We have another prediction in that the next tsunami in the market will be commercial real estate. This one comes from Thomas Barrack, the founder of Colony Capital via the WSJ's Deal Blog. (H/T Traffic Court.)
Believe it or not, if Mr. Barrack is right I think this would be as bad or worse than the residential crisis. Why? The blog post says most of it well. If the loans mature and there are no buyers and no viable refinancing options, what next: RTC II? The Obama administration better be ready for the second half of its term when this all starts hitting the fan if not sooner.
The best case I see against this is fundamentals. But, as we've seen lately, those can change on a dime. Lawyers, start dusting off some old books just in case he is right. The other savior I see is opportunistic investing. There's money out there that is waiting, patiently, for a bottom.
I'm posting way too much for my day off, and a beautiful day at that. Latersville.
