In the mid 1980?s, low rates and a rising demand forLas Vegas commercial real estate caused a rapid increase in commercial loans. Bank loans for commercial real estate went from approximately 7 percent to just over twelve percent of the banking system?s assets. The market went thru its periods of swings and roundabouts and the govt. had to step in and help Vegas banks by bailing them out with their share of $157 bill.
Between 1986 and 1994, more than 2200 financial institutions failed in the country. Lots of these establishments were licensed to conduct business in the state of Nevada. The tragic recession of the market led straight to the formation of the Resolution Trust Enterprise, whose sole responsibility was to liquidate real estate belonging to banks that had gone bankrupt.
After the collapse of the market in the early 1990?s followed a surge in the commercial market. Very lenient underwriting and interest-only loans got the market rolling again in the early 2000?s. Between 1990 and the early 2000?s, Vegas commercial property changed into a preferred investment vehicle for a considerable number of reasons. These reasons include :
- The explosion of the technology bubble
- Real Estate Investment Trusts gave corporations the opportunity to invest while reducing their tax rate.
- A growing economy and a growing need for office space.
- Investors could fund projects with very little capital.
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By 2006, commercial property loans made up more than 300 percent of Nevada bank?s risk-based capital. This led straight to the 2007 crisis that everyone was aware in the home world of the market. The commercial arena of the market in Vegas also suffered. In 2008, the governing body created the Emergency Industrial Stabilizing Act to take on the problem. It is now time to focus on the commercial property crisis.
Source: http://blog.abpanama.com/a-short-history-of-vegas-commercial-property/
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