BluegrassForeclosure.com

RealtyTimes.com has an interesting report on the commercial property bubble as well.  As many of you are aware, the commercial market lags behind the residential market.  At the height of the residential lending bubble, commercial properties saw a bubble begin.

“Towards the end of the residential real estate boom, the commercial real estate market also saw a boom itself. Fueled by easy credit and new investors entering the market the commercial real estate market exploded.

Thousands of these properties were purchased at the height of the market and were highly leveraged. These properties may have performed well enough to cover debt service and operating costs when occupancy rates were at historic highs, but now that businesses are tightening their belts, unemployment is rising, consumers are not spending money on goods and services or traveling the pressure is mounting on commercial property owners. This scenario has left these commercial owners in an extremely precarious situation. If the poor economy doesn’t push these owners to a breaking point, the lender that holds the mortgage on the property will.”

We’ll have to sit and watch what happens.  Since the recovery, what little we’ve had so far, has been without many new jobs, it is unlikely that the commercial property economy is going to bounce back any time soon.  I doubt businesses loosen the purse strings any more than they have til now.  Banks are not going to be lending much money either.  This certainly makes for a perfect storm for the commercial market as well.

What are your thoughts?