Commercial mortgage-backed bond defaults could more than double in 2009
Vacant land owners make up the bulk of commercial property defaults in Las Vegas, said Travis Nelson, assistant vice president of commercial sales at Nevada Title Co.
“There’s no income from the land. It’s hard to carry. You have a lot of higher-interest loans from private sources and hard money lenders,” Nelson said.
“So the trend is a lot of vacant land and also a good portion of office is coming back. I think we’ll see more of the same and possibly industrial and gaming at the end of this downturn in the commercial cycle,” he said.
Commercial mortgage defaults became a significant investment risk last year. Rising vacancy in apartments, office buildings and retail centers means less income for property owners to pay their debt service. Plummeting property values and a tight credit market made it nearly impossible to refinance.
U.S. commercial mortgage-backed bond defaults could more than double this year as the economic recession hurts office, retail and multifamily housing assets, Fitch Ratings predicted last week.
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