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U.S. commercial real estate activity slowed to its weakest level in 12 years in the fourth quarter, signaling another six- to nine-month slump, the National Association of Realtors said on Thursday.
Commercial real estate prices, meanwhile, fell 14.9 percent in 2008 to levels last seen in 2005, Moody's Investors Service Commercial said in a separate report on Thursday. From their peak in October 2007, prices have fallen 16 percent, Moody's said.
The NAR's index of commercial brokerage activity declined 6 percent to 109.2 last quarter from a downwardly revised 116.1 in the third quarter, the industry group said in a statement. It was the lowest reading since the last quarter of 1996, an NAR spokeswoman said.
The index is down 9.1 percent from a year ago, driven by the lack of credit for commercial property and as the U.S. recession reduces demand for office, industrial and retail buildings, the trade group said.
''A lack of commercial credit is a serious threat to the overall economy,'' Lawrence Yun, chief economist at the NAR, said in a statement.
Increased stress in commercial real estate led the Federal Reserve last week to include the assets in a program to expand consumer lending, which it also boosted in size to up to $1 trillion from $200 billion. The term asset-backed securities lending facility (TALF) is set to be launched soon.
Office and retail markets will likely take the brunt of the slowdown, the NAR said.
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