(Crystal Proenza is associate editor of Real Estate Florida.)

MIAMI-Limited debt availability and declining property values will cause the South Florida commercial real estate market to continue its downward trajectory, at least for the first two quarters of 2009, according to local experts. Plunging values may begin to stabilize in the third quarter, but property fundamentals may continue to deteriorate based on unemployment. Although there is an overall lower demand for commercial real estate, local brokers expect that sometime in the next 18 months, sale and lease transactions will pick up and lift the region out of its slump.

"We are coming into a period of time in the commercial real estate industry with the most uncertainty I have seen in my 13 year career," says Alan Kleber, senior director with Cushman & Wakefield in Miami. "Taking into consideration weak tenant demand, additional inventory coming into the market, buildings purchased at unjustifiable pricing during the commercial liquidity boom, and debt coming to maturity creating additional stress for landlords, we are truly entering uncharted territory in 2009."

Public REITs, pension funds, private investors and any owner with CMBS loans maturing in 2009 face an especially difficult time because there is an inability on the part of lenders to work on loans that were securitized, unless there is a default, says Mark Gilbert, executive vice president of the capital markets group at Cushman & Wakefield in Miami. "And then there will be loans that go into default because the fundamentals of a property change, rents go down, occupancy goes down and there will not be enough cash flow to service the present debt." On the flip side, those developers that are in good standing with fundamentally strong properties stand a high chance of receiving assistance in the form of extensions provided they are the balance sheet loans, adds Gilbert.