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Lot’s of folks have been saying commercial real estate is the next shoe to drop, after residential property. Even it seems the trade association for commercial real estate developers, owners and related professionals. “We’re looking at $400 billion in loans maturing and unless we find a way to finance them it will take commercial down hard,” says Tom Bisacquino, president of the National Association of Industrial and Office Properties, now known simply as NAIOP.
Homeowners, car makers and banks have been asking for some of the Treasury Dept.’s $700 billion in bailout funds. Add commercial real estate investors to the list. Bisacquino says the association has been lobbying to secure $20 billion in loan guarantees from the Treasury. Perhaps another $200 billion more could come from the FDIC.
He points out though that this market is different from earlier busts such as the late 1980s when there was too much overbuilding of commercial property. Today its not a question of oversupply, just a lack of liquidity.
Biscaquino says the model is not all different from the terrorist risk insurance the government helped finance after 9/11. “The government could create this secondary market,” he says. “They’re not really writing a check.”
Bisacquino says the slump has impacted his association’s 18,000 members, who range from large publicly traded real estate trusts to small architectural firms. He says the number of companies that are members hasn’t changes but they are paying dues for fewer of their employees.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.