From Richard Ellis:
Are you waiting for the next shoe to fall and are sure it's going to be Commercial and Corporate Real Estate? If so, you are in the majority. If so, I think you are dead wrong. You have missed the bottom of the commercial real estate market which I suggest occurred about the end of the second quarter of 2009. There have been a number of signs, not the least of which is a four percent average price increase of commercial real estate prices in the third quarter.
Banks who hold debt have been renegotiating loans like crazy. Everyone has a story about a commercial real estate borrower who got a "kick the can" response from their bank. Where this has happened the terms of a final principal and interest write down is postponed for a few quarters. But they have done two things when they have. First, they have relaxed repayment terms significantly. Second they have provisioned for losses often exceeding that of a future renegotiation.