Federal bank and thrift agencies reported improvements in their local commercial real estate markets in an October survey, said the FDIC, and the positive marks suggest that the ongoing recovery most of the real estate industry is undergoing is finally reaching the commercial market.

Nearly a third of the 450 respondents in the FDIC's latest survey of real estate trends showed that the senior real estate examiners and asset managers from polled federal bank and thrift regulatory agencies said their local commercial markets had improved since July - the highest proportion this year - while only 10% reported worsening conditions.

Respondents cited a decrease in the excess supply of commercial real estate as a factor. The proportion of respondents who believed that excess supply was a problem dropped to 75% from 82% over the three-month span, the lowest level recorded since April 1991 when 78% of the respondents thought there was an excess. Examiners and regulators also thought the glut in residential real estate had subsided. Forty-three percent thought there was an excess supply of real estate in their regions, compared to 48% in April and 57% in October 1992. They also reported fewer below-average commercial property sales.

But while the rest of the country seems poised for recovery, California, the agency said, is still lagging.

The survey reported that California had the largest proportion of respondents who found deteriorating conditions.

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