Commercial

Banks Teeter as Commercial RE Struggles

Commercial real estate prices rose 1 percent in November. That’s the first increase in more than a year, according to Moody’s/ReAL Commercial Property Price Indices.

But it’s too soon to say the sector is stabilizing. Moody’s analyst Connie Petruzziello predicts that occupancy and rental rates will fall in the first half of 2010, pushing prices downward as well. She expects prices to decline as much as 45 percent to 55 percent from their peak in 2007 before they begin to recover later this year.

The woes of the commercial real estate market are likely to cause more banks to fail in 2010, Federal Deposit Insurance Corp. Chair Sheila Bair said in a speech to the Commercial Mortgage Securities Association.

Bair said regulators predict higher delinquencies and charge offs for commercial real estate properties in the first three months of this year. “Commercial real estate credit problems are affecting large and small banks alike,” Bair said.

Source: Reuters News, Ilaina Jonas (01/20/2010) and The Wall Street Journal, Michael R. Crittenden (01/20/2010)

———————————————————
Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
(404) 431-2117
Web: www.elliottyouragent.com
Blog – www.elliottonrealestate.com
Twitter – http://twitter.com/elliottrob