Despite forecasts of decreasing vacancies and increasing rental rates in 2012, there are still major concerns for owners of office properties. In a recent Wall Street Journal article, authors Craig Karmin and Eliot Brown cite that the national delinquency rate of securitized office loans increased 1.4 points from 7.4% last June to 9.0% in December. This is familiar news to real estate professionals in Kansas City who recently witnessed owner Hertz Investment Group default on their $21.5M note for Commerce Tower in Downtown Kansas City. Karmin and Brown explain this trend by saying that due to the typical 5 year office lease, leases signed at peak rates in 2007 are now rolling over with tenants signing at drastically reduced rates.
