Posted by: union03g | June 1, 2009

Next Hurdle: Commercial Real Estate Collapse

Now that we have the residential housing bottoming, equities showing signs of life, TED spread normalizing and now that the markets seems to have priced in GM’s bankruptcy, lets all prepare for the CRE correction – the next big hurdle. The table below is the Banc Investment Group’s CRE index with a baseline in April 07 of 100. CRE includes multi-family, retail, industrial and office and tends to be highly correlated to employment and wages. The numbers below will tend to lag the peak, so we will see the employment numbers get better before CRE does (a long way off). I think the industrial weakness/oversupply could get much, much worse, especially in the midwest.

Check out how Non-Res construction spending has only gone up! Does this concern anyone else?  the quarterly declines in the CRE index in the table below…

Residential spending


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