$1 trillion in commercial real estate to be refinanced


As residential housing market data registers a blip on the EKG, commercial real estate has become the hot-button issue for those concerned about the potential losses lurking on bank balance sheets. Despite undergoing a 40 percent decline in property values from peak prices in 2007 -- the Case-Shiller home price index has registered "only" a 33 percent drop -- commercial real estate does not generally garner the same media attention. It's clear, however, that there are plenty of reasons to be concerned that future defaults will wind up being another $100+ billion problem.

CB Richard Ellis Group (CBG), the world's largest commercial real estate services firm, said in an investor presentation that vacany rates on office, industrial, and retail properties have increased 31 percent since the end of 2007, and are set to rise an additional 10 percent by the end of the year. CEO Brett White said on the earnings conference call that "the leasing business remains very much depressed and [moribund] and the sales market is just in a very-very similar condition as it was in the first quarter."

Originally published