WASHINGTON, DC-Delta Associates will report later today that US distressed commercial real estate has hit a plateau. If that sounds familiar, it is--the research firm declared in its last quarterly report that signs were mounting that distress was peaking and heading into a long period of plateau. “We were right,” Delta CEO Greg Leisch tells GlobeSt.com.

Specifically, Delta Associates, will report that the total value of distressed commercial real estate in the US is now $191.5
billion, including properties in distress, foreclosure and lender REO. In its previous report released in August, it said that the total value of distressed commercial real estate in the US reached $186.9
billion. The company sees an extended period of a plateau of $165 to  $200
billion of distressed assets in the system.

The increases have leveled off, Leisch says, in large part due to lender enthusiasm for credit extensions in light of the unexpected early firming of CRE prices in many markets. Compared to the last real estate downturn in the 1990s, this one has turned around rather quickly, he says. “Last time, we had seven years of negative declines for a 39% erosion in value. This time, values have been falling for two years for a 33%
decline.”

There is still risk in the system, he adds. “There is several trillion dollars worth of mortgages coming due over the next five years and we will have to see what the attitudes will be from lenders.”

Delta’s report finds that the office sector continues to represent the largest share of distressed real estate at $47.5 billion, but the good news is that it only grew by 1.1% since August 2010. Apartment properties in distress grew by 6%; industrial had the highest percentage growth at 8.7% for just under
$700 million; and retail, by contrast, fell 3.4%.