Commercial Real Estate Eyed as Looming Trouble Spot

By: Daniel Carty
Topics: Real Estate

Elizabeth Warren, chair of the TARP Congressional Oversight Panel, appears on The Early Show, October 22, 2009.

(Credit: CBS)

With many U.S. homeowners still feeling the crush of mortgages that exceed the value of their property, experts say another real estate crisis is rapidly approaching - this time in the commercial sector.

Elizabeth Warren, the chairwoman of the TARP Congressional Oversight Panel, told CNBC this week that around half of all commercial mortgages will be underwater by the end of 2010, posing a "very serious problem" for the economy over the next three years.

On Tuesday, Treasury Secretary Timothy Geithner echoed that concern on CNBC, but said the issue could be solved.

"Commercial real estate's still going to be a problem for the country. But we can manage through this process," he said.

Both Geithner and Warren said the commercial real estate troubles will affect mostly smaller banks.

"We now have 2,988 banks--mostly midsized, that have these dangerous concentrations in commercial real estate lending," Warren told CNBC.

Federal Deposit Insurance Corporation chief Sheila Bair has said she expects commercial real estate losses to be the primary force behind bank failures this year.

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by marindairish July 17, 2011 10:41 PM EDT: http://www.rentinmakati.com/; Reply to this comment


by marindairish July 17, 2011 10:07 PM EDT: I don't believe that real estate market is going down. I'm sure real estate firms will do something and they need to exert effort to prevent these things from happening.

<a href="http://www.rentinmakati.com/">Makati for rent</a>; Reply to this comment


by engineer1503 April 3, 2010 11:44 AM EDT: This obviously must be wrong.

Developers are building two new strip malls near me. I'm sure the developers paid cash up front for these new buildings. Banks wouldn't be so stupid to loan more money to build buildings they can't possiblly rent.

And the adjacent strip malls and office buildings with the empty shops and "For Rent" signs are just a fluke of some kind, I'm sure they've got a sound businesss plan, just like AIG.; Reply to this comment


by tsigili April 1, 2010 11:30 AM EDT: Looming right on the horizon, big time.; Reply to this comment

by ianlou March 31, 2010 4:42 PM EDT

Dear Conservative union bashing business owners.

Here's how this happened.
While promoting policy and practices that diminished the earning power of working Americans, you inadvertantly diminished the spending power of working Americans.

This explains your poor sales, your poor bottom line and thus the poor value of your business including the poor value of your building.

bon appetit.

Reply to this comment


by KeithDrippingSprings March 31, 2010 11:22 PM EDT: you have not been paying attention. Your Congressman and Senator are responsible for this financial disaster. The Scoundrels and Thieves have taken pay offs from financial institutions so that they would not regulate commerce. Then the Financial institutions figured out how to make sleazy deals that would put people into virtual slavery after their mortgage reset and the interest went up to an unsustainable level. Then when it all came crashing down our Government couldn't do anything except to protect the people paying their way to Washington.

The graft and corruption in our government is a bad and any third world county you can think of. The problem here is that the Legislators have made it all legal. Legal doesn't mean ethical.


by pragmatist1 April 1, 2010 10:08 AM EDT: No one twisted the arms of those on Main St. to get homes that they clearly couldn't handle financially. No one twisted the arms of those on Main St. to over extend themselves on multiple credit cards getting stuff they really didn't need. Let's stop blaming just the financial industry for what has happened. There's a lot of blame to go around, including with the politicians.


by ajvw March 31, 2010 1:55 PM EDT: who didn't see this coming? can you say bailout. from which generation are we going to borrow this money?; Reply to this comment