Commercial Real Estate Reality

Excellent conversation today on CNBC regarding the outlook for commercial real estate with Scott Rechler, CEO of RXR Realty.

As I've discussed in the past, the commercial real estate crisis has not even begun due to banks marking their loans at 100% value that are currently worth 40-50% of the loan.

The crisis will intensify through 2011 and 2012 as 1.4 trillion in commercial debt will need to be refinanced through 2014.  As Scott discusses, there is no financing available for this rollover due to the collapse of the CMBS market.  (Secondary market that packaged and sold loans during the credit bubble)

The massive mark down in prices will come when banks must finally recognize the losses and sell the assets at true market value.

This period will be the greatest real estate buying opportunity of our lifetime and based on current data will present itself around 2013.