Images of the commercial real estate downturn

Images of the commercial real estate downturn

After more than a year spent in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud. Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts as the market finally faces up to the reality of its diminished conditions, according to a report released Thursday by PriceWaterhouseCoopers and the Urban Land Institute. Property sales, which have been practically at a standstill since 2008, will begin anew as banks foreclose on troubled assets and resell them. Prices will be down an average of more than 40% from their mid-2007 peaks. It will be the biggest drop in commercial property values since the Great Depression of the 1930s and eclipse the industry debacle of the early 1990s. Stressed owners will do their best to hold on during what will be the worst market to sell in decades while investors with cash will be poised to grab bargains at the cyclical low. Retail and office properties will take the biggest hits, the report said, as nervous consumers curb spending and companies delay rehiring.

Photography by Michael Robinson Chavez / Los Angeles Times

FORD: Pasadena Ford was bought out by Ford Motor Co. as they have enacted severe cost cutting measures to stay afloat. The American automobile industry has been especially hard hit and U.S. companies are trying to slim down and become competitive once again. The economic downturn of the last two years has a left a rash of boarded-up and closed-down businesses and buildings in its wake. Most neighborhoods and districts of Los Angeles have economic casualties, both large corporations and family businesses, that have not survived the worst economic recession since the Great Depression.

VAN NUYS: Empty signs tower over empty businesses at a shopping center in Van Nuys near Laurel Canyon Boulevard. A security guard on the premises said that the plan was to tear down the center and build a new mall. Those plans have been put on hold because of the economic crisis.

K-MART: A chain-link fence blocks the exit of a shuttered K-Mart store in Northridge. The retail giant closed dozens of stores it deemed as "underperforming."

CIRCUIT CITY: Circuit City was the largest retailer to fall victim to the economic downturn. The electronics giant closed its 567 stores, resulting in 34,000 job losses in the first quarter of 2009. The Sunset Boulevard store near Silver Lake now lies empty.

LAST CALL: The bar is all that's left inside a drinking establishment in San Gabriel that shut down at the end of 2008. A neighboring business owner said that a bakery just down the way shut down after 50 years of business, after the price of flour doubled.

BIG K-MART: A boarded-up K-Mart store fronts an empty and fenced-in parking lot in Northridge at the corner of Corbin Avenue and Plummer Street. K-Mart, which is owned by Sears Holding Corp., has been steadily closing stores since its Chapter 11 filing in 2002. It has lost massive market share to discount retailers Target Corp. and Wal-Mart Inc.

ALBERTSONS: An empty parking lot and oil stains are all that remain after Albertsons shut down nine stores in the first quarter of 2009. The grocery store on Mason Avenue in Canoga Park was one of the closures resulting in about a dozen job losses.

MERVYNS: A shuttered Mervyns is seen in Simi Valley just off Eringer Road. Mervyn's filed for Chapter 11 in 2008 and soon after shut down all of its stores resulting in thousands of layoffs.

RUBBISH: Trash piles up in an empty Circuit City parking lot on Sunset Boulevard. The electronics giant was the largest retailer to fall in the economic crisis.