Deutsche Bank analyst says office market is getting worse

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A grim forecast for the U.S. office market was offered Monday by a top analyst at Deutsche Bank, who predicted that urban business districts won’t recover until 2017.

‘The froth is still working itself out,’ Richard Parkus, the bank’s head of commercial securities research, said at a New York event hosted and reported by Reuters news service. ‘We are currently in something which is comparable to what we saw in the 1990s and potentially worse.’

Recovery is not imminent. The commercial market is getting worse, not better, he said. Demand for office space is falling, so rents and the income landlords receive from rents are also falling. That means many borrowers are now struggling to make mortgage payments on their properties

Real estate values could fall as much as 50% from their 2007 peak, Parkus said. ‘We are not only not approaching stability, we are at a period of maximum deterioration,’ he said.

-- Roger Vincent