Commercial Real Estate Supply and Demand in Balance

THE FDIC's CURRENT SURVEY indicates that in the Northeast, more than 50% of respondents see a commercial real estate market in which supply and demand are in balance. This is a first for this survey which began at the end of 1992. In January of 1993, only 4% believed the C&I market was in balance -- the rest saw an excess supply. The following January of 1994, still only 12% saw a market that was in equilibrium.

[Graphical Data Chart 1993-97]

Even by January of 1995, the survey still found that only 17% believed the Northeast had shed its excess supply of commercial real estate. Finally, in January of 1996, a meaningful number of optimists surfaced with 39% under the belief the market had cleared.

This quarter for the first time, the majority of respondents held that the market has finally caught up with itself. About 51% of respondents see a C&I market in the Northeast in which supply and demand are in balance. Nationally, this occurred about 18 months prior during the third quarter of 1995.

[Steve's Signature]
Stephen Traub, ASA
Publisher, PVM ^SM

The author, Stephen Traub, ASA, is Chief Commercial Appraiser for Property Valuation Advisors, Newburyport, MA. He is a certified general appraiser in NH, ME and MA. He can be reached at (508) 462-4347 or:
by e-mail: straub@shore.net