There’s been plenty of talk about the commercial real estate “tidal wave”, the trillions in loans that will come due for refinancing over the coming years, and the high prospects of default for even well qualified lenders.
But as the Deal Junkie blog points out, the market isn’t totally frozen. The commercial mortgage-backed security issuance market is frozen (which is what TALF has supposed to jumpstart, though it’s mainly failed) but there is still lending out there.
Even in a piece on how “frozen” and worrisome the market has become, from Fortune, the numbers aren’t totally horrible
Bank lending for commercial projects in the first half of 2009 is on track to hit about $25 billion, according to Matt Anderson at research firm Foresight Analytics in Oakland, Calif.
By way of comparison, commercial loan origination was at pace of $33 billion a quarter at the peak of the market.
As the Deal Junkie points out, this is down but it’s far from frozen. And the loan demand is obviously going to be way off from the peak.
That being said, the trend is not good. The news this morning that Starbucks (SBUX) is angling for a 20-25% rent reduction across its locations does not augur well for the cash flow at commercial developments, even when they can maintain steady occupancy rates. Anecdottally, we’ve heard from others in the space that this is a big trend. There are lots of commercial rent renegotiations going on.
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