Columbia Center misses mortgage payment

[XDCX]

If you've ever watched a Seattle Seahawks game on TV or viewed tourist pictures from someone's visit to Seattle, you've seen the Columbia Tower. The 76 story Columbia Center is hard to miss as it towers above all the other high-rises in downtown Seattle.

While the Columbia Center is an impressive architectural statement, it's also a vivid example of what's happening in the commercial real estate market - the Columbia Center just missed their first mortgage payment.

A report in The Seattle Times indicates the Columbia Center has nearly 40% of its office space listed as "available" and the cash flow from their rental receipts is no longer large enough to service their mortgage. What's worse is the value of the property has dropped so far that the amount owed on the loan exceeds the value of the property. Here's a link to the report in The Seattle Times - click here (http://seattletimes.nwsource.com/html/businesstechnology/2011431935_columbia25.html)

The loan for the Columbia Center was bundled with other loans and sold as a Commercial Mortgage Backed Securities. To me this sounds just like the mess with home loans that started the whole "toxic asset" crisis that started two years ago. :(

[SHACOS]

I know my current company just consolidated their office space in the Columbia Center down from something like two floors down to half a floor. All these cost cutting measures by large corporations are really taking a toll!

[Txflyer]

I've heard lots of talk that the next financial crisis in the USA will be caused by a burst in the commercial real estate bubble.

[XDCX]

All these cost cutting measures by large corporations are really taking a toll!

In many ways I think all these cost cutting and downsizing efforts by Corporate America have made the recession deeper and longer.

I read a post on another forum earlier today where a Costco employee said there's an "employment retention plan" within the company to minimize layoffs. Costco has a reputation as an employee friendly company that also manages to meet their profit and growth goals.

Sadly, there aren't too many companies that share Costco's long term vision.

[XDCX]

I've heard lots of talk that the next financial crisis in the USA will be caused by a burst in the commercial real estate bubble.

I agree.

Based on what I've read the popular theory is most home owners will "stay in the game" as long as the value of their home is worth at least 75% of the loan value. Once they're more than 25% buried in their loan, however, the fear is the home owners will become discouraged and walk away.

I'd have to wonder what that percentage is for Commercial Real Estate?

In my opinion, GM and Chrysler have made bankruptcy look pretty clean and attractive. If it's too easy for Corporate America to walk away from their Commercial Real Estate loans, my bet is they will. (And someway or another, the tax payers will get stuck with the bill. :mad:)