From National Real Estate Investor:
“Demand appears to be cooling. During the third quarter, office demand registered 22.6 million sq. ft. down 16% from the 26.8 million sq. ft. of net absorption posted in the second quarter.
‘But demand is expected to fall off a cliff in the fourth quarter [due to] the slowing economy most notably,’ reports PPR, which is calling for a paltry 15.2 million sq. ft. of office absorption this quarter.”
From The Wall Street Journal:
“The report found that the value of commercial property declined 1.2% in September from the previous month. Particularly hard hit were apartments in the West and office property in most states other than California.
The report is an early sign that the commercial-property sector is being dragged down by the growing reluctance of lenders to extend credit for anything related to real estate, which in turn could create a new drag on the economy and additional problems for investors. Declining commercial-property values could lead to an increase in default rates on commercial real-estate loans and on commercial mortgage-backed securities.”
From The Chicago Tribune:
“'This is the first full month of data since the acceleration of the liquidity crisis, and we saw a downturn in prices as the economy slowed, the availability of capital decreased and the cost of capital increased,’ said Sally Gordon, a senior vice president at Moody's Investors Service.
Over the next year, ‘we'll see a net decline in values,’ Gordon said.
But prices are coming off a high point that will provide a cushion if the downturn continues.
Therefore, Gordon added, ‘We are not saying that commercial real estate will be the next subprime,’ referring to mortgages given to those with a weak credit history.”