IDEAS home Printed from
   My bibliography  Save this article

Is commercial real estate reliving the 1980s and early 1990s?


  • C. Alan Garner


Concern has been rising about the health of the U.S. commercial real estate market and any impact it may have on financial markets and institutions. It is too early to judge the full extent of any problems, but commercial real estate financing has been shaken by the financial market turmoil associated with recent residential mortgage defaults. The spreads of commercial mortgage-backed securities have widened relative to Treasury securities, and recent reports suggest that prices for many commercial properties are declining. In addition to the direct effects on construction activity, large commercial real estate losses by financial institutions might dampen broad-based economic growth by causing banks to cut back on commercial, industrial, and household lending. ; One way to gain perspective on the current commercial real estate market is to look back at historical experience. A natural comparison is with the 1980s and early 1990s. In the 1980s, commercial construction boomed, resulting in a massive oversupply of commercial space and creating serious financial problems for many depository institutions and real estate investors. Many analysts believe these problems helped cause a broader credit crunch in the early 1990s, which reduced the availability of funds to small and middle-sized businesses and slowed overall economic growth. ; Garner explores how the current economic and financial situations in commercial real estate are similar to, and different from, the conditions leading up to the real estate bust in the late 1980s and early 1990s. The recent commercial construction boom was not as large as in the 1980s, suggesting excess supplies of commercial space may not grow as large. Another major difference from the early 1990s-increased commercial real estate securitization-may expose developers and investors to shocks originating outside the commercial real estate sector. A major similarity is that commercial banks currently have a large direct exposure to commercial real estate loans.

Suggested Citation

  • C. Alan Garner, 2008. "Is commercial real estate reliving the 1980s and early 1990s?," Economic Review, Federal Reserve Bank of Kansas City, vol. 93(Q III), pages 89-115.
  • Handle: RePEc:fip:fedker:y:2008:i:qiii:p:89-115:n:v.93no.3

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Lynn E. Browne & Karl E. Case, 1992. "How the commercial real estate boom undid the banks," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 36, pages 57-113.
    2. Todd E. Clark & Taisuke Nakata, 2006. "The trend growth rate of employment : past, present, and future," Economic Review, Federal Reserve Bank of Kansas City, vol. 91(Q I), pages 43-85.
    Full references (including those not matched with items on IDEAS)


    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. The Value of Dirt: Introducing the Astor Index
      by Jason Barr in Skynomics Blog on 2019-09-03 12:08:02


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. David Glancy & John R. Krainer & Robert J. Kurtzman & Joseph B. Nichols, 2022. "Intermediary Segmentation in the Commercial Real Estate Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(7), pages 2029-2080, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John V. Duca & Patric H. Hendershott & David C. Ling, 2017. "How Taxes and Required Returns Drove Commercial Real Estate Valuations over the Past Four Decades," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(3), pages 549-584, September.
    2. Yijia Wen & Li Fang & Qing Li, 2022. "Commercial Real Estate Market at a Crossroads: The Impact of COVID-19 and the Implications to Future Cities," Sustainability, MDPI, vol. 14(19), pages 1-16, October.
    3. Nan-Kuang Chen & Charles Leung, 2008. "Asset Price Spillover, Collateral and Crises: with an Application to Property Market Policy," The Journal of Real Estate Finance and Economics, Springer, vol. 37(4), pages 351-385, November.
    4. Paraskevi Salamaliki, 2015. "Economic Policy Uncertainty and Economic Activity: A Focus on Infrequent Structural Shifts," Working Paper Series of the Department of Economics, University of Konstanz 2015-08, Department of Economics, University of Konstanz.
    5. Chen, Nan-Kuang, 2001. "Asset price fluctuations in Taiwan: evidence from stock and real estate prices 1973 to 1992," Journal of Asian Economics, Elsevier, vol. 12(2), pages 215-232.
    6. Lynn E. Browne, 2001. "Does Japan offer any lessons for the United States?," New England Economic Review, Federal Reserve Bank of Boston, pages 3-18.
    7. Riccardo DiCecio & Kristie M. Engemann & Michael T. Owyang & Christopher H. Wheeler, 2008. "Changing trends in the labor force: a survey," Review, Federal Reserve Bank of St. Louis, vol. 90(Jan), pages 47-62.
    8. D'Ann M. Petersen & Keith R. Phillips & Mine K. YĆ¼cel, 1994. "The role of tax policy in the boom/bust cycle of the Texas construction sector," Working Papers 9413, Federal Reserve Bank of Dallas.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2008:i:qiii:p:89-115:n:v.93no.3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Zach Kastens (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.