Residential housing is not the only chunk of the real estate sector that is suffering, according to the National Association of Realtors.
Although commercial real estate activity is still looking positive, the group says it sees a slower commercial market over the next six to nine months. “Along with the impact of the credit crunch, a weakening in leasing and building sales activity should come as no surprise because commercial real estate follows changes in overall economic activity,” said Lawrence Yun, chief economist for the NAR.
The Commercial Leading Indicator for Brokerage Activity fell 0.7 percent to an index of 119 in the first quarter from a downwardly revised reading of 119.9 in the fourth quarter, the NAR said in a statement. The index is 0.8 percent below the first quarter of 2007 when it stood at 120. The index incorporates 13 variables that reflect future commercial real estate activity.
This is the third consecutive quarterly dip since reaching a record of 120.5 in the second quarter of 2007. And though the commercial numbers may be slightly lower, they are far from the dramatic declines seen in new residential construction and sales of existing homes.
Falling employment in some sectors has led for less need for commercial space, the group said. “The job market is weak, but not recessionary,” Yun added. “There are large regional variations, with job growth in the South, while overall professional business service jobs are in the process of a long-term expansion.”