As reported by TREPP the delinquency rate for commercial real estate loans in CMBS continued to move higher in May as the monthly rate of increase has demonstrated remarkable consistency.

Specifically, office delinquency approaches 6% up 44bps.  This property type has seen continual increases month over month since May of 2009.

And the beat goes on….

View the full report here.

This is the first major commercial real estate offering of the year. Last year this market saw only one major real estate deal completed for just over $60M. What will this one fetch in this market?
See the full article here.

IPD has just released the results of the US Annual Index which reports a second consecutive year of declining commercial real estate values, and the worst on record. Capital values dropped another -22.4% to December 2009, taking the total return for the year to -17.1%. Combined with an -11.9% drop in values during 2008 the total decline in US real estate values sits at -31.7% from the peak at December 2007.

See the full report here.

Durable Goods orders decrease when you extrapolate transportation.

“New orders for manufactured durable goods in January increased $5.2 billion or 3.0 percent to $175.7 billion, the U.S. Census Bureau announced today. This was the second consecutive monthly increase and followed a 1.9 percent December increase. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders increased 1.6 percent.”

Most important in the “new orders” column is the decrease in computers and electronic components.  Orders for new computer equipment and cell phones mean jobs. Jobs drive office space absorption. The Durable Goods numbers tell us very little computer equipment = very few jobs = very little office space absorption.

It remains an excellent time to be a tenant in the market.

Because more firms plan to layoff workers than hire workers tenants will remain firmly in control in the Chicago office market.

Employment drives office space consumption, period. Without jobs creation there is no demand for office space.  Lack of demand for office space will leave the glut of sublease space on the market to languish and continue to force building owners to complete directly with this deeply discounted space.

Tom Corfman writes,

“the largest real estate deal in Chicago history is turning into the biggest example of the grim plight of many properties in the city’s downtown office market.

A venture led by New York-based Tishman Speyer Properties has defaulted on part of a package of loans used to finance the $1.72-billion purchase of six prime office towers in Chicago’s Loop during the frenzied real estate market of 2007, sources familiar with the deal say.”

from Crain’s New York Business.

Diana Olick on a recent CNBC panel. Participants discuss the driving forces behind the commercial fallout, including a lack of available credit, rising delinquencies and vacancies, and unemployment. There are many opportunities for tenants amid the gloomy numbers.

Here it comes!

“The commercial real estate business still has not been marked down. It’s not been marked to market,” Cantor Fitzgerald LP Chief Executive Howard Lutnick said. “The economy can’t, in my opinion, grow fast enough that the tenants are going to go out and start hiring and growing and building and take up all these rents at $60 a foot. It’s nonsense.”

CRE Then v Now