[taylodl]

Commercial Real Estate is a completely different animal than residential real estate. Yes, you can mortgage commercial properties but the downpayment requirements are significantly higher and the term of the loan is significantly shorter.

Most of the entities on the hook for paying back the bank are commercial real estate development firms. As such they often have a mixed portfolio of residential (think apartments), office, retail, and entertainment properties. Offices are further divided into small business, professional services (doctors, dentist), and general office space. Unless their portfolio is extremely focused and not diversified, then they'll be alright.

Fortune 500 companies also aren't letting go of their iconic office buildings, as the building itself is an icon for the company.

Given all these factors, I think the idea that commercial real estate is going to crash and burn and that the banks are going to be left holding the bag are being quite a bit overblown.