Is commercial real estate the next big bubble in the United States?
“There is a large overhang (empty space) of commercial real estate that will take years to absorb. In addition there are $1.3 trillion in commercial mortgage notes coming due in the next 3-4 years but only $800 million in debt capacity for these loans.
Wall Street will likely experience another crash in 2013-2014 unless something is done. Traditional loans on commercial buildings used to go through banks. Then in 2003-2004, Wall Street learned they could securitize loans and act as banks or alternative lending institutions.
This led to strong competition for loans, more people bought buildings and the balloon expanded. But then it popped, values have plummeted and remain way down. Most of these loans were made with ten year notes. So unless things improve dramatically in the next few years, when the notes come due, they will be foreclosed, values will drop again.