Amid news Monday that commercial property prices fell the most since 2000, thanks to a quickly tanking retail sector, we can't help but wonder if the CRE bust many have predicted is already here. From Reuters:
Moody's said prices of retail properties have dropped 5.7 percent from their peak in 2007, compared with declines of 3.4 percent for apartment buildings and 2.3 percent for industrial real estate, respectively. Office property prices are down 2 percent from their peak, according to quarterly data. On a monthly basis, commercial property prices fell 2.3 percent in March, the most since Moody's began collecting the data in 2000.
The eponymous author of the awesome Calculated Risk blog thinks the CRE bust is officially here, and even goes so far as to collect some recent quotes from analysts and economists. Our favorite:
"On the commercial side, best I can tell the problems are in all of it - offices, retail, hotels. I think we will see a prolonged decline." -- Kermit Baker, chief economist for the American Institute of Architects
We don't cover a lot of commercial real estate here at HW, as it's not really our bag, but it is absolutely worth noting that a drop in CRE will be felt in residential housing markets. No question about it.