Unless there is a strong and immediate improvement in the U.S. economy, it is likely to receive yet another sucker punch from the $1.4 trillion in commercial real estate loans coming due over the next three years.
The capital city of the South is notorious for its commercial real estate booms and busts. During the recent financial unpleasantness, Atlanta’s price per square foot for office space has fallen by 50% since the peak of the cycle in 2007.
As the number of distressed loans continues to mount, so do the opportunities to buy debt at a discount. Over the past week, the real estate investment banking firm Carlton Group received two major auction assignments totaling $564 million.
The Mandarin Oriental is a 248-room, non-flagged, full-service luxury hotel in Manhattan’s Columbus Circle. A component of the AOL Time Warner Center, the hotel boasts two ballrooms and a 17,000 sq. ft. spa, among other amenities.
More than 36% of the $270 billion in commercial real estate loans maturing in 2010 are under water, meaning the mortgage balance is greater than the value of underlying property, according to data from Oakland, Calif.-based research firm Foresight Analytics. And the worst is yet to come.
The newly announced merger of Colliers International and FirstService Real Estate Advisors will spawn a blockbuster full-service brokerage along the lines of industry behemoths CB Richard Ellis and Jones Lang LaSalle.
On the surface, it’s a bad combination: $1.4 trillion in commercial real estate debt maturing through 2010, limited capital and 7 million job losses since the start of the recession. Despite the sour-tasting mixture, signs of liquidity returning to the market as well as stellar buying opportunities may make next year a bit more palatable for investors.
Although Southern California’s office market will continue to suffer next year, the industrial market is poised to emerge from the recession because strong growth in India and China is fueling demand for U.S. goods. That’s according to the 2010 Casden Industrial and Office Market Forecast by the University of Southern California Lusk Center for Real Estate.