The Last To Go – And The Next One Coming

Doug Marshall
Market Assessment
Published June 3, 2009


The housing crisis – the frozen credit tundra – the bipolar stock market… We’ve heard these bad tidings for over a year now, and more.

What is not being talked up yet (because we’re only on the cusp of it), is the rise in commercial real estate foreclosures and the potential impact that future defaults on commercial loans might have on an already wobbly economy.

Commercial real estate has been one of the last sectors to feel the pinch, being relatively stable and containing a lower default rate… underpinned by easy credit already obtained.

This interactive map (rollover your county) is a great resource for seeing how the economy is currently doing; it also gives rise to questions as to how various areas in the country might be affected by this trend.

The fallout due to the bad economy is already being felt. Linens ‘N’ Things, Circuit City, and many more… these large corporations are in serious trouble – leaving storefronts behind, vacant as they close down, declaring bankruptcy, or going out of business altogether.

“Delinquency rates and defaults on office and retail buildings and hotels have more than doubled in just six months.

For apartments and industrial buildings, rates have increased more than 80 percent, according to Reis, Inc,” says the Associated Press.

The impact on the economy of the coming wave of bankruptcies is hard to gauge.

But some pundits heralding “slight rebounds” in current market trends should take an honest look at this long-range financial impact on commercial real estate.

It’s not over yet.


Source:
Alex Veiga, StarTribune.com
May 11, 2009