According to an article in the Dallas Morning News, the number of new loans issued for commercial properties plunged 70 percent in the first quarter of 2009 compared to the same time period in 2008.
The article said:
"In the first quarter of 2009 we saw the effects of the continued recession coupled with little demand from borrowers and a constrained supply from lenders as a result of the credit crunch," Jamie Woodwell, a researcher at the Mortgage Bankers Association, said in the report.
Lending contraction in the commercial real estate industry has already stopped most new construction projects in the Dallas-Fort Worth area and has increased the number of foreclosures and bankruptcies in the construction industry. The credit crunch has also created a difficult credit environment for investors attempting to buy existing offices, shopping centers, hotels, warehouses and apartment buildings.
The hotel industry has been hit especially hard with loan origination dropping 88 percent in the industry. But the credit crunch isn't just hurting new buyers of commercial real estate, those who want or need to refinance are also being hurt. Many commercial real estate investors have already faced bankruptcy and foreclosure as they fail to survive in the contracting industry. And the number of foreclosures and bankruptcies in the commercial real estate industry are likely to increase as many investors fail to get the refinancing they need to pay outstanding loans on property.