Commercial

Commercial real estate on shaky foundation

(SF GATE) - Optimism about a national economic recovery, fueled by rising stock prices and an improved residential real estate market, is tempered by the widespread belief that a raft of commercial real estate loan defaults is just around the corner.

Fears of a commercial real estate mortgage meltdown are bolstered by persistent unemployment, which has led to office and retail vacancies, rising commercial loan default rates and hundreds of bank failures - including two in the Bay Area in recent months.

A wave of commercial mortgage foreclosures would probably translate to more empty storefronts and offices, decreased municipal property tax revenue and fewer bank loans available to start and expand businesses.

But while most commercial real estate experts agree that in 2010 there will more loan defaults, scores more bank closures and limited construction lending, many observers do not believe that commercial mortgage defaults will derail the recovery.

© 2009 Realty News Now.