Commercial Real Estate Chartbook: Quarter 2

Commercial real estate markets showed surprising resiliency during the second quarter, with property transactions rising solidly and leasing activity holding up better than expected. The apparent resiliency flies in the face of much of the concerns so widely expressed about the sector, many of which are valid. We remain cautious in our outlook for commercial real estate and construction. With the … Commercial real estate markets showed surprising resiliency during the second quarter, with property transactions rising solidly and leasing activity holding up better than expected. The apparent resiliency flies in the face of much of the concerns so widely expressed about the sector, many of which are valid. We remain cautious in our outlook for commercial real estate and construction. With the exception of a handful of markets, overbuilding was never really the issue that many made it out to be. The rise in delinquency rates in recent years was mostly caused by the sharp contraction in employment, retail sales and the rate of household formation growth. Even the modest rebound in real GDP growth and stabilization in nonfarm employment was not enough to arrest the increase in delinquency. The apparent improvement in demand may be overstated as many firms are taking advantage of soft market conditions to upgrade space and locations. Thank you for your interest in Wells Fargo’s Economic Commentary by email. You are receiving this message because you have requested Economic Commentary information and updates sent via email. If you no longer wish to receive these emails, please click on the following link to access the Economic Commentary by email registration page: http://www.wellsfargo.com/economicsemail.

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