As bad as it has been for the for the housing market in the real estate game the condition of commercial real estate has managed to fair a little better. That status is faltering fast however as well over $170 billion in non-bank commercial mortgages are coming to the end in 2009. With that much on the books and the financial market in the mess that it is in it’s shaping up to be the perfect storm for the commercial market to come crashing down in 2009. Very much in the way the housing market collapsed in 2007-08.
There does appear to be some light at the end of the very dark and long tunnel though as the commercial real estate market has been included in the big government stimulus plan. The details on the plan as of right now are shaky at best. It has been confirmed though that the newly revised stimulus plan that will be going to President Obama will include a life line or bail out if you prefer to call it for the commercial real estate market.
The idea behind the plan is to free up loan money for the all those loans that are coming due this year so they can be restructured to refinanced. The problem right now like for all real estate is the lack of funds available for people to restructure or refinance their current loans. The move by the government was applauded by all those involved in the commercial real estate market. Now they are just waiting on the details and how it will be administered over the coming months.
The execution of the plan and the timeliness of the funds coming down the pipeline is crucial if commercial real estate market hopes to avoid the wide spread collapse that the housing market is enduring. Right now commercial defaults are hovering around a low 1% right now and as long as the government follows through on their bail out plan it will hopefully stay around 1%. If not depending on what numbers or experts you look to that 1%could turn into as much as 6% by the end of the year. So lets all keep our fingers crossed that this new plan will work!
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