The CRE "Earthquake"

I have been warning about the impending collapse in the commercial real estate world for quite some time (in May, in July). Recently more and more anecdotal stories about continued softening in CRE seem to be coming in. This most recent one is from Law.com:

The sudden queasiness of lenders has cast a pall over the once-robust real estate market in the last six weeks, Cowan and other lawyers report. Deals have been interrupted mid-stride. Some have been re-jiggered and others have just died.

With the pop of the housing bubble and the implosion of the subprime mortgage market, lawyers representing homebuilders had already seen a slowdown in transactions. But with the credit crunch that followed, high-end commercial real estate deals -- the cash cow for big-firm real estate groups -- aren't going forward.

Although the dead deals haven't come close to killing the practice, they have taken some life out of the legal fees. Some clients demand discounts from 5 percent to 15 percent if a deal doesn't go through, lawyers report.

While I don't think this is a doom and gloom report, I think this does lead one to become more and more concerned about the health of the CRE market. A good question to ask would be who would get hurt the most if the CRE market went into a tailspin?