Apartment Building Advisors Blog

Meltdown 101: Commercial real estate in distress

By ALEX VEIGA, AP Real Estate Writer Alex Veiga, Ap Real Estate Writer – Wed Jul 22

Experts say prospects for a turnaround in the near future aren't good, because the commercial real estate market's fortunes depend largely on free-flowing credit markets and cranked up spending by businesses and consumers — neither of which economists expect will happen anytime soon.

That means more commercial property loan defaults are likely, and that could mean trouble for the still-recovering U.S. banking system.

Q: What's the government doing to help?

A: Last month, the government opened part of the consumer lending program known as the Term-Asset-Backed Securities Loan Facility to commercial real estate loans. The hope is that will boost the availability of loans, helping to prevent defaults and facilitate sales.

Industry groups are now pushing for the government to extend this program through the end of next year.