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Wachovia Issues Report on Commercial Real Estate

June 16, 2008

Wachovia issued a report earlier this month on the state of commercial real estate. Generally speaking, they are bearish on almost all asset classes. Citing a tight lending market, oil prices, slowing demand, and other factors, the anticipation is that the run up in asset prices will continue the reverse which was initiated over the past few quarters.

The report contains a lot of useful data and charts, and rather than paraphrase the details, I’ve outlined the key points below. If you’d like to read the whole report, it is available here for download.

  • Traditional Commercial Mortgage Financiers Pick-up Market Share
  • CMBS Issuance Halts and About Face
  • Nonresidential Construction Set to Weaken
  • Property Fundamentals Correction Underway
  • Domestic Banks Tighten Lending Standards
  • Slowing Economy Puts Pressure on Office Fundamentals
  • Industrial Demand Cooling Off
  • Apartments Expected to Benefit from Housing Slump?
  • Retail Slowing with Consumer Spending

There isn’t much that wasn’t generally known in the report, but the numbers and charts quantify what is going on. The prices are national averages so cap rates, costs per square foot, etc. in the report vary significantly from what assets trade for in Silicon Valley and bay area. Nevertheless, money chases opportunity so any fundamental change in other markets will have an impact on our local market as opportunity costs become to great to ignore.

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lisa September 22, 2008

Will you suggest sources for report on commercial real estate trends as of Aug or Sept?

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