It seems that there is no respite for the U.S. commercial property sector for the moment. Am I cracking jokes? Well, it depends entirely on you how can this statement be taken but you must keep in mind that this has been the perception of celebrated real estate services firm Jones Lang LaSalle Inc. Haven’t you heard the name of this firm? Jones Lang LaSalle is a globally acclaimed financial and professional services firm specializing in real estate services and investment management. What is the forecast of the firm? The firm has stated in its report in spades that the sales of U.S. commercial property is expected to diminish another 20 to 25 percent in 2009 whereas its sales in all likelihood fell 70 percent in 2008.
If we go through the report of the firm, it will be found that the sales figure of the last year attained simply $125 billion thanks to the global downturn along with global credit crisis and also the US slump. Nevertheless, among these the decline was most sharp in the last part of 2008 due to the closure (almost) of the commercial mortgage-backed securities (CMBS) market. What makes CMBS so important? The only reason is that it was the crucial source of funding for the real estate boom of the erstwhile five years. Throughout the whole year the issuance of CMBS dropped sharply 95 percent in 2008 to $12.1 billion and there has been no CMBS issuance since June.
Speaking on this Bart Steinfeld, Managing Director of Jones Lang LaSalle’s Real Estate Investment Banking practice, said in a statement, “The beginning of a new presidential administration and new aggressive monetary policies should increase certainty into the debt markets by mid-2009, but the CMBS market as we knew it in 2006-2007 is gone.”
All these indicate that the present anguishes may continue throughout the year.
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