Second real estate collapse coming

From the NY Post:

The next wave of the credit crisis is about to hit -- a collapse in commercial real estate and potential explosion of bank failures...

Nearly half of all US commercial-real-estate-mortgage loans come due within the next five years. Deutsche Bank believes that 65 percent or more will fail to qualify for refinancing.

Absent new job creation -- and whatever nascent recovery is underway seems unlikely to produce net new jobs for several years -- vacancy rates will remain high. The action in commercial real estate will be largely subleasing -- at rents of 50 percent to 85 percent of scheduled lease rates. These lower sublease rates will eventually become the real market rates, putting further downward pressure on property values.

As things stand, this next wave of the crisis will sabotage the recovery -- driving up bank failures, FDIC bailouts and problems for some large insurance companies. Indeed, Congress will surely wind up having to bail out the FDIC itself.