During a field hearing here, G. Joseph Cosenza, an owner of Inland Real Estate Group in Oak Brook, Ill., testified on behalf of NAR and the Illinois Association of Realtors®. Cosenza said the crisis is driven by a confluence of high unemployment, a slow economy, weakening commercial property fundamentals, and an increase in commercial loan delinquencies.
“Commercial real estate is the basis for much of the growth in the American industry and economy, and having a stable and well-functioning commercial market is crucial to our nation’s economic recovery,” Cosenza said. “But the market is now in the midst of a financial meltdown and many property owners are underwater. We cannot regain our footing until action is taken on such issues as an enhancement of liquidity and extensions of terms for performing properties.”
Cosenza outlined a number of proposals he urged the congressional panel to consider.
Cosenza also pointed out that commercial loans are often short term, and property owners must refinance frequently. “More than half of the outstanding business loans held by credit unions have been extended by those approaching, or at, the cap. That means that credit unions with experience in handling commercial loans are unable to continue helping us get out of this crisis,” Cosenza said.
He said incentives and improved cash flow for investors of commercial property would help fend off some of the challenges the market faces and soften some of the commercial liquidity crisis. “The most effective means of improving the cash flow on real property is to provide more generous depreciation allowances. NAR believes that some combination of accelerated depreciation (or shorter recovery periods) and passive loss relief would be significant investor incentives,” Cosenza stated.
“The commercial real estate sector supports more than 9 million jobs and generates billions of dollars in federal, state and local tax revenue,” said Cosenza. “NAR believes the commercial market is vital to American life and urges Congress to act quickly on these crucial issues.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
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