The value of commercial real estate is still falling, but across the country, the pace has slowed compared to earlier in the year, according to Integra Realty Resources.

The New York-based company has completed more than 25,000 commercial valuation assignments in 2009, and its fourth quarter index shows that the office, industrial, and multifamily sectors lost only 3 percent of their value in the past three months. The lodging and retail sectors recorded a 5 percent drop.

Integra says that while not ideal, these rates of decline show a leveling off that sets the stage for a slow recovery.

“Commercial real estate is stabilizing quicker than some pundits believe,” said Jeffrey Rogers, president and COO of Integra Realty Resources. “Deterioration in values over the past three months has been markedly less then the past 12 months. The rate of decline is expected to slow even further and some sectors are expected to stabilize in the next six months.”

Rogers says he expects the value of commercial real estate to continue to decline an estimated 5 percent nationally through the first half of next year, but that rate is well below the 11-17 percent depreciation experience across asset classes in 2009.

The Integra survey shows that while conditions are improving, commercial real estate continues to be recessionary. A large percentage of Integra’s assignments are classified as distressed assets, with the Western (67 percent of assignments) and Southern (62 percent of assignments) regions struggling the most. The Eastern

and Central regions are faring a bit better, with 35 percent and 47 percent of assignments considered distressed assets.

“The office sector is showing the strongest glimmers of hope, and our research also shows the multifamily sector is moving toward stabilization,” Rogers said. “Lodging and retail will suffer worse in the coming months.”

Integra’s findings also illuminated the best and worst performing sectors in the country in regards to value change in the past 12 months. Nationally, the regions with the lowest rates of devaluation in the past 12 months include: Central multifamily (-7 percent), Central industrial (-9 percent), Southern industrial (-10 percent), Southern multifamily (-11 percent), and Central office (-11 percent).

According to Integra, the regions with the highest rates of devaluation include: Eastern lodging (-20 percent), Western lodging (-19 percent), Western retail (-19 percent), Western office (-18 percent), and Eastern office (-17 percent).

Despite the end-of-year slow down in depreciation, Mark Dotzour, chief economist at the Texas A&M Real Estate Center says recovery for the commercial real estate sector is a good 12 to 24 months away.

The Fort Worth Business Press reported that during a recent presentation at a local meeting of the Society of Commercial Realtors, Dotzour said a lack of valuation comparables is part of the reason investors aren’t scooping of low-priced deals.

Not surprisingly, Federal Reserve data shows that there has been no increase in the number of new commercial real estate loans in 2009, compared to 2008.

According to Dotzour, many large institutional banks aren’t eager to make loans because loans require comparable market analysis, or comps, and that could mean banks would have to recognize losses in their real estate portfolios, the paper said.

Dotzour contends that the buying flood gates will unleash as soon as there are enough commercial real estate transactions to produce market value comps that reflect today’s rock-bottom prices.

FROM DSNEWS.COM