Commercial Real Estate Isn't Escaping the Downturn

11:00 AM CDT on Friday, April 25, 2008

New economic reports show that the commercial real estate sector isn't escaping the U.S. economic downturn.

The nationwide architectural billings index -- a gauge of new projects in the pipeline -- is at its lowest point since the American Institute of Architects began the index in the mid-1990s.

The AIA estimates that its index provides a nine- to 12-month advance estimate of construction spending.

Economist Kermit Baker says in the March report that "the prognosis for commercial construction later this year is not favorable at this point."

"Aside from historically low project demand, all regions are showing very poor business conditions," he said. "This is not likely to reverse itself anytime soon."

Another new commercial property sector snapshot from Standard & Poor's shows that commercial property gains are steadily deteriorating.

Source: Dallas Morning News

The latest S&P/GRA Commercial Real Estate Index shows an overall 7 percent rate of one-year commercial property appreciation. That's less than the rate at the peak in 2006.

"All sectors and regions are losing momentum compared to a year or two ago," S&P's David Blitzer said.