Commercial real estate investment has “dropped sharply” as vacancies have shown moderate increases, according to the National Association of Realtors.
The economy, NAR said, is to blame. “Although the supply-demand fundamentals are broadly favorable in most commercial real estate markets, vacancy rates are rising modestly and rent gains are slowing,” said NAR chief economist Lawrence Yun. “Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors. Despite the slowdown, the commercial real estate market is in much better shape compared to conditions during the 2001 recession.”
Investment in commercial real estate during the first four months of 2008 was $48.2 billion, down 69.5% from $157.8 billion during the same period in 2007 when the credit markets were functioning normally. Those totals do not include transactions valued at less than $5 million or investments in the hospitality sector.
