Moody's Sees Bottom for CRE

In an indication that U.S. commercial real estate may be bottoming out, the performance of more individual markets showed improvement in the fourth quarter of 2002 than in the third quarter, according to a study by Moody's Investors Service.The rating agency's "Red-Yellow-Green" index on U.S. commercial property markets changed very little nationally, but Moody's did see changes in specific markets. Only five of 50 office markets covered by the study are expected to see "negative absorption" of space over the next 12 months, according to the report. Even the stressed hotel sector some improvement, with its overall score rising to 24 points from 7 in the third quarter. However, of the 25 hotel markets covered by Moody's, three are "green," meaning they see little trouble; four are "yellow," and require monitoring; and 17 are in the "red" zone, meaning they are under stress. Of 53 multifamily markets covered by Moody's, 28 are green, 25 are yellow, and none are red.