Subprime Spillover
The housing market is separate from the commercial real estate market. I don't have any figures, but would bet the correlation between the two is lower than most people think. The housing market's subprime problems, despite the differences between the housing and commercial real estate markets, will spill over to the commercial market and the tenant in common market. All the loans on TIC transactions are sold by the lenders to firms that package the loans into Commercial Mortgage Backed Securities (CMBS). To maintain their ability to sell their loans to the packagers, lenders will impose tougher lending standards, require more reserves and command higher spreads. This translates into more expensive financing for TICs, but will allow the CMBS to keep their ratings and marketability. TIC sponsors, and in particular those pushing marginal deals, better get ready for the tougher scrutiny.