According to a report by Grubb & Ellis that was just released, Austin, Texas comes in at number ten for the strongest commercial real estate market.  In the “2011 Real Estate Forecast”, the real estate investment firm foresees a slow recovery in the leasing market for all property types.  However, activity in the investment market began its recovery earlier than anticipated which signals a lot of opportunity for serious commercial investors.

“All things being considered, 2010 was actually better than most anticipated it would be — we saw positive net absorption and an uptick in investment sales during the second half of the year, positioning us for a continued recovery in 2011,” said Robert Bach, senior vice president and chief economist at Grubb & Ellis.

According to the report, Austin’s commercial real estate market will recover at a steady growth rate.  Although foreclosures and write-downs are expected to increase as banks deal with the pool of distressed loans extended last year, Austin’s office market still managed 10th place on Grubb & Ellis’ annual “Investment Opportunity Monitor.”

See below for the top ten cities with the strongest commercial real estate markets:

While many large financial institutions have all but decided not to delve further into commercial mortgage-backed securities (CMBS); Wells Fargo is moving full speed ahead and plunging back into the CMBS market.  Wells Fargo hired additional personnel to work on this area of business because they strongly believe that there will be a resurgence of CMBS deals and they want to be ready when it happens. It’s all about positioning. Ed Blakey, head of commercial mortgage lending and servicing at Wells Fargo has said, “Our pipeline is growing and we intend to be a leader of this market.”

As you know, Wells Fargo purchased Wachovia two years ago and prior to the takeover, Wachovia was the leading underwriter in the CMBS market.  As a matter of fact, before Wachovia’s takeover, it had structured the largest CMBS deal in history–a $7.9 billion bond that included financing for the 2006 purchase of Manhattan’s largest apartment complex.

According to data compiled by the Mortgage Bankers Association, Wells Fargo is the top U.S. commercial real estate lender with more than $27 billion in loans last year, which is triple the amount of runner-up PNC Financial Services Group, Inc.

Wells Fargo isn’t the player in the CMBS industry. Other lenders are gearing up for the resurgence of the CMBS market.  Many analysts believe there is strong demand for CMBS deals and that there will be a great deal opportunity of loans maturing over the next five years.  Matthew Anderson, Managing Director at Foresight Analytics estimates there is almost $1.5 trillion in commercial mortgages on the books of banks or bundled into securities that will come due between 2010 and 2014.  Sounds like a great window of opportunity!

According to Moody’s Investors Service, the number of delinquencies for commercial mortgage-backed securities (CMBS) has continued to climb in November to 8.63%.  November 2010 proved to be a higher rate than October which saw a delinquency rate of 8.39%.  The spike in November was the largest increase since May yet it was still significantly lower than the first half of 2010.

Loans that originated in 2007 have the highest delinquency rate of 10.86%.  However, loans from 2008, have actually decreased their deliquency rate in the month of November as they have smaller outstanding balances.

No one property type was able to escape default. All property types were affected and actually doubled in delinquency in November from a year ago. According to Housingwire, industrial property saw an increase from 3.11% to 6.38&; multifamily went from 7.4% to 13. 9%; office space increased from 2.95% to 6.72%; retail went from 4.24% to 7.14% and hotels spiked from 7.8% to 16.42%.

The areas most affected by these delinquency rates are the southern (10.86%) and western (9.7%) regions of the United States. The eastern part of the country inched upward slightly while the Midwest actually decreased slightly.

Two years after the residential housing collapse, commercial real estate is poised for a grand downfall of its own.  Savvy investors who position themselves correctly will make fortunes as opportunities will abound.  According to Kevin Hall at McClathy Newspapers,  “Thousands of commercial mortgages valued at the hundreds of billions of dollars are approaching a renewal date.  By some estimates, two out of every three will no longer meet the original loan conditions and will not be able to refinance.”

This is the next wave to hit and when the other shoe drops, a vicious cycle will unfold.  For the enterprising entrepreneur, there are a host of ways to profit in this time.

Commercial Workout Consulting is an absolute goldmine niche area. In this arena, the consultant takes a well definited analytic approach to each case.  The Commercial Borrowers find themselves in a double whammy as property values have declined to the point of adversely affecting cashflow and debt ratios; and, commercial underwriting standards have tightened, making it nearly impossible to refinance.

Lenders, on the other hand, find themselves with no answers either as foreclosure and real estate owned (REOs) only serve as an anchor on the bank’s balance sheet.

The workout consultant will craft solutions that resolve these complex issues and bring an optimum outcome to all parties.