March 6, 2002—In their Commercial Real Estate and CMBS Outlook for 2002, analysts at Wachovia Securities Commercial Real Estate Finance said that commercial real estate likely will experience moderating deterioration amid sluggish economic growth in 2002, though it is not expected to decline to levels seen in the early 1990s.
The analysts noted that better real estate loans typically are made during this phase of the real estate cycle after marked deterioration has set in. As a result, although the commercial mortgage-backed securities vintage is expected to be smaller this year, it may be of higher quality.
Although hotels have shown the greatest weakness in this downturn so far, softness has spread to the multifamily sector, where absorption has turned negative for the first time in more than a decade. Dramatic increases in vacancies in 2001 for the office and industrial sectors will evolve into rental rate declines in 2002, according to the report.
For the full report, contact Wachovia’s Real Estate research group at 704/715-1864.
