Up in the Air

For example, in Harlem, Vornado Realty Trust -- one of the city's biggest commercial landlords -- is suspending plans to build a 23-story, $435 million headquarters for Major League Baseball's cable network after it didn't secure additional tenants and financing, according to people with knowledge of the deal.

In Chicago, a marquee, $500 million project of offices, retail and a hotel at the city's landmark Union Station is years behind schedule after a deal to get a loan from Eurohypo, a real estate bank in Frankfurt, Germany, fell through, leaving the developer to try to secure another. "They pulled it back," said developer Hossein Youssefi of his deal with Eurohypo. He said the deal was going to be 85 percent leveraged financing, but Youssefi said Eurohypo told him they were "going to be in a holding pattern." He's trying to get another loan but said he couldn't elaborate on the details because of a confidentiality agreement. "We are hoping it happens," he said. "Nothing these days is finalized."

Some real estate companies and well-heeled investors are hurting.

General Growth Properties, the nation's second-largest shopping mall owner and owner of Tysons Galleria and Landmark Mall, replaced its chief executive, and some analysts fear the company is overleveraged and selling off properties. General Electric, which has one of the largest real estate portfolios in the world, said it had a 62 percent decline in its third quarter profit on real estate -- to $244 million from $640 million -- and is selling off some of its assets.

In the Washington area, there is a concern that new developments won't break ground, as it is harder for developers to get loans. The sales market, which had been considered a hot spot for out-of-town and foreign investors, is slowing from last year's unprecedented run, when 170 buildings -- worth $10.1 billion -- were sold in the Washington area. That compares with 51 buildings worth $3 billion for the first nine months of this year.

One major fear is that Washington, long considered a bulwark because of its steadily growing economy anchored by the federal government and the spinoff of related businesses leasing office space, is growing "increasingly vulnerable, as leasing activity has eased to its slowest pace in over a decade," said Sigrid Zialcita, director of research at Cushman & Wakefield.

The office vacancy rate in the region is hovering around 10.9 percent. If unemployment rises, that rate will probably go up, analysts say.

"D.C. is used to having favored-nation status where it is usually insulated from downturns," said Brian McVay, executive vice president at Cushman & Wakefield's Washington area office. "We're now going to see some of the pain here like everywhere else. "If you haven't broken ground on something, the chances of you doing it anytime soon are slim."

Some deals are getting financed, but they are typically smaller and have multiple lenders. In some cases, a building that houses a government tenant often has an easier time getting a loan because it is not as subject to market ups and downs.

At the $1 billion Portals project in Southwest, the building's owner, Republic Properties, typically would have refinanced the original commercial mortgaged-back security loan on the property as it was coming due or gotten a single bank to lend the money.

But since commercial mortgage-backed deals are all but gone and lenders are reluctant to make large loans, Republic went to 40 or 50 banks to find lenders. The building is about 40 percent leased and has a solid tenant with the Federal Emergency Management Agency.

Last month, Republic landed a $212 million loan with Cal National Bank of Los Angeles and a fund of Prudential real estate. Cal National only put up $120 million, so Republic got a $92 million mezzanine loan to bridge the gap. Mezzanine debt, much like a second mortgage on a house, is much more expensive to borrow, ranging from 11 to 18 percent these days.