According to an article in the Star-Telegram, the commercial real estate industry may be next on the foreclosure hit list.
The article said:
Thousands of commercial mortgages valued at hundreds of billions of dollars are approaching a renewal date. By some estimates, two out of every three will no longer meet the original loan conditions and won’t be able to refinance. And with prices for commercial properties expected to plunge, a vicious cycle may unfold much as it has in the nation’s housing market.
This is exactly what caused the residential real estate foreclosure crisis. Property values are dropping rapidly and as the number of commercial foreclosures creep upwards many lenders are cautious about lending, even to businesses. We saw an example of this last month, when General Growth Properties, the nation’s second largest mall developer filed for bankruptcy.
The company owns over 200 malls nationwide; but was unable to renegotiate its debts when they became due. We could see this scenario play out over the next year as commercial real estate struggles to avoid a foreclosure crisis.