The Dust Hasn’t Settled Just Yet
Despite robust economic growth in the second half of last year and a more upbeat assessment for economic activity during the first part of 2010, the outlook for commercial real estate has not materially improved. Credit quality is still deteriorating as delinquencies and defaults increase.Operating fundamentals continue to decline. Vacancy rates across all property types have either already risen to record highs or appear set to. Lending standards remain exceptionally tight, and there has been very little progress made at clearing up the logjam of properties with maturing loans in the next few years, many of which are underwater or have seen loan-to-value (LTV) ratios skyrocket to levels that are difficult to refinance.
See 2/17/2010 report: Wells Fargo Commercial Real Estate Report 4th Quarter 2009