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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 02/22/2010 : 20:10:17
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Commercial real estate losses start hitting home
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Commercial real estate losses start hitting home
Nationally, banks could lose $300 billion in downturn, report says
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Elizabeth Place, a former hospital that has been turned into office and medical spaces, went into Chapter 11 bankruptcy so its owners could negotiate more favorable terms with their lenders.
Ty Greenlees/Staff Photographer Elizabeth Place, a former hospital that has been turned into office and medical spaces, went into Chapter 11 bankruptcy so its owners could negotiate more favorable terms with their lenders.
Kettering Tower, Dayton's tallest office building, was foreclosed on and placed into receivership. Staff file photo
Skip Peterson/Staff photographer Kettering Tower, Dayton's tallest office building, was foreclosed on and placed into receivership. Staff file photo
By Tim Tresslar, Staff Writer Updated 8:21 PM Saturday, February 20, 2010
The real estate downturn has sparked concerns nationally that debt-laden, overvalued commercial properties will fall into foreclosure, causing billions of dollars in losses. But observers say difficulties in the local commercial real estate market likely won’t mirror those seen in other parts of the country.
Nationally, problems in commercial real estate have been concentrated largely in hotel and multi-family properties, said Doug Harnish, president of Gem Public Sector Services. Locally, however, office properties in downtown Dayton have faced the biggest difficulties and those were caused by longer-term trends such as the departure of large tenants from the city center and the acquisition of properties by out-of-town owners, Harnish said. Additionally, an increase in employees working from home and moves by businesses to use less space also have taken their toll on downtown office properties, he said.
High-profile properties have encountered problems. Kettering Tower, the city’s tallest office building was foreclosed on and eventually placed into receivership, while the owners of the 32-34 N. Main St. office building that once housed Key Bank’s Dayton headquarters have decided to close all but the ground floor of that building for financial reasons.
In October, Elizabeth Place, a former hospital that has been turned into office and medical spaces, went into Chapter 11 bankruptcy so its owners could negotiate more favorable terms with their lenders.
Nationally, Congressional examiners also see trouble looming in the commercial real estate sector.
In a Feb. 10 report, the panel overseeing the Troubled Asset Relief Program said $1.4 trillion in commercial real estate loans will reach the end of their terms between 2010 and 2014. The largest losses in the commercial real estate sector are expected to happen next year and beyond, with banks losing as much as $300 billion.
“A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American,” the report states. “Empty office complexes, hotels and retail stores could lead directly to lost jobs.”
Banking-industry trade groups such as the Ohio Bankers League have criticized the report, calling it misleading and questioning its calls for additional “stress” testing of community banks.
Mike Van Buskirk, the league’s president, said banks need to be realistic when weighing whether to work out new terms with their commercial borrowers. But banks also have an incentive to work out new terms with their commercial borrowers, especially during a depressed real estate market, he said.
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 02/22/2010 : 20:11:33
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"The real estate downturn has sparked concerns nationally that debt-laden, overvalued commercial properties will fall into foreclosure, causing billions of dollars in losses. But observers say difficulties in the local commercial real estate market likely won’t mirror those seen in other parts of the country."
Don't believe that. It may start here in the rust belt but it is coming to a city near you soon. It wasn't long before the West coast felt the effects of the forclosurers and unemployment. Boom towns such as Vegas quickly went bust. No money being spent = no need for commercial real estate be it Cleveland or Huston. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 02/22/2010 : 20:39:41
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Are these the same observers who down played the sub prime debacle, and who are down playing the upcoming Alt-A disaster about to unleash on us..? Both of these are going to make the sub prime meltdown look tame. 
No joke, in my parts, whole industrial parks are empty, with weather beaten for sale signs everywhere and weeds growing in the parking lots. At least a quarter to a third of the commercial buildings in the Detroit Metro area are vacant and/or for sale. You would be hard pressed to find a strip mall with more than 50% occupancy.
And we still have idiots building new commercial buildings...  The disconnect from reality is mind boggling.
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thogey
1000+ Penny Miser Member
USA
1617 Posts |
Posted - 02/22/2010 : 20:42:05
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The whole Detroit deal is sad.
It must be tough. What a waste of a city.
Edit to add :I read the Silverdome was sold for 250,000 |
Come to the new and improved realcent: http://realcent.org
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Edited by - thogey on 02/22/2010 21:01:42 |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 02/22/2010 : 20:59:28
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quote:
Originally posted by Bluegill
Are these the same observers who down played the sub prime debacle, and who are down playing the upcoming Alt-A disaster about to unleash on us..? Both of these are going to make the sub prime meltdown look tame.
No joke, in my parts, whole industrial parks are empty, with weather beaten for sale signs everywhere and weeds growing in the parking lots. At least a quarter to a third of the commercial buildings in the Detroit Metro area are vacant and/or for sale. You would be hard pressed to find a strip mall with more than 50% occupancy.
And we still have idiots building new commercial buildings... The disconnect from reality is mind boggling.
Most new construction is due to urban flight. As areas of a city decay those who still have money no longer want to go there. So they build some place new. Sometimes an idiot or two get ahold of some goverment loan and trys to rehab. a bad part of town. They go under and take our tax dollars down with them. In Cleveland only the major hospitals are able to buy up slums and expand there. That is because they have unlimited money to throw around. |
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All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 02/22/2010 : 21:57:21
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I was talking about spec buildings in the `burbs. Developers building a new building with out tenants lined up. Building right across the street and down the road from vacant buildings that those owners can't find tenants for.
There are empty new buildings that have been vacant for almost 2 years now, with faded "for lease" and "available" signs in the windows...
And there still building...
There isn't much in the way of rehab in the `burbs. They either build new on vacant land, or demo and then build new.
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Commercial real estate losses start hitting home
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