Billionaire Wilbur Ross Sees Huge Commercial Real Estate Crash

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Billionaire investor Wilbur Ross said today that the US in entering a huge commercial real estate crash. You thought the residential crash was bad, just wait.

In a Bloomberg article, Ross said:

"“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate -- the return that investors are demanding to buy a property -- are going up.”

There has been a lot of talk about a commercial crash for the past six months. Just a week ago, Capmark, one of the largest real estate lenders filed for Chapter 11. The banks are surely quaking in their shoes as they look into a possible tidal wave of commercial defaults.

Ross has been dubbed the King of Bankruptcy and likes buying distressed businesses. Recently, he was part of the investment group that purchased Corus Bankshares. Corus was known on BestCashCow for its very competitive CD rates.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • David Hall

    October 31, 2009

    The market have already priced in a commercial real estate bust. Everyone has been talking about this forever.

  • Rich

    October 31, 2009

    People also knew about the mortgage problem and the housing bubble, but the market didn't price that in. When a major bank needs to go back to the government because their commercial portfolio is bust, watch what happens to the market.

  • Bye Bye Bank of America

    October 31, 2009

    This will be the last shoe to drop for the big banks. Even their accounting changes won't be able to paper over these losses when the malls, skyscrapers, and office parks go busto.

  • JCD

    November 02, 2009

    When someone in the business of buying up distressed companies and/or real estate makes such a "prediction" you have to ask yourself "why would he say that?".


    In other words, he certainly is not going to make a prediction (right or wrong) that will not benefit himself. That is a 100%, take-it-to-the-bank fact.

  • Sam Cass

    November 02, 2009

    "In other words, he certainly is not going to make a prediction (right or wrong) that will not benefit himself. That is a 100%, take-it-to-the-bank fact."

    I agree and was actually thinking the same thing. He's certainly not an unbiased commentator. I should have put that in the article.

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