The Commercial Real Estate Bust Is Here
Looks like I spoke a little too soon earlier. Calculated Risk points to a Reuters report explaining that strip mall owners suffered their worst second quarter in 30 years, due to so many store closings and cutbacks. It’s another sign of the decline of commercial real estate, which is hitting small and regional banks hard because they took on more development loans, and because they keep those loans on their books. Usually, after a subdivision begins to be hit by foreclosures, the strip malls and big box stores built nearby start to fail, too. The report is further evidence of that downward spiral. So are an increasing number of regional banks on the problem lists of regulators.
To make it worse, Calculated Risk says that the report came out even before Starbucks announced plans to close 600 stores. Think how many malls will have empty storefronts where a Starbucks once stood.
Said Calculated Risk: “The CRE bust is here.”