by Calculated Risk on 12/03/2008 05:24:00 PM

OK, two ...

“Our worry is that you have these very large players in distressed situations where they are going to have to sell assets at any price they can get. That can really weigh on the commercial real estate market.”
Joel Bloomer, Morningstar analyst commenting on General Growth Properties and Centro in Retail Traffic (hat tip Justin)

And from the Fed's Beige book:

Commercial real estate markets weakened broadly. Vacancy rates rose in Boston, New York, Richmond, Chicago, Kansas City and San Francisco, but were mixed across markets in the St. Louis District. Leasing activity was down in almost all Districts. Rents fell in the Boston, New York and Kansas City Districts. Despite reductions in construction materials costs, commercial building activity declined in many Districts with tighter credit conditions as a factor.

And just like with residential real estate, the CRE bust impacts other suppliers down stream, as an example from Reuters: U.S. office furniture orders fall 6 pct in Oct

U.S. office furniture orders fell 6 percent in October to $945 million compared with a year ago, its largest decline since May 2003, a trade group said on Wednesday.

The CRE downturn is here. This is the typical pattern - residential real estate leads the economy into a recession, and then CRE turns down during the recession. Usually new residential investment (RI) also leads the economy out of recession too - but any recovery in RI will probably be weak this time because of the huge overhang of inventory, and because house prices are still too high. Yes - I saw the article about Global Insight suggesting that the "housing market is now slightly undervalued" - uh, right. I'll have more on their analysis later.