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The next headache for the economy may involve commercial real estate, according to recent reports.
This week, the New York Times reported that nearly every major U.S. city currently has vacancy rates of more than 10 percent in its office buildings, raising concern about the long-term impact this will have on lenders.
So far, the current recession has been linked much more closely to defaults on homes and mortgages, but with rising unemployment rates and a stagnant business climate, the report notes that some fear commercial real estate could be the next economic shoe to drop - particularly with many regional banks having invested heavily in this sector in recent years.
Last fall, the Urban Land Institute predicted that 2009 would be the worst in nearly two decades for commercial real estate, stressing the importance of restructuring property financing for many buildings that could soon end up distressed.
Even with more attention being paid to commercial properties however, residential real estate is still very much a problem in many parts of the country. This week, Reuters noted that two prominent economists recently told the American Economic Association that the current housing downturn could last well into 2010, leading to a difficult 2009 for homeowners as well as lenders.
Commercial real estate may be next economic headache
The next headache for the economy may involve commercial real estate, according to recent reports. This week, the New York Times reported that nearly every major U.S. city currently has vacancy rates of more than 10 percent in its office buildings, raising concern about the long-term impact this will have on lenders.
So far, the current recession has been linked much more closely to defaults on homes and mortgages, but with rising unemployment rates and a stagnant business climate, the report notes that some fear commercial real estate could be the next economic shoe to drop - particularly with many regional banks having invested heavily in this sector in recent years.
Last fall, the Urban Land Institute predicted that 2009 would be the worst in nearly two decades for commercial real estate, stressing the importance of restructuring property financing for many buildings that could soon end up distressed.
Even with more attention being paid to commercial properties however, residential real estate is still very much a problem in many parts of the country. This week, Reuters noted that two prominent economists recently told the American Economic Association that the current housing downturn could last well into 2010, leading to a difficult 2009 for homeowners as well as lenders.
