Malay Bansal has an interesting and not too complex article explaining the problems in the Commercial Real Estate (CRE) market.
Let me give you the short version. Valuations will fall by about half and the declines (already in the pipeline) will manifest between now and 2015 as the various loans become due or the current owners default. Now you know why the banks are sitting on all that government money ($1 trillion plus in cash) and not lending. They expect to take further hits. The magnitude of the hits could run anywhere from 1/2 trillion to 1.5 trillion. We are not out of the woods yet. Not by a long shot.
It's bad enough right now, but if the government gets involved they will only prolong the problem and make it worse.
(Of course, in some circles that would be a reason for the government to get involved.)