These are excerpts from todays Beige book by the FEDERAL RESERVE on June 29 2009 .
These are the excerpts concerning Commercial real estate .
For the whole report click the link .
http://www.federalreserve.gov/FOMC/Beigebook/2009/20090729/FullReport.htm
Real Estate and Construction
Commercial real estate leasing markets were described as either "weak" or "slow" in all 12 Districts
Significant weakness in the retail leasing sector was reported for the Boston, Minneapolis, and New York Districts, and industrial vacancy increased in the Atlanta, Dallas, Minneapolis, and St. Louis Districts. Commercial real estate sales volume remained low, even "non-existent" in some Districts, reportedly due to a combination of tight credit and weak demand.
Boston -
Sentiment is mostly negative among commercial real estate contacts this period. Throughout the region, vacancy rates rose again across all commercial property types as sublease supply continues to expand.
Sales transaction volume remained very light across all markets, as large gaps persisted between bid and ask prices and credit remains tight.
The pace of write-downs by commercial lenders is expected to accelerate over the next twelve months.
New York -
New York City's market, however, has shown further signs of deteriorating, in both the sales and rental markets. In the second quarter, the median sales price for existing co-ops and condos in Manhattan reportedly fell 26 percent from a year earlier, while the number of sales transactions fell 50 percent;
Vacancy rates have risen in office, industrial, and retail buildings. Rents have moved down and landlord concessions have increased. Several contacts echoed the comment of one who said, "The balance of power has moved back toward the tenant." Contacts also indicated that financing for commercial construction and investment remained very difficult
Philly -
Vacancy rates have risen in office, industrial, and retail buildings. Rents have moved down and landlord concessions have increased. Several contacts echoed the comment of one who said, "The balance of power has moved back toward the tenant." Contacts also indicated that financing for commercial construction and investment remained very difficult
Cleveland -
The residential construction industry remains weak. Although most builders continued to experience a slight increase in sales, their outlook is less optimistic than in the second quarter.
We continued to hear numerous accounts of difficulties in obtaining financing for private-sector projects
Richmond -
On the commercial side, lending activity continued to decline, with demand for loans "unseasonably low
Commercial real estate activity remained weak since our last report as contacts reported fewer prospects and smaller transaction sizes. Contacts cited multiple reasons for recent transactions that did occur, including firms cutting back on space, moving to a less expensive building, or extending existing contracts early in order to negotiate lower rental rates.
Atlanta -
Commercial real estate activity continued to trend lower in June and through mid-July. Vacancy rates rose in many parts of the District, which has put additional downward pressure on rents. Contacts reported that some tenants were requesting lower lease rates on existing contracts. Commercial construction continued to slow as well. Contractors continued to report an increasing number of projects being delayed or cancelled, especially in the retail sector.
Most Florida contacts experienced improvements in sales, particularly for existing homes, although partly because of increased foreclosure sales. Most contacts continued to note downward pressure on home prices from foreclosures and short-sales. Both builders and Realtors noted some increased demand at the low-end of the housing market. The majority of homebuilders and contractors reported that new home construction remained at very low levels.
Chicago -
Construction activity in the District remained weak. Residential construction was low, especially for apartments and condominiums.
Nonresidential construction declined, led by the commercial and industrial sectors where high vacancy rates remained a concern.
St. Louis -
Commercial real estate and construction markets continued to struggle throughout the District. A contact in Memphis noted that commercial real estate foreclosures are likely to increase as a result of current credit conditions. A contact in St. Louis noted that, with the exception of institutional and health care-related projects, little construction is taking place. Industrial real estate and construction contacts throughout the District also continued to report a difficult environment. Contacts in the Louisville area expressed disappointment regarding the slow impact of the stimulus bill and the size of projects it has funded to date.
Minneapolis -
Commercial real estate markets were slow. A representative of a state bankers' association said the number of troubled commercial property loans has increased. Vacancies were particularly pronounced in retail and industrial markets throughout the District
Kansas City -
Commercial real estate weakened further with declines in completions and construction underway.
Few commercial real estate firms expected a recovery by the end of 2010, although some commercial builders noted increased competitive pressures from firms outside the region seeking opportunities in District markets. Further declines in commercial real estate prices and rents were expected. Commercial real estate firms said the market favored buyers and tenants, leaving them little negotiating leverage.
Dallas -
Commercial leasing activity continues to soften as businesses cut costs. Landlords are reportedly becoming more aggressive in lease negotiations by offering additional concessions.
Sales transactions of commercial real estate properties remain almost nonexistent, but there continue to be reports of interested investors for very good deals. Private nonresidential construction activity continues to decline
Outlooks remain uncertain, and many expect no significant pickup in nonresidential activity until late 2010 or 2011
San Francisco -
Demand for commercial real estate continued to erode.
Demand for commercial real estate fell further, and with rising vacancy rates
Construction activity for commercial properties also continued to fall, and contacts noted that a lack of available credit remained a constraint for construction activity and investment transactions in some areas.
