A recent report issued by a real estate expert at the Atlanta Fed expresses concern over rising commercial loan defaults. With vacancies in apartments at a 23 year high, strip malls vacancies the highest in 17 years and with rising problems in office rentals, hotels, warehouses, and other commercial ventures, owners are faced with rapidly declining revenues.
Some experts have suggested that commercial real estate values will drop by 50% or more, and the falling values will make it impossible for owners to refinance. With approximately $3.5 trillion in outstanding commercial real estate loans, the Fed is concerned by the prospect of billions in defaults weakening banks struggling to maintain solvency.
See the report at: Calculated Risk Blog.
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