by Calculated Risk on 11/19/2007 12:26:00 AM

From the WSJ: Commercial Property Now Under Pressure

The value of commercial real estate ... is now starting to decline due ... according to a report set to be released today by Moody's Investors Service.

The report found that the value of commercial property declined 1.2% in September from the previous month.

The CRE market saw loose lending too:

Even a slight decline in values could make it difficult for property owners to refinance their mortgages, especially if they have been paying only interest on their existing debt and not paying down principal. Such interest-only mortgages have become increasingly popular.

And there is more space available:

Already there are signs of slowing in some markets. Available sublease space swelled to 77 million square feet in the third quarter from 73 million square feet nationwide in the second quarter, the first national increase in five years, according to Grubb & Ellis Co.

Historically the CRE market trails the residential real estate market by about a year and half. So it appears the CRE slump is right on schedule.