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WASHINGTON, DC-The National Association of Realtors’ forward looking index for the commercial real estate market has downshifted into a new phase of decelerating growth. The Commercial Leading Indicator for Brokerage Activity increased 0.2% to an index of 120.3 in the Q1 2007 from 120.1 in Q4 2006. This is 0.8% higher than the first quarter of 2006 when it stood at 119.3.

“There is a noticeable deceleration of growth,” Lawrence Yun, NAR senior economist tells GlobeSt.com. “The leading indicator has been growing by close to 3% year over year. Now it is close to 1%.”

He attributes the Index’s slowing growth to an overall economic slowdown. “We are getting to the point where the CLI could contract,” he warns. A more likely scenario, though, he says would be subpar growth for the next two quarters. “After that I think we will see a resurgence in both the leading indicator and commercial activity.”

The small net rise in the index means net absorption of space in the industrial and office sectors should be fairly steady over the next six to nine months, with slightly higher completions of overall office, warehouse, retail and lodging structures, NAR says.

Net absorption in the office and industrial sectors in the third quarter of 2007 is expected to be 10 million to 20 million sf, with about $335 billion to $345 billion in new completed commercial construction activity, compared with $323 billion of new construction recorded in the first quarter of this year.

Also, leasing and sales activity in the third quarter of this year is expected to be approximately 0.8% higher than the third quarter of 2006.

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