PHILADELPHIA -- From his 30th-floor Center City office, William J. Hirschfeld has an in-your-face reminder that all is not well in commercial real estate.

His view is of One Liberty Place, the 61-story premier office address that, to the casual observer, is a glistening marvel. To Hirschfeld, it's also a constant prod that he's "gotta make the doughnuts."

That means finding a tenant for the 54th floor, a spectacular space that, despite pulse-quickening views, Hirschfeld, as One Liberty's leasing manager, has had no luck filling since Cigna moved out three years ago.

It's just a hint of the harrowing state of affairs in commercial real estate, where vacancies are on the rise across virtually all sectors, rents and property values are dropping, building owners are low on funds, and financing options are drying up.

And bad as things are, they're expected to get worse - the next slide in the snowballing economic crisis that began with the collapse of the housing market and continues to claim casualties.

"There's a tremendous amount of pain coming," declared Sid Smith, managing partner of the regional office of Newmark Knight Frank Smith Mack, a global real estate services firm.

There's plenty of pain already, and abundant evidence that economic suffering is as contagious as flu in the workplace:

The office market is faring the worst, a direct result of layoffs and the shuttering of businesses altogether. At the close of the third quarter, the office-vacancy rate in the Pennsylvania suburbs was 18.4 percent; in South Jersey, 16.1 percent; in downtown Philadelphia, 12.6 percent, according to data from Grubb & Ellis Co., a national commercial real estate services company. For the combined region including Wilmington, the rate was 16.3 percent, slightly better than the national rate of 17.1 percent, which Grubb & Ellis attributed to the diversity of this area's economy and a lack of overbuilding before the recession started.

Those who have lost jobs or fear losing them are shopping less. That, in turn, has led to retailers' going out of business or pulling back on expansion plans, leaving empty storefronts in shopping centers and on Main Streets, and vacant big-box hulks. The region's retail-vacancy rate is put at 8.3 percent.

With shopping down, so is a lot of manufacturing and the need for stockpiling inventory, thus creating vacancies in warehouses and other industrial spaces.

Multifamily commercial properties (apartment and condo buildings) don't have a lot to crow about, either: Vacancies have been on a gradual climb there, too, currently about 8 percent in this market. Some reasons: unemployment (young people aren't leaving home, for instance) and abundant now-less-expensive homes for sale.

All this empty commercial space is driving down rents, creating a capital-flow problem for the landlords who can least afford it - those with debt coming due. Of the $3.5 trillion in outstanding commercial debt, an estimated $535 billion will mature over the next two years, according to Marcus & Millichap, a national commercial real estate brokerage firm.

Property values are down as well, as much as 40 percent since October 2007, the most recent peak. Those drops contributed to the bankruptcy filing last month by Capmark Financial Group Inc., a commercial-property lender in Horsham that wound up owing more to its own creditors than its loans were worth.

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