9,500 Shuttered Stores In Sacramento Area

Before taking a closeup look at Sacramento, please consider a snapshot of commercial real estate in general. MarketWatch is reporting that commercial mortgage failures threaten system:

Over the next few years, a wave of commercial real-estate loan failures could threaten America's financial system, and in the worst case scenario, hundreds of additional community and midsize banks could face insolvency, a congressional watchdog group said Thursday.

According to a report by the Congressional Oversight Panel, a watchdog group for a $700 billion bank-bailout package, about $1.4 trillion in commercial real-estate loans will reach the end of their terms between 2010 and 2014, of which nearly half are now under water (that is, the borrower owes more than the underlying property is currently worth).

The report added that losses from commercial loans could range as high as $200 billion to $300 billion.

As a result, it said, banks that suffer from the losses or are discouraged by the economic future could become even more reluctant to lend, which could reduce access to credit for more businesses and families, accelerating a negative economic cycle.

"The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation's midsize and smaller banks, and that as the damage spreads beyond individual banks, that it will contribute to prolonged weakness throughout the economy," said the report, which was approved unanimously by the five-member COP.

Commercial real estate woes are everywhere you look, but Sacramento, California is ground zero of the ongoing bust. It will take years if not a decade to fill vacant businesses in greater Sacramento.