WASHINGTON, Aug. 26 (Xinhua) -- U.S. commercial real estate market has improved gradually in recent quarters but remains weak with high vacancy and low renting rates, a leading industry group said on Thursday.
The National Association of Realtors (NAR) said its commercial real estate index, an attitudinal survey of more than 600 local market experts, rose 2.8 percentage points to 41.0 in the second quarter of this year, but remains well below a level of 100 that represents a balanced marketplace.
This is the third consecutive quarterly improvement after nearly three years of decline; the last time the commercial market was in equilibrium at the 100 level was in the third quarter of 2007.
Lawrence Yun, NAR chief economist, said fallout from the recession continues to impact commercial real estate.
"Vacancy rates are beginning to level off in some sectors, but rent discounts and moderate levels of landlord concessions are widespread," he said. "This is very much a tenant's market, which is quite favorable for businesses that are considering expansion."
The quarterly survey covers four major sectors of the commercial real estate market, including office, industrial, retail and multifamily markets.
Federal Reserve Chairman Ben Bernanke said early this month that "notable restraints on the recovery persist," including housing, commercial real estate and the labor markets.
With property values unlikely to rise, banks are reluctant to offer refinancing deals to new building owners. Experts said that could ignite a wave of defaults on loans to developers of office buildings, condominiums and malls that could do further damage to the already ailing economy.