The Real Deal Miami

Commercial property prices may pose large problem for economy

July 23, 2009 09:00AM

Federal Reserve Chairman Ben Bernanke said a potential wave of commercial real estate defaults may present a challenge for the economy and urged lenders to modify problem mortgages to avoid defaults. Federal policy makers will extend the TALF, which began accepting commercial mortgage-backed securities as collateral last month, if they feel that the financial markets are still “some distance from normal operation,” Bernanke said. Since the peak of the market, commercial property prices have fallen 35 percent and more than $108 billion worth of commercial properties are now in default, foreclosure or bankruptcy, according to reports by Moody’s Investor Services and Real Capital Analytics.