Commercial Real Estate Prices Decline: Is This The Bubble?
By: Myles, August 21st, 2008
According to the Blog ResearchRecap, concerns about the commercial real estate market bubbled as triggered by a June 2008 report from Standard & Poor’s: CMBX Index Causing Commercial Real Estate Capital to Dry Up.
As reported in SeekingAlpha,
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Down 3.3% in June from May 2008;
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9.6% below what it was a year earlier (2007).
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0.6% below its level two years ago (2006).
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The CPPI now stands at 11.8% below its peak in October 2007.
Moody’s also reports that during the second quarter of 2008, all four property types measured in the index posted negative returns.
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The national industrial market saw the largest drop in prices, with a return of -9.3% during the 2nd Quarter 2008.
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The national apartment market returned -7.1%
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Offices saw returns of -5.9% and retail of -4.6%
While the volume of transactions dropped significantly throughout the first half of 2008, declining more than 25% over the first half of 2007, Moody’s notes that there was a slight increase in both number and dollar value in June 2008 over the previous month.
More recently Moody’s noted this week that US commercial real estate prices fell for the fourth straight month in June, and today the New York Times reports that Some Fear Commercial Property Loans Will Be Next Stage in Downturn.
And if all that is not enough, Audit Integrity’s report that Forensic Analysis Gives Clues to Lehman Problems, which noted that Lehman’s travails can be traced back to mid 2006. Rumors continue to swirl around Lehman’s future, most recently with reports of a possible foreign buyer or a hostile takeover.
While nobody expects the number of failures that characterized the savings and loan crisis, Regional US Banks May Need Rescuing, according to a well-read post from Oxford Analytical. However, unlike the largest financial firms, the 150 possible regional banks that may go under, just may not be regarded as too big to fail.
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