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Fitch expects commercial properties to fare better in 2012

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Fitch Ratings expects commercial property performance to stabilize slowly and ultimately improve slightly from 2010 and going into next year. Analysts compared net operating income by region and found economic recovery in some areas of the country is emerging faster than others. The overall net operating income for 2010 fell 1% from 2009, but declined at a slower rate than the 5% decline in 2009 from the prior year. Fitch said office properties in the Southeast, hotels in the Far West and retail and multifamily properties in the Rocky Mountain region performed better over the past 12 months than in 2010. Fitch Ratings analyzed financials of the 22,534 commercial properties that secure its current $257.7 billion fixed-rate, commercial mortgage-backed securities portfolio. Hotel properties, especially in Texas, Florida, and Georgia, experienced a 20% drop in net operating income between 2008 and 2010, according to analysts. But hotels were also the first property type to show improved performance and NOI rose in 2010 from the year before in Florida, Ohio and California. Analysts said Florida, which had a 34% decline from 2008 to 2010, experienced a 7% growth from 2009 to last year "indicative of a quicker recovery and the return of leisure travel." The performance of retail properties declined modestly from 2008 through 2010 with a 3% drop in net operating income, according to analysts. Multifamily properties experienced the least volatility in declines, with overall drops in NOI of less than 1% in most regions. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.

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