Commercial Real Estate on the Mend?
Well, not quite. It's more like pre-mending, as the rate of growth in delinquencies slows down:
The easiest way to determine if things are getting better would be to look at delinquencies. Here are some measures:
Let's look at each of these lines. First, the green one shows commercial mortgage-backed securities (CMBS) portfolios and includes the earliest-term delinquencies. Although they continue to rise, they're doing so consistently more slowly, as the distances between each point have been decreasing for about a year. The red line is the most severe delinquencies, as 90 days or more delinquent means that the properties are essentially defaulted. Its story is similar, as delinquencies have continued to grow, but not as quickly as they had in prior quarters. Finally, delinquencies on 60 or more day multi-family portfolios owned by Fannie Mae actually declined during the quarter.
This data hardly indicates that all problems are behind the commercial mortgage market, but it does suggest that a recovery probably isn't far off.