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WASHINGTON, DC-The decline in commercial real estate appears to be slowing, at least according to the latest statistics from the National Association of Realtors. So suggests its leading economic indicator, which registered only a 1.3 percentage point decline in its Commercial Leading Indicator for Brokerage Activity for Q2. The index reading was 101.5, compared to 102.8 in Q1. The index is at its lowest point since its inception in Q1 1994–as well as a steep drop from Q2 2008, when it was at 117.6.

“The decline is moderating a bit–we can hope that the steep declines may be coming to an end–but we are not nearly back to normal,” Lawrence Yun, NAR chief economist, tells GlobeSt.com.

The slight easing of credit and introduction of liquidity into the sector is largely the reason, he continues. TALF was extended for a few months beyond the December 2009 expiration date, Yun notes. Also, “there has been a nice gain in the REIT stock price index, which implies that credit conditions may be loosening.”

Yun’s best guess for commercial real estate recovery? “We’ll be bouncing along the bottom for some time, but meaningful gains won’t occur until the second half of next year.”

Getting to that point, though, will not be pretty. NAR is forecasting sharp increases in vacancies for the next year. It expects office vacancy rates to increase from 15.5% in the second quarter to 18.8% in the second quarter of 2010.

In the industrial market vacancy rates are likely to rise from 13% now to 15% in Q2 2010. Retail vacancies will edge up from 11.7% in Q2 2009 to 12.9% in the same period of 2010. Multifamily vacancy rates, by contrast, are expected to slip from 7.4% now to 7.1% in the second quarter of next year.

NAR is not the only leading economic indicator to point to an upcoming recovery. The American Institute of Architect’s latest Architecture Billings Index also suggests a rebound may be underway.

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