All Signs Point to Commercial Real Estate Bust
A Barclays Capital analyst said in a Sept. 18 research note that commercial real estate prices have "bottomed," citing optimistic assessments by some of the investment bank's financial customers.
Wrong. Some pertinent data points:
- Commercial mortgage defaults are projected to reach 4.1 percent by year-end, which would be the highest level since 1992
- Delinquency on commercial mortgages in Q1 rose to 3.2 percent, up from 2.7 percent in Q4
- Commercial property values in 2009 are down more than 30 percent year-over-year
- In Q2 the U.S. office vacancy rate rose to 16.5 percent, up from 15.5 percent in Q1
- Delinquency rates on loans held in commercial mortgage-backed securities in Q2 rose roughly two points, to 3.8 percent
- Through July, construction spending has fallen 11.4 percent compared with the year-ago period
- Delinquency rates on construction loans in Q1 reached 13.5 percent, up from 11.4 percent in Q4 and the highest level since 1993
- Annual industrial rent is expected to fall 11.4 percent this year and another 11.7 percent in 2010
- Retail vacancy rates in Q1 rose to a record 9.5 percent
