St Louis Real Estate – Commercial Real Estate: The Next Shoe to Fall?

Dennis Norman

Big Losses Are Forecast For Commercial Real Estate and Expected to Crush Some Community Banks-Can the Housing Market Avoid the Fallout?

This morning the Congressional Oversight Panel issued a report, “Commercial Real Estate Losses and the Risk to Financial Stability” which expressed concerns about coming losses in Commercial Real Estate and also described how these losses could affect nearly everyone.

congressional-oversight-panel The report states the panel “is deeply concerned that a wave of commercial real estate loan losses over the next four years could jeopardize the stability of many banks, particularly community banks, and prolong an already painful recession.”

According to the panel, there are $1.4 trillion in commercial real estate (CRE) loans that were made in the last decade that will require refinancing in 2011 through 2014 and “nearly half (of the loans) are at present underwater,” meaning the borrower owes more o the loan than the property is worth. The concern is that “even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit.”

The commercial real estate crisis is not expected to bring down any of the largest banks however community banks face “the greatest risk of insolvency due to mounting commercial real estate loans losses” according to the report.

Think this won’t affect you if you are not an investor in commerical real estate or a banker? Think again…According to the panel “a significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American.” When commercial properties fail, it creates a downward spiral of economic contraction: job losses; deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities. Because community banks play a critical role in financing the small businesses that could help the American economy create new jobs, their widespread failure could disrupt local communities, undermine the economic recovery and extend an already painful recession.

An analysis of the St. Louis commercial real estate market by the National Association of REALTORS(R) does not paint a real pretty picture.  As you can see from the charts below vacancies have been rising in all four types of commercial property, absorption rates have been negative, and both are forecast to stay that way with the exception of the retail market which is projected to show improvement in vacancies and absorption this year.


Print Friendly, PDF & Email

18 comments to St Louis Real Estate – Commercial Real Estate: The Next Shoe to Fall?

  • … [Trackback]

    […] Read More to that Topic: […]

  • … [Trackback]

    […] Find More on on that Topic: […]

  • … [Trackback]

    […] Find More on that Topic: […]

  • … [Trackback]

    […] Here you will find 36549 additional Info on that Topic: […]

  • … [Trackback]

    […] Read More here on that Topic: […]

  • … [Trackback]

    […] Information to that Topic: […]

  • … [Trackback]

    […] There you will find 15648 additional Info on that Topic: […]

  • … [Trackback]

    […] There you will find 52068 additional Information on that Topic: […]

  • Fantastic beat ! I would like to apprentice while you amend your site, how can i subscribe for a blog web site? The account aided me a acceptable deal. I had been tiny bit acquainted of this your broadcast provided bright clear idea

  • … [Trackback]

    […] Read More on that Topic: […]

  • … [Trackback]

    […] Find More Information here to that Topic: […]

  • Undeniably believe that which you said. Your favorite justification appeared to be on the web the simplest thing to be aware of. I say to you, I certainly get irked while people think about worries that they just do not know about. You managed to hit the nail upon the top as well as defined out the whole thing without having side effect , people could take a signal. Will probably be back to get more. Thanks

  • Its like you learn my mind! You seem to understand a lot about this, such as you wrote the guide in it or something. I believe that you just could do with some to drive the message home a little bit, but other than that, this is fantastic blog. A fantastic read. I will certainly be back.

  • Very interesting points you have remarked, thanks for putting up. “Strength does not come from physical capacity. It comes from an indomitable will.” by Mohandas Karamchand Gandhi.

  • An interesting discussion is worth comment. I think that you should write more on this topic, it might not be a taboo subject but generally people are not enough to speak on such topics. To the next. Cheers

  • Excellent post. I used to be checking constantly this weblog and I’m inspired! Extremely helpful info specially the final phase :) I maintain such info a lot. I was seeking this certain info for a long time. Thanks and good luck.

  • I have learn a few just right stuff here. Certainly worth bookmarking for revisiting. I surprise how a lot attempt you place to make one of these magnificent informative web site.

  • … [Trackback]

    […] Read More Info here to that Topic: […]

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>