USA : the difficulties of commercial property, threat to recovery

The difficulties of commercial real estate appears more threatening to take over the U.S. economy.

In its latest economic report, the central bank of the United States (Fed) notes that this area is the worse off the country.

Commercial real estate includes the rental and sale of local professional use: offices, shops, industrial buildings, shopping malls etc.. The risks it poses to growth are related to rising defaults on mortgages made by banks to companies.

If the sector's difficulties appeared to daylight well after those of housing, the Fed figures show that the default rates on such loans has increased steadily since the bubble burst in real estate loans risk of summer 2007.

According to the Mortgage Bankers Association of America (MBA), late payments of borrowers in this sector increased sharply to a record second quarter

The banks are less exposed to commercial property as housing, but this sector has contributed to the economic recovery started in the third quarter, after losing about a point of growth in the United States in 2007 and 2008.

In contrast, commercial real estate has weighed on growth of about one percentage point annual rate since the beginning of the year after "having had a broadly neutral in 2008," and "indications" that the sector "will continue to weigh on the recovery, "said Janet Yellen Tuesday, a leader of the Fed.

The outlook is "worrying," she said, noting that the difficulties stemmed "largely from the effects of recession and tighter credit, more than the building boom and lax lending" that led to the housing bubble led to the current crisis.

Dennis Lockhart, a colleague of the central bank fears that the sector's problems will result in an "impaired ability of small banks to support small businesses, vital to the United States insofar as they are the engine of job creation.

In fact, he said Tuesday, the smaller banks (with assets less than $ 10 billion) owns more than half of the debt related to commercial real estate in the form of individual loans.

A rising default rate on these loans could create a vicious circle where the bankruptcies of small businesses and small banks will nourish each other. Indeed, small banks provide Lockhart says half of the commercial and industrial loans to small businesses.

In late October, Capmark Financial, a group of commercial real estate financing the bulk of the United States, filed for bankruptcy.

Its bankruptcy is emblematic of the difficulties of the sector, while the market for mortgage-securitization business, which allows lenders to refinance is still very poorly, even by the admission of Ms. Yellen, despite the efforts of the Fed out of the doldrums.

Concerned by the exposure of smaller banks in the U.S. commercial real estate, the IMF noted in late September that the deterioration of the sector itself was now "full speed".