Despite reports from the 12 Federal Reserve districts indicating that economic conditions are improving modestly since the last report more than a month ago, market conditions for commercial real estate and construction were reported to have weakened in virtually all districts, with rising vacancy rates and downward pressure on rents.

In its Beige Book, the Federal Reserve reveals expectations for commercial markets are low. Boston and Kansas City, Mo., described their commercial markets as "distressed." However, other districts reported signs of movement, such as increased leasing from the health care and education markets. Atlanta indicated a slight pickup in new development projects, Minneapolis described some recent activity in hotel and retail development, and San Francisco noted minor improvement in availability of financing for new developments.