Commercial Real Estate Developers, Once Masters Of The Universe, Come Hat-In-Hand

It wasn’t that long ago the commercial real estate developers, particularly here in California, considered themselves the masters of the universe.

How times have changed.

On the front page of today’s Wall Street Journal is a story detailing the woes of real estate developers. Titled Developers Ask U.S. For Bailout As Massive Debt Looms, details the coming tsunami wave of debt for commercial real estate enterprises, among them mall developers.

According to the story, one research firm estimates that $530 billion is coming due in the next three years, with $160 billion next year alone. Regular readers of this site know that the developer of the Elk Grove’s largest retail center ever, General Growth Properties (GGP), has stopped construction of the Elk Grove Promenade.

GGP has over $900 million due by February and has put several of its prized properties up for sale to stave off the wolves at the door. Over the next three years, GGP has over three billion in debt coming due.

The future of GGP is doubtful as are several other companies. In Elk Grove we have already seen one regional commercial developer, KOBRA Properties, declare Chapter 11 bankruptcy.

KOBRA had one development underway near Laguna Blvd and Bruceville Rd., the Laguna Creek Shopping Center, that has been foreclosed on. KOBRA also owns at least one existing strip center in town where it appears maintenance and pest control is lax.

In the coming months, it is likely many of these properties will be foreclosed on and once again, Elk Grove, and maybe all taxpayers, will be left to deal with the aftermath of these masters of the universe.