by George Ratiu, NAR Research
Last month in this column we looked at how the financial crisis on Wall Street and a slowing economy have been affecting the office and industrial sectors of commercial real estate. This month we examine the impacts on retail and multi-family properties.
Retail Sector
Over the last few years, healthy job growth and a steadily, albeit slower, expanding economy spurred demand for office and industrial space. Consumer spending was strong, fueled by credit availability. Consumer spending accounts for 70 percent of economic activity and has been the main driver of economic growth over the past few years. But as employment turned negative at the beginning of this year, and as credit availability dried up due to the financial crisis that emerged, consumer spending has slowed considerably. In addition, rising prices for most consumer goods, due primarily to increased fuel costs, have also curtailed consumer spending. These factors have rippled through the retail sector of the commercial real estate market.
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