The commercial mortgage market will shrink for another year, bottoming out at about $2.9 trillion in late 2011, and then begin to rise in 2012, with volume reaching about $3.3 trillion by 2015, according to new research issued by Prudential Real Estate Investors (PREI), the real estate investment management business of Prudential Financial Inc.
The PREI report, titled ‘Deleveraging the Commercial Mortgage Market: How Much Further to Go?’, bases its findings on a model that calculates the ratio of commercial mortgages as a share of gross domestic product. Working from this model, PREI estimates that the commercial mortgage market will shrink through the fourth quarter of 2011, dipping to $2.9 trillion from its $3.4 trillion peak in the first quarter of 2009 – a cumulative drop of about 14%.
‘The availability of debt is a critical element of the commercial real estate market,’ says Jack Taylor, managing director at PREI. ‘Closely monitoring debt allows us to gauge the health of the market and to plan strategy accordingly. As commercial mortgage volume nears the bottom of the current cycle, we will begin to see activity pick up.’
SOURCE: PREI
