The shopping center and apartment sectors softened enough during the first quarter to prompt Moody’s to place them in the so-called "yellow zone," where the ratings agency considers market well being to be more fragile. With this inclusion, Moody’s has now placed all classes of U.S real estate in the danger zone.

"Shopping centers and multifamily are dependent on the consumer side of the economy, and the stamina of the U.S. consumer is problematic pending a more robust and sustained recovery, particularly on the employment front," says Moody’s analyst Sally Gordon. According to Gordon, the multifamily decline is largely due to a glut of new supply expected to outstrip demand by roughly 1% and an already steep vacancy rate of 6.6%, up from 5.5% one year ago.

"For neighborhood and community shopping centers, the downward drift in the score is almost solely accounted for by a slowdown in expected growth in real personal income, the key indicator of shopping center demand," says Gordon.

Meanwhile, the corporate sector is seeing little capital investment, making the prospects for a near term resurgence in demand for office and industrial space unlikely. Moody’s also ranked the top 10 strongest commercial real estate markets in the nation during the first quarter. Four of the top 10 strongest markets were in California, with three in New York state. They are, from No. 1 to No. 10: Honolulu; Los Angeles; Riverside, Calif.; Oakland, Calif.; Long Island, N.Y.; New York City; northern New Jersey; Philadelphia; Orange County, Calif.; and Westchester County, N.Y.

On the other hand, the 10 worst overall markets in the nation least worst to downright dismal were Stamford, Conn.; Denver; Albuquerque; Dallas; Indianapolis; Atlanta; Austin; Columbus, Ohio; Phoenix and Orlando, Fla.