Commercial Real Estate (loan, financing, market, payments)

[Oildog]

When all the commercial real estate loans come due, will the inability to refinance cause another big dip in the market? Is this the next show that will raise unemployment, and is it what government wants another stimulus payment for????

[chet everett]

Huh? "when all the commercial real estate loan come due"??? Is there a blast of trumpets or something?

[Traderx]

He is refering to the billions upon billions in short term financing that needs to be rolled over within the next 6-12 months on commercial property. As it stands right now, it would appear unlikely much of that can get financed. I wouldn't be surprised to see a bailout of this industry going forward.

[chet everett]

Last I heard there are still lots of dollars washing around the system. The Fed has all kinds of liquidity, as do most banks. Sure the collateral is not exactly as prime as it was while ago, but as long as the "money pump" does not get jammed (like it did for overnight paper a while back...) there is always some way to finance stuff.

There is ALWAYS a mix of short term and longer term debt that make up the lenders balance sheets. The odds that the commercial real estate lenders will ever go as brain dead as the residential side mess are much slimmer.

[8 SNAKE]

Financing aside, commercial real estate is getting hammered right now and is only going to get worse (very generic words on my part, I know). Vacancy rates are very high and steadily increasing in many parts of the country (again, all RE is local so pardon the generalization).

I read a report yesterday that discussed the rising vacancy rates in apartment buildings. Next month, vacancy rates are likely to hit an all-time high. Consequently, delinquent loan payments are starting to add up and foreclosures are not far behind. Office space, shopping malls and other commercial property are also doing quite poorly.

[chet everett]

Don't confuse vacancy reports with new construction that was financed with record low rates with other kinds of vacant commercial property. All experienced real estate / property management firms that are worth their salt understand the "boom / bust" nature of ultra low rates driving overbuilding. Some very very very wealthy people specifically use that cycle to VASTLY increase their size and influence.

[8 SNAKE]

Originally Posted by chet everett

Don't confuse vacancy reports with new construction that was financed with record low rates with other kinds of vacant commercial property. All experienced real estate / property management firms that are worth their salt understand the "boom / bust" nature of ultra low rates driving overbuilding. Some very very very wealthy people specifically use that cycle to VASTLY increase their size and influence.

I understand the cycle quite well. I was merely pointing out the troubles that are plaguing much of the commercial real estate sector right now.