We’ve noted indicators of pending softness in CRE from time to time in the past here at HW, but today a feature at Bloomberg underscores just how soft the commercial RE sector really is:
Workers building the $3.5 billion Cosmopolitan Resort & Casino on the Las Vegas strip are getting used to their financiers from Deutsche Bank AG … Since January, when New York developer Ian Bruce Eichner defaulted on a $760 million loan, Frankfurt-based Deutsche Bank has been cutting Perini a monthly check for $70 million to continue construction, now in full swing with 2,800 workers on site and a dozen cranes towering overhead … Not far down the strip is the Tropicana Resort & Casino, whose parent filed for bankruptcy protection in May. Tropicana Entertainment LLC defaulted in April on a $1.3 billion syndicated credit line arranged by Zurich-based Credit Suisse Group to help finance the purchase of the casino in 2006 … The economic slump that began in the U.S. housing market has spread to commercial real estate, Wachovia Corp. senior economist Mark Vitner wrote in a June 4 note.
Which isn’t good for the economy, or for residential real estate, at that. I’m not sure we’ve seen an official pronouncement of a CRE slump but for a few analysts yet, but I’m sure they’re on the way.
