Saturday, May 2, 2009

2009: Commercial Property Market Hits Rock Bottom

The colossal run-up in commercial real estate prices is now being followed by an equally precipitous tumble. The apartment sector is expected to have peak-to-trough price declines of about 40% over the 2007 - 2010 period.

For multi-family properties, this recession has proven to be far worse than the 1990 - 1991 or 2001-2003 recessions.

In 2008 and 2009, apartments have gone vacant as renters lost jobs and cut back on their spending (presumably moving in with friends and family to economize).

This trend is expected to reverse and the rental market is forecast to tighten since little apartment construction is in the pipeline. Multifamily starts in March fell 42 percent when compared to February 2009 and 55 percent compared year-on-year. [Multi-Housing News]