Many companies that were looking for office space are now opting to delay their plans as uncertainty looms in the economy, stalling what had been a two-year rebound, The Wall Street Journal reports. 

The commercial market had been picking up in recent months because of expectations that rents and occupancies would continue to rise. But the economy and fears over a double-dip recession has more worried about moving forward. 

Companies such as UBS AG, Morgan Stanley, and the Quidsi unit of Amazon.com Inc. all recently have postponed looking for office space in New York. 

In the first half of 2011, U.S. commercial-property sales were booming, rising 107 percent over the same period a year earlier. Firms completed more than $93 billion in deals in that time, according to Real Capital Analytics Inc. Since then, the growth of sales has slowed considerably.

More companies who do want to press ahead are finding deals falling apart due to struggles securing financing for projects as banks remain squeamish on issuing commercial loans. Commercial real estate loans that went bad have been blamed as one of the largest culprits to about 400 bank failures since the financial crisis in 2008, according to a new report by Deutsche Bank AG analysts. 

Some investors are viewing any slowdown in the commercial market as temporary, particularly in hot-spots like New York and Washington. Low interest rates and prices and rents in niches like high-end retail are still a major lure, analysts say. 

Source: “Commercial Space Starts to Wobble,” The Wall Street Journal (Sept. 21, 2011) [Log-in required.]

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