Commercial real estate outlook turns grim
Just as the commercial real estate sector showed signs of recovery, analysts now forecast a renewed struggle as the economy slumps. Financial advisory firm Deloitte said in a report Thursday modest GDP growth, still high unemployment and weakened housing demand delayed a full-fledged commercial real estate recovery. Nearly $1.7 trillion in CRE loans will come due between 2011 and 2015. According to Deloitte, 60% of these loans are underwater, making it difficult for tenants to refinance and extend their terms. This strategy of "extend and pretend" may be waning as workouts faded in the first quarter of 2011 and new commercial REO showed an uptick (see chart below). Jon Prior. Follow him on Twitter @JonAPrior.