Weekly Market Insight . Outstanding Commercial Real Estate Loans . 03/19/12

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Outstanding Commercial Real Estate Loans
All Commercial Banks, Seasonally Adjusted
March 19, 2012
Sources: Federal Reserve, Grubb & Ellis
After dropping for 35 consecutive months, the value of commercial real estate loans held at U.S. banks increased in February. CRE loans fell from a peak of $1.73 trillion in December 2008 to $1.41 trillion in January 2012, a decline of 18 percent, before rebounding slightly to $1.43 trillion last month. Not only are banks making more CRE loans, their delinquency and charge-off rates are coming down, indicating that banks increasingly view commercial real estate as a creditworthy and profitable asset class. The 30-day delinquency rate on bank CRE loans, which peaked at 8.78 percent in the second quarter of 2010, fell to 6.12 percent in the fourth quarter of 2011, while the charge-off rate declined from 2.87 percent in the fourth quarter of 2009 to 0.95 percent in the fourth quarter of 2011. Other lenders including CMBS and insurance companies are expected to ramp up their deal volume in 2012, which will support the expected 25 to 50 percent increase in the value of investment transactions this year.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.

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Robert Bach
Senior Vice President, Chief Economist

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© 2012 Grubb & Ellis, all rights reserved.

About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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