Marketplace.org takes an insightful look at the current conditions in the commercial real estate sector. Although the Term Asset-Backed Loan Facility (TALF) and the Public Private Investment Program (P-PIP) are quietly keeping commercial real estate on life support, there are now signs that more assistance may be needed. If the unemployment rate exceeds 10% as expected, the elevated office space vacancy rates in commercial real estate will also increase. The jobs issue is becoming more pertinent as the consequences of extended high unemployment begin to reverberate through the economy. In fact, U.S. office vacancies hit a 5-year high of 16.5% in the 3rd quarter alone.

TALF has extended billions of dollars in loans to debt burdened developers in an attempt to keep the commercial real estate domino from falling. One of the biggest issues is the banks continued refusal to mark down any commercial real estate backed assets. Basically, banks are crossing their fingers and hoping that a recovery comes sooner than later, with the possibility of dire consequences if it ends up being later.