Commercial RE is actually my thing; I only dabble on the edges of the residential side of my business.

There is such a glut of office and warehouse space in Carlsbad (as well as So. Vista/San Marcos) that it’s ridiculous. I don’t know who convinced these banks that there was sufficient demand for these units, but several somebodies (including appraisers) were telling whoppers and they should be punished for it.

There are other areas in the region with similar gluts, like E. Chula Vista and Temecula/Murietta. And they’re all going down, just as surely as the SFR market. The difference between commercial and residential is that commercial buildings can’t be filled simply by dropping the price. There has to be a business, and that business has to generate sufficient profits to support the building they’re in.

That’s why I think the “commercial correction” will come on even faster than the residential correction.