RTTNews - The commercial real estate market fell nearly 5 percent in the first quarter of 2009, the National Association of Realtors revealed Wednesday. The report urged the Federal Reserve to take action to boost activity in the sector, which is down nearly 13 percent from a year ago.
The NAR warned that a lack of demand will continue to negatively impact the real estate market throughout 2009.
Commercial real estate fell 4.8% in the first quarter compared with the fourth and is down 12.9% compared with a year ago.
It is critical for the Federal Reserve to increase liquidity by purchasing commercial mortgage-backed securities, said Lawrence Yun, chief economist for the trade group. Because commercial real estate always lags an overall economic recovery, it will take some time for the commercial real estate market to rebound.
His concerns were echoed by both congressional and Federal Reserve officials alike. In a hearing Thursday, Christopher Dodd, D-Conn., warned of the potential negative effect of a faltering commercial real estate sector, which threatens to further destabilize the broader financial sector.
Overall, the picture remains mixed, Dodd said.
In addition, Atlanta Federal Reserve Bank President Dennis Lockhart has repeatedly stated the he is concerned about the commercial real estate sector, including how it could impact the banking system. In an April speech Lockhart warned that declining commercial real estate markets could put further pressure on already strained financial institutions and markets.
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