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Road to recovery

  • Jobs lost; hopes fade
    J.R. Childress is up before the sun, bustling about in the French colonial brick house he built.Sunday
  • Retail sales growth in China slips
    Chinese shoppers on their Lunar New Year holiday were less lavish than expected by Hong Kong jewelers, curbed spending on beauty brands and slowed spending at South Korean stores.Sunday
  • Homeowners get incentives to facilitate short sales
    Banks, accelerating efforts to move troubled mortgages off their books, are offering about $35,000 in cash to delinquent homeowners to sell their properties for less than they owe.Sunday
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Locally
Some Fort Wayne
office spaces have been filled this year, said Dan A. Dickey, president and co-owner of NAI Harding Dahm.
On Thursday, he estimated vacancies in Class A suburban buildings – newer properties offering many amenities outside downtown – have dropped to 17 percent or 18 percent. His firm estimated 28 percent of those properties were vacant last year.
Dickey said the Class B suburban property vacancy rate for older buildings has remained around last year’s level of 21 percent.
The downtown office vacancy rate tends to be higher, but that area also has seen some new tenants moving in, Dickey said. Few offices are being built because of the recession, so companies are renting available space.
“We’re really kind of encouraged,” he said.
Associated Press
The recession and credit crisis have halted construction of Boyd Gaming’s Echelon, a multibillion-dollar resort that was being built in Las Vegas.
Published: July 10, 2009 3:00 a.m.

Real estate ‘time bomb’ feared

Alan Zibel | Associated Press

WASHINGTON – Owners of shopping malls, hotels and offices are defaulting on their loans at an alarming rate, and the commercial real estate market is not expected to hit bottom for three more years, industry experts warned Thursday.

“The commercial real estate time bomb is ticking,” said Rep. Carolyn Maloney, D-N.Y., who heads the congressional Joint Economic Committee.

Delinquency rates on commercial loans have doubled in the past year to 7 percent as more companies downsize and retailers close their doors, according to the Federal Reserve. Small and regional banks face the greatest risk of severe losses from commercial real estate loans.

The commercial real estate market’s fortunes are tied closely to the economy, especially unemployment, which hit 9.5 percent in June.

Funding for commercial loans virtually shut down last year as the financial system unraveled. Industry executives say financing is still extremely difficult to obtain, even for financially healthy properties.

Losses in securities backed by commercial property loans could be as high as $90 billion in the coming years, said Deutsche Bank analyst Richard Parkus. He said even more losses – up to $140 billion – are expected from construction loans made by regional and local banks, rather than those sold as securities held by investors.

“We believe the bottom is several years away,” Parkus told lawmakers.

Industry groups are pushing for the government to launch government programs to support commercial real estate loans.

– Jenni Glenn, The Journal Gazette
© Copyright 2012 Associated Press. All rights reserved. Neither this material nor its presentation may be published, broadcast, rewritten or redistributed.
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