More East Bay Commercial Defaults

Posted by Expert Gadget Reviewer on Thursday, 17 June 2010

Reports in the Oakland Tribune this morning about two East Bay commercial buildings falling into default. 1111 Jackson Street in Oakland,  and the Berkeley Tower at 2120 University Ave in Berkeley, have been pushed into default by Bank of America, lender on both properties.

1111 Jackson St. in Oakland: Photo courtesy of Laura A Oda, Bay Area News Group 

The properties were purchased back in 2007 by an affiliate of Scanlan Kemper Bard (SKB), a large Oregon based commercial real estate merchant banking group.

This is simply another chapter in the death and re-birth of commercial real estate. It appears clear that rather than the CRE Tsunami that many experts called for, we are actually going to experience a slow moving tropical storm.  Defaults will consistently crop up over the next several years, but not the chaotic crash that we experienced in the housing market.

Defaults are nasty but necessary. Old owners who are sitting on underwater properties get cleared out - and new owners can buy good property at current market prices, allowing for rents to be lowered, commissions to be paid, and TI allowances to be offered.