Moody's Investors Services sees no broad-based recovery in commercial real estate markets over the next year due to weakness in demand and what it calls "diminished lending."
“Our latest U.S. commercial real estate prices indices show that price recovery for the overall market has been stalled for two years,” writes Moody's director of CRE research Tad Phillipp.
Phillipp also voices concern that over the next two years some investors may be forced to write down their investments in commercial-backed MBS because some of these deals – written at peak valuations – are set to refinance.
“Many of these deals require significant price appreciation in order to refinance,” he adds.
Still, a Moody's index that tracks CRE gained 5% in July. “We view this month's uptick more as another bounce along the bottom than as a harbinger of a recovery,” Moody's says.
