Add the once-solid commercial real estate market to the list of sectors felled by the subprime mortgage contagion, as owners of malls, apartment complexes and office buildings have seen financing disappear, prices plunge and the pace of sales dwindle 50%, reports the Wall Street Journal. Lenders, burned by the residential debacle, have become reluctant to risk commercial exposure.
Sales are so slow experts are struggling to set prices on buildings. Nearly all agree values are dropping, even if sellers have not yet marked down their properties. Lenders, worried about defaults, have raised rates to the point of being unaffordable. Mall-owner Centro Properties Group is one company caught in the crunch. Unable to refinance short-term debt, it saw share prices plummet 90% in two days.