After weathering the residential real estate storm, banks will face a brutal battering of commercial loan losses, according to a group of financial industry insiders who spoke at the Reuters Global Finance Summit. Howard Lutnick, CEO of Cantor Fitzgerald, said that the overpricing of commercial properties led to a crisis in the market. “The commercial real estate business still has not been marked down. It’s not been marked to market,” Lutnick said. “The economy can’t, in my opinion, grow fast enough that the tenants are going to go out and start hiring and growing and building and take up all these rents at $60 a foot.” The consensus among the panel was that, as U.S. banks held $1.65 trillion in commercial real estate loans as of Nov. 4, they’ve done little to solve the problem, choosing instead to postpone the inevitable. “When you’re in the eye of the hurricane, it sure feels good until you look at the TV screen and then you say, ‘look, the hurricane is all around you,’” Lutnick said.
Banks face commercial real estate trauma, analysts say
November 18, 2009 06:15PM
November 20, 2009 at 9:02 am, Anonymous said:
#5, Commercial Real Estate includes multi-family real estate. Don’t believe the broker babble — NYC prices have a lot further to drop.
November 19, 2009 at 10:28 am, Anonymous said:
No kidding! Right now there are over $ 500 billion in commercial building loans that are not being paid. Hello!
November 19, 2009 at 10:37 am, Anonymous said:
This mess will make sub-prime look mild. It will take years to work out all these bad CRE loans.
November 19, 2009 at 11:47 am, Anonymous said:
Well we all know that banks like to make money by making loans to their friends, so lets see what happens when they have to call in these loans.
November 19, 2009 at 12:19 pm, Anonymous said:
Only true geniuses bet on Commercial Real Estate when residential is cycling into a crash. Elephants as lemmings.
November 19, 2009 at 3:08 pm, Anonymous said:
Sooo… does this mean that residential real estate will go down even more? cause in that case, I’ll wait around for the huricane to hit before buying something in overpriced NYC