There is not likely going to be any shortage of commercial debt either in California or across the United States during the coming years. Though the housing sector appears to be on its way towards recovery, there is a great deal of commercial real estate debt that will likely come due during the next five years. It is believed that as much as $1.7 trillion in commercial real estate loans are anticipated to be due from now until 2018.
Legislators also are showing concern regarding this potential problem. Congressional representatives have made a legislative proposal that would make it easier to refinance much of this debt. As similar proposals have been made in the U.S. Senate and by the President, we will still have to wait to discover the nature of any legislation that actually becomes law.
It's no secret that real estate values were largely inflated during the housing bubble. Yet commercial real estate values are not expected to match these inflated prices for a number of years.
There remains concern that defaults on commercial mortgage could trigger another economic recession. It has been reported that office and retail properties are still not being picked up by prospective buyers as rates of vacancies are at the historically highest rates ever. However, it is anticipated that new loans to replace maturing debt may come in from commercial mortgage backed securities, banks, investment trusts and life insurance companies.
These new lenders will need to come up with imaginative ways to collect upon debt that has matured. They would be well advised to consult with attorneys who understand how commercial debt operates and who can initiate commercial debt collection strategies.
Source: U.S. News, "A Simple Solution for America's Looming Commercial Debt Crisis," Jason Gold, Aug. 1, 2013