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Commercial real estate is suffering along with the residential real estate market although not as severe.  Here are a couple articles that give some insight on the situation.

The Commercial Real Estate Default Wave is Here

What has been lost in the housing talk recovery is the grim statistics that commercial real estate has fallen 37 percent in value in the last year. This wouldn’t be such a big problem aside from the tiny detail that some $3 trillion in commercial real estate loans are still outstanding. The commercial real estate debacle is already happening with defaults reaching 16 year highs. This is already occurring before many of the commercial real estate loans reach their refinance dates. In some instances banks are simply ignoring non-payment and giving borrowers a few more months or even years. Why? Because they can still claim the note is current and claim the asset at inflated values.

Yet this is a game we are all familiar with. Suspending mark to market has always been a method for the U.S. Treasury and Federal Reserve to skirt any real accounting from Wall Street. If we look at the current FDIC insured bank balance sheet, we can see that many more problems lie ahead for commercial real estate:    –more

Greener Pastures for Commercial Real Estate

Good news about commercial real estate is in short supply these days, so it may be surprising to hear that going “green” can earn some “green.”

New research shows that green-certified buildings command substantially higher rents and selling prices. Economists Piet Eichholtz, Nils Kok, and John Quigley estimate just how much in a forthcoming paper in the American Economic Review. They consider the federal government’s Energy Star certification and the U.S. Green Building Council’s LEED certification.

The study is based on a statistical comparison of commercial buildings across the U.S. After closely matching buildings and controlling for important structural and location characteristics, they find that office space in green-certified buildings rents for a premium of 3% per square foot. And after adjusting for even higher occupancy rates in green buildings, the effective rental premium is closer to 6% per square foot. What is more, comparable results are found in significantly higher sale prices, from which the green rental premium is consistent with a capitalization rate of just over 6%.  –more

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