The commercial real estate market is improving, but not enough to push delinquencies down by much on securitized loans to Chicago-area properties.
The delinquency rate on local commercial mortgage-backed securities (CMBS) loans edged lower in February, to 7.9 percent, after hitting its highest point since the crash, 8.4 percent, in January, according to Trepp LLC, a New York-based research firm.
Yet the rate has hovered around 8 percent for the past several quarters even amid encouraging signs that demand for local office, retail and other commercial space is growing. Many landlords continue to struggle to refinance properties and refill space after losing tenants.
“There's enough stress still in the economy and the real estate market staying stable is a good thing,” says Tom Fink, senior vice-president and managing director at Trepp. Lower delinquencies are “going to be dependent on the broader economy being strong and robust and I think that's what we're all waiting for.”
Occupancies are rising again in the four main sectors — office, apartments, retail and industrial — but rents have yet to rebound by much. Incomes at many suburban office buildings, for instance, continue to fall as tenants sign leases at much lower rents than they paid before the recession, making it harder for landlords to cover mortgage payments.
Read more: http://www.chicagorealestatedaily.com/article/20120312/CRED02/120319974/cmbs-delinquencies-linger-at-uncomfortable-stable-point#ixzz1p05nghd5
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