Slowdown, credit crunch now hurting commercial real estate

The economic slowdown and the credit crunch are beginning to cause significant damage to the commercial real estate business, the National Association of Realtors (NAR) said in a report Wednesday.

(Forbes) -- Until recently, the commercial side of the business had been steady in contrast to the housing collapse. Now, 'tight credit availability has significantly slowed the volume of commercial real estate transactions,' said Patricia Nooney of the Realtors Commercial Alliance Committee. Investment in commercial real estate has fallen dramatically to $48.2 billion in the first four months of 2008, down 69.5 percent from the $157.8 billion during the same period in 2007 when credit was easily available. Also, vacancy rates are rising and rent gains are slowing according to the report. NAR chief economist Lawrence Yun said: 'Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors.'