Marktbericht USA Jul09

While we are encouraged to see signs of stabilization in the economy and financial markets, the outlook for commercial real estate will be dominated by three powerful themes: deleveraging, deflating asset values and deteriorating fundamentals.

Executive Summary

• Many economic indicators have stopped their free fall or have started showing signs of improvement, but that may be of little consolation in the commercial real estate market, which lags the broader economy.
  
• The rate of job losses has slowed, but unemployment continues to rise, and positive growth may not start until sometime in 2010. As a result, space market fundamentals, which are dependent on employment, will continue to deteriorate.
  
• Lenders’ appetite for commercial real estate is restrained. Loans are available on a selective basis, but not enough to support a robust level of new transactions or refinancings. The government’s efforts may get the CMBS market restarted this summer, but deal activity will be limited at first.
  
• The deleveraging of commercial properties, a process that will take years, is just beginning. Loan defaults are rising, particularly on assets whose owners overleveraged during the boom times and now cannot pay off existing debt.
  
• Property values continue on a downward spiral. As measured by the NCREIF Property Index, they have dropped nearly 25% since peaking in 1Q08, and are likely to slide by another 15% or more before the cycle ends.
  
• One sign of encouragement in the second quarter came from the REIT market, where the NAREIT equity index rose 28.9% amid a flurry of equity offerings that demonstrated REITs’ ability to tap the public markets for precious capital.