Can Commercial Real Estate Sink the Economy? – Torto Wheaton Commercial Real Estate Research

September 4, 2009

Volume 10, Number 35

Can Commercial Real Estate Sink the Economy?

Jon Southard, Principal, Director of Forecasting

Now that it is clear to all that the economy has the ability to sink commercial real estate at any time, the converse is being asked with increasing frequency: whether commercial real estate can sink the economy. Given the size of the industry (compared to, say, residential housing), under most circumstances it cannot; we know from the S&L crisis, however, that problems in our sector can be enough to cause a recession. The 1990s bust was all about newly built buildings that weren’t needed when they arrived; this time around, overbuilding was not the problem, overvaluations were. So where does that leave us?

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