Commercial real-estate fundamentals seem dramatically weaker across most major property segments and markets, according to The Wall Street Journal, citing data sourced from Deutche Bank.

Commercial real-estate (CRE) loans are going sour at an accelerating pace threatening to cause tens or possibly even hundreds of billions of dollars in losses to banks already hurt by the housing downturn. The delinquency rate on about $700 billion in securitized loans backed by office buildings, hotels, stores and other investment property has more than doubled since September to 1.8% this month.

The Real Estate Roundtable, a trade group, estimates that commercial real estate in the U.S. is worth $6.5 trillion and financed by about $3.1 trillion in debt.

Foresight Analytics in Oakland, Calif., estimates the U.S. banking sector could suffer as much as $250 billion in commercial-real-estate losses in this downturn. The research firm projects that more than 700 banks could fail as a result of their exposure to commercial real estate.

In 1993, less than 2% of the nation’s banks and savings institutions had commercial real-estate exposure exceeding five times their Tier 1 capital. By the end of 2008, that had risen to about 12%, or about 800 financial institutions. This means they have a thinner cushion for loans that go sour.

CRE however, “may not be hit as hard as many fear if the economy pulls out of recession more quickly, driving up rents and occupancy rates. And greater availability of financing — a key goal of the Obama administration — could lift property values”. [via WSJ]