Commercial Real Estate, Banking Failures and Opportunities for New Money

In this article I am highlighting the important link between commercial real estate (CRE) and banking failures. Though this financial crisis was not triggered by commercial but residential real estate in the US, one should recognize the broader importance of CRE on the financial sector. In my view CRE credit is not just a credit type as others like residential mortgages or credit card debt but can play at some times a pivotal role on the balance sheets of banks. That’s why commercial real estate credit has to be addressed in a particular risk management framework.The current situation in commercial real estate markets in the US and in some European countries is far from comfortable and negatively impacts the balance sheets in the financial sector. This leads to a paralysis of parts of the financial sector but creates at the same time vast opportunities for new money. A thoughtful research based approach identifying these opportunities and avoiding risks is the key to success for new lending.

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