Commercial property price index drops

The Manhattan office market isn’t looking good, as Moody’s/REAL Commercial Property Price September Indices for the borough dropped 22.9 percent between the second quarters of 2008 and 2009. The indices track the price changes of commercial real estate in 10 top U.S. markets. This figure is in line with the 21.2 percent national drop on the same scale, as analysts predict that as much as $700 billion in commercial debt could come due by 2013. Dan Fasulo, managing director at Real Capital, said that while commercial lenders look to foreclosure as an option on distressed properties, it’s not a fait accompli. “I think, at some point, if the building is not performing, if it lost a major tenant or rents went down and they can’t pay debt service, [a lender] might foreclose, but these lenders are not going to give away assets for cents on the dollar,” Fasulo said. “They are going to tuck it away in their portfolio.”