Jun
12

More Commercial Property Defaults Likely

By
June 10, 2008

By Ilaina Jonas – Reuters

Commercial property investors may soon follow the trend of their embattled residential real estate brethren and surrender a property to lenders when its value falls below the amount owed on a mortgage.

Though a controversial move, and one that could trigger significant long-term penalties, some real estate experts said they think there is actually some value in the decision.

U.S. commercial real estate, while not as bad off as the U.S. housing market, has softened since last year as credit has become more expensive and difficult to obtain, bringing sales to a near standstill.

What’s more, with the U.S. economy continuing to weaken, some commercial property owners are starting to see some large department stores in malls or grocery stores in neighborhood shopping centers close their doors.

U.S. commercial property sales transactions were off nearly 70 percent in the first quarter of 2008 versus a year earlier, according to research firm Real Capital Analytics.

ARTICLE SHORTENED DUE TO LENGTH….

LINK TO ARTICLE HERE:

http://www.reuters.com/article/reutersEdge/idUSN1033690520080610
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