WASHINGTON — The real estate market will continue to decline in 2009 thanks to a sustained lack of credit and the economic slump, according to a forward-looking index and forecast for commercial real estate sectors published by the National Association of Realtors (NAR).“The credit crunch has especially hammered down some components of NAR’s commercial leading indicator,” says Lawrence Yun, NAR chief economist, although he pointed out that all components of the index declined. “A lack of commercial credit is a serious threat to the overall economy. The Federal Reserve needs to use the Term Asset-Backed Securities Loan Facility (TALF) to provide liquidity and support for commercial mortgage-backed securities.”The Commercial Leading Indicator for Brokerage Activity fell 6.0% to an index of 109.2 in the fourth quarter from a downwardly revised reading of 116.1 in the third quarter, and is 9.1% lower than an index of 120.1 in the fourth quarter of 2007.The slowing index means commercial real estate activity, as measured by net absorption and the completion of new commercial buildings, is likely to weaken further over the next six to nine months, NAR says.The Society of Industrial and Office Realtors (SIOR), in its Commercial Real Estate Index, a separate attitudinal survey of 644 local market experts, also expects a lower level of business activity in upcoming quarters. Ninety percent of respondents indicate leasing activity in their market is down, and vacancy rates are generally higher, NAR says.The SIOR index has declined for eight consecutive quarters and is 58.5 percentage points below the 100-point criteria that represents a balanced marketplace.Given the freeze in commercial credit, investment activity in commercial real estate sectors has essentially halted, while continuing job losses are reducing the demand for space, according to NAR’s latest Commercial Real Estate Outlook.
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