Commercial Properties Could Undermine Recovery


Could the defaults and foreclosures of office towers, shopping malls, and half-built condo complexes bring down the rest of the economy? That's been the worry in recent weeks, as the "slow motion train wreck" of commercial real estate picks up steam.

"Both in the U.S. and Europe, experts are concerned that stress from the commercial real estate sector could undermine the fragile economic recovery," said Anita Likus in the Wall Street Journal.

The worry is that a wave of foreclosures and loan defaults for commercial properties in the year ahead could create more serious problems for the financial system. But the commercial crisis is different in fundamental ways from the residential subprime mortgage bomb that started our problems two years ago.

Originally published