Good News for Commercial Real Estate?

Believe it or not, I now have two credible sources of good news about commercial real estate in my hands. Good news about CRE? It's been years since i have read an article on CRE and not wanted to go home and prepare for Armageddon. I don't know about you but I have introduced myself at a party, shyly told my new acquaintance that I am in CRE and they end up laughing at me and walking away. So needless to say, I am thrilled at any piece of blue sky that pops through the clouds, and I feel compelled to tell you about it.

The first article was published by Grubb & Ellis. Apparently the overabundance of shadow space (space on a lease but not being actively used by the lessee) has been absorbed, meaning that users are back to full capacity and in need of expansion space again soon. According to Grubb & Ellis, the US economy is growing as we speak. Net effective rents are down, but expected to rise within the next couple of years. They predict that strong tenant demand is in my future. I haven’t gotten my asking rate since 2008 – could that be in my future? Could cash flow actually become a positive line item on my financial statement? Will lenders begin to take my calls instead of screening?

The second article was published by the Associated Press. While not specifically on CRE, it has to do with manufacturing, which as an owner of industrial real estate, directly affects my tenant’s business. And I am always rooting for my tenants. The headline actually stated that manufacturing is on the rise, which is why I decided to read on. It said that manufacturing expanded at their fastest pace in nearly 7 years. New orders rose, backlogs increased, inventories shrunk. And they are hiring! Ok, so the cost of raw materials is up, too, and we are all feeling the pain at the pump, but don’t rain on my parade. I am ready to celebrate!

So I leave today feeling pretty good about my success in CRE…how about you?