As the American economy again enters a period of uncertainty, industry analysts are raising valid concerns that the commercial real estate market could slide into a turmoil once the trillion dollars of loans that the sector carries begin maturing within the next few years.

Experts explained that majority of commercial loans in the United States were contracted during the real estate bubble but most borrowers were now enmeshed with mortgages that are worth much higher than the properties they owned.

Rep Elizabeth Warren, chair of the Congressional Oversight Panel, warned that troubled commercial properties that are set to renew their skyrocketing loans could eventually end up defaulting on debt servicing, effectively creating “a wave of commercial mortgage defaults and triggering economic damage that would touch the lives of every American.”

The scenario is not actually far-fetched as commercial loans were normally refinanced in a cycle of three to ten years and such procedure eventually eats up the actual value of a mortgage property, from a decline of 40 percent to actually canceling out the property’s total value as interest further pile up.

Warren said that defaults introduce the specter of empty offices and empty stores which inevitably lead to job losses while on the other hand, banks absorbing too many loan defaults would become reluctant to release more loans and the end situation is scarcity of jobs and funds, which could bring the economy down to its knees.

New Jersey’s The Goldstein Group president Chuck Lanyard said that more than eight percent of the group’s retail space on its numerous stores and shopping malls went unoccupied during these hard times and prior to the recession, the average was a manageable two to three percent.

Lanyard blamed the decline to a decade of accelerated expansion activities which created a breaking point in commercial retail space and ended up pitting similar businesses competing against each other.

He said that the crowded retail sector in New Jersey discouraged fresh initiatives from new retailers as they would not want to go in direct competition with existing and established businesses, with grave concerns that “there’s not enough dollars to go around for those retailers to survive.”

However, Lanyard remains optimistic that the bankruptcies that have paralyzed many giant commercial centers such as Circuit City and Linens ‘n Things would simply pass over Paramus, as he cited that the area’s vacancy rates were still relatively low compared to other regions in the country.

Tax assessor James Anzevino could only follow Lanyard’s upbeat attitude as he stressed that despite the current economic difficulties, people still frequent the shopping malls not only to venture around and kill time but to actually spend some of their cash.

One example, Anzevino pointed to is the $170 million Bergen Town Center expansion, which in spite of three years delay is now approaching completion, a testament, according to him, to Paramus’ strength and resiliency.

Economists are in agreement that New Jersey and New York may not be paralyzed by the looming commercial mortgages meltdown but they remained cautious on the area’s high incidence of vacancy rates, while its loan delinquency rates were running much higher than the national levels.

The only consolation that analysts could see now is banks have identified the problem early and are presently working hard to rectify the situation by adjusting commercial loans in order to veer away from the debilitating foreclosures that were seen in housing market lately.