Prices for commercial real estate have already fallen by about 40%, but the problem is that lots of owners are in negative equity now, said Richard LeFrak, president of the LeFrak Organization. Malls are also likely to suffer, as "the new norm is that nobody goes shopping, everybody is saving," LeFrak said, adding that mall vacancy rates run at about 11-12%. Owners don't sell because "the bottom line is there's more debt than there's value," Zell added. However, debt makes up about 80 or 90% of commercial real estate projects in the US and because of the recession, unemployed people "need little retail space," Wilbur Ross, chairman and CEO of WL Ross & Co., said. Owners don't sell because "the bottom line is there's more debt than there's value," Zell added. However, debt makes up about 80 or 90% of commercial real estate projects in the US and because of the recession, unemployed people "need little retail space," Wilbur Ross, chairman and CEO of WL Ross & Co., said. "
I think it's going to be a long, hard struggle even without new construction," Ross said. "I think it is going to be tragic for the equity owners and for some of the lenders." Typical regional banks in the US would have 25% of their assets in commercial property loans. "I think the biggest victims are going to be the regional banks."
