NEW YORK - January 26, 2009 - Foreclosures have delivered a devastating blow to the residential side of real estate in recent years - and experts say the bloodletting is about to begin for its commercial counterpart.

Commercial property foreclosures nationwide are expected to hit record levels this year as retailers struggle, office tenants downsize and overleveraged borrowers scramble to pay up or refinance loans coming due.

"We're certainly in uncharted territory," said Stephen Blank, a senior resident fellow at the Washington-based Urban Land Institute. "Many property owners are drowning in debt, lenders are not lending ... and property income flows are declining."

Ripples of the problem are being felt across Greater Cincinnati and Northern Kentucky, typified by the cases of three major Downtown buildings, including a hotel, plus a Sharonville office park, that are wending through the courts.

Scott Yards, of the Cincinnati office of commercial real estate firm CB Richard Ellis, said an unprecedented number of commercial real estate sales occurred throughout the region in 2004, 2005 and 2006, when "money was plentiful" and lending guidelines were less stringent than now.

"And those loans were typically short-term. We're talking three- to five-year terms," said Yards, vice president of CBRE's office properties group. "Now we're at the point that a lot of these loans are maturing, and these buildings have lost tenants, which means their incomes have gone backward. For them, it's going to be very difficult to refinance."

Across the region, roughly 22 percent - or $1.5 billion - of commercial real estate loans are expected to mature between now and 2011, according to Foresight Analytics, an Oakland, Kalifornia-based real estate data-mining firm.