The value of commercial buildings fell 1.03 per cent between January and February, the largest monthly decline since at least 1993, when the industry was just emerging from a deep slump.

The fall in national property prices comes as banks have retrenched on lending due to credit crisis and the slowing economy, causing the volume of deals to slow sharply. The market for commercial mortgage-backed securities, which until last August was a major route to cheaper borrowing, has largely ground to a halt.

“The party is over,” says Mish Shedlock, on his blog, Mish’s Global Economic Trend Analysis, “and so are insane financing schemes. Commercial real estate is going to be a disaster. That disaster is not priced in, nor is the effect of a slowing CRE market on jobs, on sentiment, on consumer spending, or on foreclosures.”