Thursday, June 05, 2008

Wachovia: CRE Slump is Here

by Calculated Risk on 6/05/2008 02:11:00 PM

Wachovia economists Mark Vitner and Anika R. Khan: Commercial Real Estate Chartbook: June 2008

The faltering housing market and generally sluggish pace of the overall economy are finally taking a toll on the commercial real estate market. Demand for office, industrial and retail space is waning, sending vacancy rates higher and property prices lower.
Wachovia CRE Forecast Click on graph for larger image in new window.

This graph shows the Wachovia forecast for real non-residential investment (green columns, and the Year-over-year forecast in red).
Real private nonresidential construction is expected to moderate in the second quarter and continue to slide under the weight of tightening underwriting standards and slower economic growth.
Here is my fairly long Non-Residential Investment Overview with similar conclusions.

Also - this coming slump in CRE is one of the reasons the FDIC and the Fed are so concerned with bank failures later this year.