\nCommercial property values in the US declined in October to the lowest level in more than seven years as unemployment reduced demand for apartments, offices and retail space.\n<\/p>\n
\nThe Moody\u2019s\/REAL Commercial Property Price indices fell 1.5 % in October from September to the lowest since August 2002.\n<\/p>\n
\nPrices were down 36% from a year earlier and are now 44% below the peak in October 2007, Moody\u2019s Investors Service said.\n<\/p>\n
\nThe gloomy news follows predictions from commercial property brokers, including Jones Lang LaSalle and Grubb & Ellis, that office vacancies may approach 20% next year as employers hold off hiring.\n<\/p>\n
\n\u2018The number one issue facing commercial real estate right now is the value declines that we\u2019ve seen since prices peaked,\u2019 Matthew Anderson, a partner at Foresight Analytics in Oakland, California.\n<\/p>\n
\nAlso worrying is that an estimated $1.4 trillion of commercial real estate debt is scheduled to mature over the next five years and Foresight estimates that 53% of it is underwater, meaning the value of the property is less than the mortgage.\n<\/p>\n
\nCommercial property values may decline by a total of 50% from the peak to the bottom, Anderson added. \u2018This is the worst that we\u2019ve seen since World War II,\u2019 he commented.\n<\/p>\n
\nHe also predicted that delinquencies for commercial real estate mortgages held by banks may increase by 5.6% in the fourth quarter of 2009 and reach 8% next year.\n<\/p>\n
\nThe delinquency rate for US commercial mortgage-backed securities rose to 4.47% as of the end of November, Moody\u2019s Investors Service said.\n<\/p>\n
\nThat\u2019s almost six times the rate of 0.75% a year ago.\n<\/p>\n
\nAnd last week the Mortgage Bankers Association reported that delinquency rates continued to rise in the third quarter on properties held by all but one of the five major commercial real estate investor groups tracked by the MBA. Defaults were the highest among holders of bank, thrift and CMBS loans.<\/p>\n","protected":false},"excerpt":{"rendered":"
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