So many real estate deals are crumbling that prices for commercial real estate could fall 15 percent in the coming year, which would create the biggest decline since 2001, according to Bloomberg.
Property owners are being forced to put off sales or accept lower prices as the cost of borrowing rises.
"People aren't willing to do deals right now,'' said Howard Michaels of the New York-based chairman of Carlton Advisory Services Inc. ``The expectation is that prices will come down.''
Acquisitions of apartment buildings fell by half in July from June, according to Real Capital Analytics Inc. in New York.
Morgan Stanley analyst Matthew Ostrower foresees a 5-percent to 15-percent drop in average commercial real estate prices in the next two years.
Another analyst, Michael Knott of Green Street Advisors Inc., said office prices might fall 15 percent in 18 months.