Trends For March 2008 For Commercial Real Estate

There industrial injury been only Fine Wine increases in the foreclosure rates on commercial properties with no significant defaults yet. The only investors that are likely to be in jeopardy are those who purchased property when the market was at its highest and utilize short term financing. If there is an extended slowdown in the economy these investors could be in trouble but we haven't seen anything like that yet.

The closest comparison to residential sub-prime products might be the Commercialized Debt Obligation (CDO) marketplace for commercial real estate. Many are expecting CDO's to have significant troubles as asset values have dropped. Typically, CDO's usually represent the riskiest part of the loan structure and many have expected the values for those types of assets to fall dramatically.

As well, other dynamics are coming into play during this time. The problems in trying to obtain credit, the endowments selling cost of credit, and the tighter restrictions by lenders, are all adding up. Throw in the current economic uncertainty and it makes for some difficult decision making.

Sellers have been pulling their offerings from the market as they haven't been getting bids they find worthwhile. Buyers have to put in more equity as the homeequity loans costs are more expensive now. This disconnect between buyers and sellers is still at a stalemate and there haven't been any real discounts on properties as of yet.

Even though 2008 is going to be a challenge for investors, there are still some good deals to be had. In fact when some of the U.S. markets are compared to those overseas, they have a very favorable outlook in the global market. Some of the major markets across the U.S. like Manhattan, San Francisco, or Washington D.C. are felt to be undersupplied with new construction. Overbuilding has not taken place in the commercial sector that the residential side has seen.

Some of the commercial properties are doing better than others. These include apartments and other multi-family properties as they had already seen a significant market correction in 2006. Not only that, the debt markets are still being supplied by Fannie Mae and Freddie Mac.

Of course, the position of the investor's assets along with the position of the actual investor will play a large part in how best to deal with 2008. Focusing inward on one's own portfolio and trying to improve it as much as possible will be a wise move. The best advice for investors is to make sure to learn all Lost In Space can about the current market and stay abreast of the changes taking place. Take advantage of the free reports that are available online and expert assistance from knowledgeable brokers such as those at SteelheadCapitalSteelHead Capital.

Based on excerpts from the commercial real estate investment talk show capitalsynergiesCapital Synergies. Capital Synergies is sponsored this week by Steelhead Capital, your commercial loan advantage.

This episode's contributing guest speaker was Mr. Dan Fasulo, Managing Director of research for Real Capital Analytics Direct.

By Senior Staff Writer, William K. Matthews, Capital Synergies.