The numbers, which have been compiled from Real CapitalAnalytics,represent an increase of 10%, or $17.3 billion, sinceDelta'sJanuary report and 33%, or $46.9 billion, since November2009.

The good news is that the rate of growth continues to slow andhas,in fact, come down from its peak during the first half of 2009,whenthe total value was doubling every three months, the reportconcludes. This slowdown is due in large part to the willingness oflenders to pretend and extend.


"But the real test of distress velocity will come this year andin2011, as around $600 billion in loans come due and expertspredict up to 350 banks may fail," the report says. Retailproperties continue to be the largest segment of thedistressedmarket, with $41.7 billion, compared to $38.5 billion inJanuary.Also, distressed apartment properties grew the most sinceJanuary--by$4.9 billion to $35.8 billion, or a 14% increase.


In terms of regions, the Washington, DC area remains relativelycalm.The commercial real estate market here is in relativelygoodshape, Greg Leisch, CEO of Delta Associates tells,because much of the area's distressed assets--37%--are largelyconcentrated in four companies: General Growth Properties, Opus,Tishman Speyer and Broadway Management.


Then, there is the fact that the region's banks are still verystrong. "We just don't have the risk of many banks failing, whichis where the problems are arising in states like Florida, Nevadaand Illinois," Leisch says. "When assets fall into the hands of theFDIC they become liabilities to the agency, and as soon as realestate becomes a liability it is dealt with irrationally." By thathe means real estate is a long-hold asset, but the FDIC process isgeared toward selling off the asset as quickly as possible.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.