I was at a confab of about 75 commerical real estate professionals yesterday
...and some amazing stuff was said: First everyone got up and introduced themselves, said what they did, and gave their opinion on the state of the commerical real estate market...
AMAZINGLY, IT WAS ALL GLOOM AND DOOM!
WE ARE OVER-BUILT AND STILL BUILDING MORE.... said one person.
TENANT RETENTION IS THE NAME OF THE GAME...said another.
DEINDUSTRIALIZATION HAS COLLAPSED THE INDUSTRIAL MARKET...AND WAREHOUSING IS WEAK REGIONALLY.
WE ARE A THROW AWAY ECONOMY WITH NEW BUILDING STEALING THE TENANTS FROM OLDER BUILDINGS... Buildings are like "Dixie Cups" use 'em and toss 'em.
RESIDENTIAL RENTALS HAVE COLLAPSED IN MOST AREAS.
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On the "bright side"....
RETAIL RENTALS ARE "STRONG"... Laid off managers are "buying their own businesses" vowing "never again will someone do this (the layoff) to me." Others, who can't find jobs are starting undercapitalized businesses...(an alas, three months later dying like flies!)
VACANT LAND IS STRONG...GOTTA HAVE SOMEPLACE TO PUT ALL THAT "NEW CONSTRUCTION!" RIGHT?
CONCLUSION?
The ultra-low rates that Greenspan used to protect the stock bubble has created "distortions" in the real estate market.....
1. WE ARE OVER-STORED AND GETTING MORE OVER-STORED EVERYDAY AS COMMERICAL BUILDERS "DO THEIR THING" THANKS TO LOW RATES.
2. BUILDERS NEED LAND TO BUILD ON.
3. RETAIL IS "STRONG" BUT NOT WELL FINANCED...AND THE COLLAPSE OF THE AMERICAN CONSUMER DUE TO $3 GAS IS NOT HELPING. AND RATES ARE RISING ALA THE FED. AND THE NEW BANKRUPTCY LAW IS JUST STARTING TO "SINK IN" ON CONSUMERS WITH HIGH CREDIT CARD DEBT.
4. NEW RETAIL ARE OFTEN REFUGEES FROM "BOOM STATES" LIKE CALIFORNIA...OR LAID OFF OR OTHERWISE JOBLESS "BOOMERS" SEEKING NEW OPPORTUNITIES...(AND OFTEN MORTGAGING THEIR HOME EQUITY TO DO IT!)
SO LET'S CALL IT A LOT OF GLOOM...WITH A LITTLE MISPLACED AND MISGUIDED "BOOM."
GLOOM AND BOOM?
