The avalanche of commercial real estate foreclosures has not materialized. This is because of the currently lender policy of "extend and pretend" and the unwillingness of many lenders to sell those properties that they own (REO) at deeply discounted prices.

Much of this unwillingness to sell stems from the massive injection of taxpayer money into the financial system to strengthen weak lender balance sheets. Because of those taxpayer dollars lenders have little motivation to raise additional capital by selling foreclosed properties at significant discounts. Currently it is in a lenders best interest to work problem loans out ("extend and pretend") and to not to sell bank owned properties (REOs) at steep discounts because of the negative impact on their capital requirements.

Providing the economy continues to recover many owners of commercial real estate should narrowly dodge the foreclosure bullet.

Unlike the downturn in the 1990s, prior to this downturn there was a lack of significant speculative construction in most markets. This lack of oversupply should translate to a faster rebound as employment increases and demand for commercial real estate accelerates.

In many markets higher vacancy rates and reduced rents are enticing tenants back into the market and are driving stepped up leasing activity with a resulting improvement in absorption rates. Industrial, office, and some retail categories are returning to positive net absorption.

Bid/ask spreads are narrowing as owners and investors adjust to the realities of the market. We have also seen a pleasant uptick in both closed transactions, pending contracts, and requests for property information.

The recent spurt in gross domestic product (GDP) of 5.7% will, if sustained, boost industrial production and profits, leading to more jobs that in turn will put upward pressure on rents and commercial real estate.

The recent uptick in employment caused unemployment rates to drop to 9.7%. Jobs grew in manufacturing and temporary help (a precursor to future hiring), while service jobs and construction declined reflecting temporary holiday employment, the weather, and minimal home building activity.

Many firms are reporting better-than-expected earnings and moderate sales increases, which should translate to moderate job growth in 2010.

Government spending is having a trickle down, positive effect on office properties that serve consulting, accounting, public relations and government affairs.