More CRE reporting

The blogger Mish is on to the Commercial Real Estate (CRE) downturn. His latest blog entry,WSJ Report: Less Shopping = Fewer Malls, shows that both the WSJ and the FT are reporting a fall in CRE prices.

The Financial Times is reporting a Plunge in U.S. commercial property.

Commercial property prices in the U.S. in February saw their sharpest decline since records began nearly 15 years ago as sources of finance for deals has dried up, according to data from Standard & Poor’s out yesterday.

The value of commercial buildings fell 1.03 per cent between January and February, the largest monthly decline since at least 1993, when the industry was just emerging from a deep slump.

The fall in national property prices comes as banks have retrenched on lending due to credit crisis and the slowing economy, causing the volume of deals to slow sharply. The market for commercial mortgage-backed securities, which until last August was a major route to cheaper borrowing, has largely ground to a halt.

Sales of commercial properties were down 71 per cent in the first quarter compared with a year earlier, according to data from Real Capital Analytics.

Less Shopping = Fewer Malls

The Wall Street Journal is reporting Less Shopping = Fewer Malls.

Many of the largest U.S. developers of malls and shopping centers have reacted to retailers’ waning demand for space by postponing by a year or more some of their projects. Other venues will be built piecemeal as leasing progress allows. Still others have been canceled before the start of construction.

The slowdown comes as consumers rattled by the credit crisis rein in spending, causing retailers to rethink their previously aggressive expansion plans. Among the national chains that recently pared their growth plans are J.C. Penney Co., Chico’s FAS Inc., Starbucks Corp. and Home Depot Inc. At least partly because of the spending lull, nearly 6,500 U.S. stores are expected to close this year, the highest tally since 2001, according to the International Council of Shopping Centers.

Isn’t this an expected outgrowth of the housing bubble? People spend less when they have less to spend. It’s pretty simple. The hope is that the banks have already accounted for this. I doubt it, but I do hope so.