‘Huge’ Commercial Real Estate Crash Coming

[Nikki Stone1]

http://www.bloomberg.com/apps/news?pid=20601087&sid=amPXzjQV3nGQ

Oct. 30 (Bloomberg) -- Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”

“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”

U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.

“The American consumer will no longer be able to serve as the motor for the world economy,” said Soros, 79.....

[Joanne98]

1. And they'll give the money to the banksters and they'll steal it!

[itsrobert]

2. That would be diaster for Sears Holdings

as they only thing they have of value is the property that Sears and Kmarts sit on.

[Nikki Stone1]

3. Oh Lordy...

:(

[nashville_brook]

4. notice that the most toxic commercial real estate is in office space -- no jobs, no need for space.

in central florida we're seeing a bit of a rebound in industrial leasing -- but it's nothing to write home about. office vacancies are soaring. downtown orlando has three brand new towers (condos+office space) in bankruptcy. but, that's nothing compared to miami.

[Warpy]

5. Office towers have been overbuilt since the 70s

and have been used as cash cows not from their tenants but by being over leveraged to generate profit from taking on debt.

That's the bubble that's about to burst, another debt bubble.

The money, of course, has been safely stashed in the Caymans.