Location is key in 2008 commercial/multifamily sector.
Last year's "perfect calm" in the market has been replaced one year later by a market that is anything but perfect, explained Jamie Woodwell, MBA's senior director of commercial/multifamily research.
"The commercial sectors that are performing the poorest are those related or tied to the single-family residential sector," said Woodwell.
Woodwell stressed that the commercial and multifamily markets are still poised for growth, but a much slower rate of growth than what the market has grown accustomed to.
"Once again, location matters," said Woodwell. "We're getting to the point where we've had this rising tide lifting all boats, and now we're going to start some of that differentiation again where individual properties, individual locations, will be the key drivers of the properties and the loans going forward."
Looking at the overall economy, MBA Chief Economist Doug Duncan noted that economic growth will barely remain in positive territory at less than 1 percent during the first half of 2008, while the unemployment rate will hover at or near 5 percent in 2008 with a 50/50 risk of recession.
Duncan explained that the economic slowdown has increased conservatism and made lenders more gun-shy, which, in turn, will slow the pace of recovery as credit extension slows.
"The housing sector will remain the biggest drag on the economy, but it's pretty clear now that the credit market turmoil has bled into the rest of the economy," said Duncan. "Until house prices stabilize, the housing sector will continue to be a drag."
Duncan also noted that the Federal Reserve first and foremost remains on watch for signs of recession.
"The news will get better during the second half of the year," said Duncan. "Interest rates are likely to stay pretty benign through the first half of the year, but risk spreads will remain wide."
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|Comment:||Location is key in 2008 commercial/multifamily sector.(Commercial)|
|Date:||Mar 1, 2008|
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