`A Lot More Pain To Come'

Founded on vast optimism and funded by eager lenders, the prestigious Portman real estate realm has foundered in the lousy property market of the '90s. Like other high-flying developers who have come to grief in the past two years, John C. Portman Jr. never figured that demand for his gargantuan projects would flag. But in 1990, massive vacancies forced Portman into a killing cash crunch. He couldn't service the $2.1 billion in debt that had expanded his empire of concrete and glass from his Atlanta hometown all the way to Shanghai.

The woes facing Portman, who declined to be interviewed for this story, are shared by legions of other wounded developers, from New York's Donald Trump to Dallas' Trammell Crow to obscure suburban players. The harsh 19.5% office vacancy rate nationwide also is inflicting pain on the banks, insurance companies, and other financial institutions that lent them the money in the first place (chart). The commercial real estate debacle has been the main reason for the wave of big bank and insurer failures this year.