The commercial real estate venture loans should amortize over the life of the asset—if that is a short period of time then so be it.
The bubble economy (tomorrow will take care of itself) approach was destined to fail.
Your proposal would increase risk and interest rates for such loans
Unfortunately, they never thought about a recession this deep. They had money they “had” to get out and the balloons had worked before. As a matter of fact, they made the balloon balances to be lower than the replacement costs.
So we got a situation where no one wants to invest in the “see-throughs” no matter what the square footage cost might be. You still got real estate taxes, insurance, maintenance and management fees to pay. Then you got the real estate agents who try to stick you with gigantic “commissions” and then the cost of retrofit, which in an office building you are talking $60.00/SF+. Tenants then want to negotiate for free rent, moving cost covered, communication systems included and all other kinds of “goodies”.
My husband and I have been through these ups and downs and luckily after 40 years in the business got out and just in time! We can sleep at night, have what we need to live a happy life and enjoy our life in the USA as we know it today.
My prayers go out to those who have thought the market would turn in 18 months but has only gone from bad to worse. It will be quite an adjustment for some of the high rollers in both the development and banking industry.
And worse yet, us taxpayers will pay for this fiasco. JMHO.