May as well kiss commercial real estate goodbye, at least till sometime next year. Yeah, fat chance!
The latest report from the National Association of Realtors is darker than a nighttime boy scout camp out without a roaring fire.
On its website, NAR’s chief economist says, “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions.”
But if there is any light ahead at all, it comes from Lawrence Yun’s insistence that commercial real estate “almost always” lags the rest of the economy.
“With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011.”
Now, you may have taken note of one thing that is a lot for Mr. Yun to hang his hat–and prediction–on: that the job market is “expected to turn for the better later this year.”
Says who?
I guess it depends on one’s definition of “turn for the better?”
If having fewer people laid off each month is turning for the better, I guess that it is. But, so far, nothing would indicate that any meaningful non government jobs are being created and, even if that were to start happening, economists expect it to take years before the employment level reaches its peak of just a few short years ago.
At what point, then, does this rather tepid “turn for the better” translate into a more robust commercial real estate sector?
Besides, as Mr. Yun seems to forget ( or wants to avoid discussion of), so many commercial properties are now underwater (worth less than their mortgages), that foreclosures of commercial properties are likely for years to come, say many experts who have studied the matter.
I think it is nonsense to even suggest any real recovery in the commercial sector within only a year or so.
But check back with me in, say, 2015, and we can discuss it further than.
Related posts:
- Commercial Real Estate in a Crystal Ball
- Commercial Real Estate To Take A Pounding. Maybe We Can Bail Them Out,Too?
- Have the Credit Markets Dried Up Completely? That Depends Upon Where You Are Looking!
- Business Owners Buy Commercial Real Estate
- Deja-Vu… All Over Again! This time in the Commercial Real Estate Market
Article Author: Charles FeldmanCharles has written 179 articles for us.
Visit Charles's Website: http://www.thefeldmanblog.com
Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.
Joshua Dorkin
{ 3 comments… read them below or add one }
Commercial activity is beginning to pick up in the UK – developers are buying land, and the share prices of developers in commercial and residential markets are beginning to move ahead: this is usually a good indicator.
We’re still talking in these parts about some of the amazing commercial real estate deals from the last downturn (i.e. the unforgettable sale of the Wang Towers in Lowell to a developer at a 1994 foreclosure auction – the towers were built at a cost of $60 million in the 1980s and sold at auction for $525,000) and I’ve seen reports about some enormous discounts lately. Interesting times…
.-= Elizabeth Bolton´s last blog ..Condos In Renovated Churches =-.
Hi Charles,
In late 2009 I attended one of Ron LeGrand’s real estate courses, in Edmonton, Alberta, Canada.
He was saying that he was purchasing a lot of commercial real estate across a number of different States.
For the readers out there that are currently still investing in commercial real estate, I would be interested to hear, what you are buying, and where. As well, what are you major challenges right now…?
Best Regards,
Neil.
.-= Neil Uttamsingh´s last blog ..4 Lessons from a real estate investor Superstar =-.