The Star-Telegram featured an interesting article about the commercial real estate industry, its vulnerability to massive foreclosures and the potential impact on job losses and foreclosures.
The article featured an excerpt from The Urban Land Institute:
“The commercial faces its worst year since the wrenching 1991-92 industry depression. Values will drop substantially, foreclosures and delinquency rates will increase sharply, and a limping economy likely will crimp property cash flows.”
Many banks were heavily invested in the real estate industry, which includes commercial real estate. We haven’t seen the massive foreclosures in commercial real estate, yet; but many experts are preparing for the worse, pulling back in many extremes. An example of this is that almost no new commercial starts are scheduled for 2009 because many lenders and investors are avoiding new commercial projects because of expected foreclosures in the sector. Could they also be expecting bankruptcies?
Although Dallas-Fort Worth is positioned a little better than the rest of the country the commercial foreclosure outlook isn’t looking good. As with residential real estate many new jobs were created in the commercial real estate sector and because of this we can expect to see large scale job losses as this sector faces foreclosures and even some bankruptcies.