UPDATE 1-Commercial real estate markets to slow into '09-NAR

NEW YORK, Nov 20 (Reuters) - The economic downturn will slow commercial real estate markets into 2009, the National Association of Realtors said on Thursday.

The association's Commercial Leading Indicator for Brokerage Activity slowed 1.7 percent to 116.5 in the third quarter, down 3.1 percent from last year.

The decline in the index means commercial real estate activity, as measured by net absorption and the completion of new commercial buildings, is projected to weaken over the next six to nine months, the association said in a statement.

"Aside from weakening conditions in the index variables, the commercial mortgage-backed securities market is all but frozen, making it very difficult to rollover existing debt that is coming due," said Lawrence Yun, NAR's chief economist.

"It is encouraging to hear the Treasury Department is considering using the Troubled Asset Relief Program to help revive the commercial real estate debt market, but time is of the essence and it must be implemented immediately."

Yield spread premiums on a commercial mortgage-backed securities index soared more than 100 basis points to a record for a third straight day on concern defaults on office buildings and retail centers will spike. (Reporting by Helen Chernikoff and Al Yoon; Editing by Andre Grenon)