WASHINGTON – Feb. 7, 2011 – The U.S. commercial real estate market may be at or close to bottom, a Federal Reserve executive told a congressional committee Friday.
Patrick Parkinson, director of the division of banking supervision and regulation, said he does not believe the commercial real estate market poses a risk to the largest banks. He told the Congressional Oversight Committee that while some of those banks still hold large portfolios of mortgage-backed securities they have already taken large write-downs on them.
Overall, the market remains far below its peak in 2007, he said.
“Underlying market fundamentals of CRE remain a significant concern, but they have shown some signs of stabilizing,” Parkinson said. “For instance, vacancy rates on office, industrial, and retail properties have stopped increasing, although they remained at elevated levels at the end of 2010, ranging between 13 percent and more than 16 percent, depending upon the property type and location.”
He said sales of commercial real estate improved in every quarter of 2010.
The world’s largest commercial property brokerage, CB Richard Ellis, based in Los Angeles, reported double-digit fourth-quarter gains Thursday in all its global business lines except real estate development services.
Bricks & Mortar Capital President Craig Silvers told the Los Angeles Times improving economies in the United States and Asia have more companies taking action on real estate matters and trying to “lock in real estate leases or buy property before prices get out of control.”
Copyright © United Press International 2011
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