Stan Ross, Chairman of the Board of the USC Lusk Center for Real Estate is quoted in the April 12, 2009 edition of Business Week:
Will Commercial Loan Losses Hurt Regional Banks?
Business Week
By David Bogoslaw
...For many regional banks, commercial loans constitute more than 50% of their loan portfolios. In an Apr. 9 note, Oja said he was "increasingly concerned about commercial lending exposure at regional banks" because "we think commercial lending credit declines may begin in force this year..."
...With law firms and other businesses cutting back workforce and giving up rented office space when leases expire, vacancies in office buildings are sure to rise. And new tenants most likely will pay lower rents than the former tenants were paying, says Stan Ross, chairman of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. He estimates that 15% of all office space across the U.S. is currently vacant. "We can live with 10% to 12%, but we start really feeling it at 15% to 18%," he says. "And we could get [to 18%]."
Vacancies pose less of a problem for larger owners, who typically can devote cash flow from other kinds of properties to service loan payments to banks, says Ross. "We've seen some of that..."
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