An article in The Richmond Times-Dispatch predicts that the nation’s commercial real estate outlook won’t look much better in 2010 than 2009. After a boom period over the previous years where developers, bankers and investors did very well, the economic downturn has hit commercial real estate in Louisville and other markets across the country especially hard. Long-term relationships between developers, bankers and investors have been hit hard as investors and bankers run for cover, and developers are forced to declare bankruptcy.
Commercial real estate values across the country peaked in late 2007 and have dropped a precipitous 43.7 percent through October of last year according to a report issued by Moody’s/REAL Commercial Property Price Indices. The biggest losses in commercial real estate values were from October 2008 to the same month in 2009 that showed year-over-year declines of 36.4 percent.
One of the more accurate snapshots of the commercial real estate market is the number of delinquent loans for commercial real estate projects. From November 2008 to November 2009, the balance of delinquent commercial real estate loans soared from $7.03 billion to $37.93 billion, an astonishing 440 percent increase. While some industry watchers predict modest gains in commercial real estate values and sales in some markets, other markets are expected to continue struggling with few gains until late 2010 at the earliest.
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