Commercial property values in the U.S. declined in October to the lowest level since 2002 as unemployment cut demand for apartments, offices and retail space.

The Moody's/REAL commercial property price indexes, released Monday, fell 1.5% in October from September. Prices fell 36% from a year earlier and were 44% below the peak in October 2007.

Property values are dropping as unemployment levels climb and consumers cut their spending. Office vacancies may approach 20% next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc. and Grubb & Ellis Co. said last month.

"The No. 1 issue facing commercial real estate right now is the value declines that we've seen since prices peaked," Matthew Anderson, a partner at Foresight Analytics LLC in Oakland, Calif., said in an interview.

"I tend to think that the size of the declines moving forward is going to be smaller."

An estimated $1.4 trillion of commercial real estate debt is scheduled to mature over the next five years and Foresight estimates that 53% of it is underwater, Anderson said.

Commercial property values may decline by a total of 50% from the peak to the bottom, he said. "This is the worst that we've seen since World War II."

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