Tag Archives: Commercial real estate

The commercial real estate market is just beginning to collapse

Or so says this Prudential report.

Prudential has put out a quarterly update on the state of the US commercial real estate market. 

Square Feet Blog identified a few of the key comments from the report.

On commercial banks:

Commercial banks, which represent about half of the $3.5 trillion commercial-mortgage market, remain largely stuck in the “extend-and-pretend” mode. Some banks are originating loans for balance sheets, but the capacity and appetite for such deals is limited. Many banks are working through issues emanating from distressed loans that they wrote or inherited through mergers and thus most of their mortgage business encompasses extending existing loans.

And here’s the ominous commentary on life insurers, always a big part of this market

Troublesome for the market is that the increased activity of life companies and the emergence of specialty firms falls far short of filling the void left by the decimated CMBS market. At their peak life insurers wrote slightly more than $40 billion of commercial mortgages annually, compared to peak CMBS issuance of $230 billion in 2007. According to the American Council of Life Insurers, in the second quarter life companies made $4.6 billion of mortgage commitments, up 77% from 1Q09; a vast improvement but a drop in the bucket relative to the amount needed to replace the roughly $400 billion of debt that is scheduled to mature in 2010.

How does this affect your serene little cottage in Chickahominy? Well, if the banks fail, who’s going to lend your buyer the money to buy it?

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Deutsche bank – Commercial Real Estate in the crapper until 2017

That’s a long time.  The Wall Street Journal reports that commercial real estate fell 8.6% in just April alone while in Boston, they’re expecting a tsunami to wipe out anyone who bought in the past few years.

Good thing the Antares boys were wiped out last year or this would be painful to watch.

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Commercial real estate fell 15% last year

And is still going down. Just in case you were wondering.

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Wall St. rents to fall 35%?

So says this prediction. That’s probably not good news for Greenwich landlords if they were using the lure of cheaper rent to attract financial service firms.

GE Capital is laying off 11,000 workers (worldwide). That’s not encouraging, either.

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