The Commercial Real Estate Tsunami: A Survival Guide for Lenders, Owners, Buyers, and Brokers

A tsunami is imminent for the commercial real estate (CRE) market, one not comprised of water but of debt. An unprecedented wave of commercial debt loans—about $1.4 trillion—will reach the end of their terms between 2010 through 2014. Nearly half are at present “under water,” that is, the borrower owes more than the underlying property is currently worth. About two-thirds of the estimated $700 billion in securitized (CMBS) loans will not qualify for refinancing. And banks are not adequately protecting themselves against potential losses, setting aside only 38 cents of every dollar for bad loans. As a result of the commercial real estate foreclosures that lie ahead, more than 700 banks could possibly fail. Combined with the weakest economic and financial conditions in generations, this tsunami of debt threatens to derail a nascent economic recovery and hit the financial markets with a second round of losses.

In THE COMMERCIAL REAL ESTATE TSUNAMI (Wiley; May 2010; $49.95; 978-0470-62682-5; Hardcover), CRE Industry veteran Tony Wood addresses the trillion dollar wave of commercial loan maturities coming due in the next few years, including the causes, which are rooted in the same market exuberance that led to the residential housing market collapse, lessons learned from previous cycles, how to manage increasing vacancies and falling rental rates, and restructuring businesses to meet the new market’s challenges.

In addition to insight provided by Wood, this book contains research, interviews, and contributions from such experts in the market as Dr. Sam Chandan, Global Chief Economist and Executive Vice President of Real Capital Analytics; Charles McClure, 2009 President of CCMI (Certified Commercial Investment Member) Institute; Matthew Anderson of real estate market consultancy Foresight Analytics; Eric Von Berg of Newmark Realty Capital; Maura O’Connor of Seyfarth Shaw LLP; Cynthia Shelton of CRI firm Colliers Arnold and the 2009 President of the Florida Association of Realtors, Tom Loeswick of business consultancy Shirlaws International; and Donna Wood of FamilyBroke.com and TRI Commercial/CORFAC International Brokers.

THE COMMERCIAL REAL ESTATE TSUNAMI not only sends out a warning to the CRE industry but offers concrete solutions that will help market participants—investors, developers, lenders, and brokers weather and benefit from the coming torrent.