Commercial Real Estate - Next Shoe to Drop?

Thomas Oliver thinks so (see opinion/ article in ajc.com).

Take a Sunday drive. Up Piedmont toward Buckhead. Turn left or right at
Peachtree. Along the way, notice all the new buildings. The offices, condos and
retail shops.

Vacant new buildings.

As someone remarked: The only difference between Atlanta and Detroit is that our empty buildings are new. The next shoe to drop will be the implosion of the commercial real estate market.About $400 billion in commercial mortgages are set to mature this year across the country, the president of the Atlanta Fed told the Miami Chamber of Commerce last week.

In an article also published by the AJC in mid- January, Georgia bankers were already feeling the pain from the commercial front.

Rating agencies and analysts are taking notice. Moody’s Investors Service this week changed its outlook for Synovus, Georgia’s second-biggest bank, from “stable” to “negative,” in part because of commercial real estate fears.

And just a couple of weeks ago... thanks to rising unemployment experts are expecting the worse is yet to come for commercial real estate.

Commercial real estate lags residential real estate by six quarters, so the majority of owner and tenant defaults due to the business downturn are still to come, the panelists said.

What do YOU think? Is this just a lot of gloomy hype?

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