Commercial Real Estate Still Has Not Hit Bottom

The subprime market went first. Then regular mortgages went south as people lost their jobs and could not make their mortgage payments. Foreclosures rose, real estate values fell, HELOC dried up, and home owners floundered.

Commercial real estate has stayed put but the piper must be paid and that will likely happen in 2010.

The Los Angeles Times reports:

After spending more than a year in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud.

Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts with their lenders as the market finally faces up to the reality of its diminished conditions, according to a report set for release today.

The long-awaited blood bath, however, will benefit investors who are able to swoop in to take advantage of record bargains.

Unlike the formerly overheated housing market, which is in the process of being purged through foreclosures and sellers' growing willingness to lower their asking prices, the business of buying and selling commercial real estate has been stuck in neutral since the recession kicked in.