The credit markets are still frozen up on the eve of General Growth's $900 million refi prayer.
The holiday party circuit has been all about,"can you believe what happened to the reits"
Well reits that were on a buying binge on 80% ltv and paying up through 2007 find themselves looking ahead to serious refi issues in 2009. Who will want to fund the depreciating assets?
Some serious trading of properties may occur. Good deals will be based on tenant's that have a product that the citizens of the USA NEED not WANT., ie: soap, food, paper, beverage, auto parts and the consumer staples. Everything else is fair game for serious scrutiny. Rental rates are falling, landlord's willing to offer rent abatement in order to have tenant's move.
Sales that did happen in 2008 were already teed up in 2007.
Medical space seeing very good activity. Office depot dumping stores as well as KB Toys this week. Looks like we are trending to a reset down to levels seen in 2000. Ten year bill could go to 2% and borrowing will be at 65% ltv and up in 2009.
Big Box warehouse space is abundant at Exit 8A, South Brunswick, Monroe.
Exit 7A has big vacancy as well.
Cookie cutter deals at 25,000 sf and under continue to be a mainstay in the 4th quarter.
In the meantime there is a whole lot of enthusiasm towards a rip roar sale market in 2009, the only problem is what will be the catalyst towards acquiring assets that continue to decline in value? It will be all about the tenant's credit and their risk participation in the lease that govern 2009.
Thursday, December 11, 2008
Sunday, November 16, 2008
Buckle Up- 45 days til 2009
Sill too much bad debt on the bank's balance sheets has kept the commercial lending market FROZEN. Yes deals that are 50% LTV under 4 million can get done, but then you've eliminated 80% of potential deals.
It seems that the US of A has to hyper-inflate and spend 2 Trillion dollars over the next three years rebuilding every single solitary road,bridge, tunnel and transportation infrastructure that needs repair in order to keep the unemployment rate below high levels.
I can say that NJ remains at least for now much better than middle America since within 5 hrs of NY is 1/3 of the population of the country. Space will take time to be absorbed and older buildings will be candidates for redevelopment. Prime is at 4% going to 3% and the 10 Year Note is at 3.75% going to 2.75%, which would help the most important rate we need to be changed, that is the 30 year fixed. Can you believe that its not 5% yet? That's where it needs to be or lower within the next 9 months to get any 2nd home buyer interested in placing their bet and move this economy along.
It seems that the US of A has to hyper-inflate and spend 2 Trillion dollars over the next three years rebuilding every single solitary road,bridge, tunnel and transportation infrastructure that needs repair in order to keep the unemployment rate below high levels.
I can say that NJ remains at least for now much better than middle America since within 5 hrs of NY is 1/3 of the population of the country. Space will take time to be absorbed and older buildings will be candidates for redevelopment. Prime is at 4% going to 3% and the 10 Year Note is at 3.75% going to 2.75%, which would help the most important rate we need to be changed, that is the 30 year fixed. Can you believe that its not 5% yet? That's where it needs to be or lower within the next 9 months to get any 2nd home buyer interested in placing their bet and move this economy along.
Sunday, September 28, 2008
TheGreatBailout Begins
Well folks, $700 billion is about as much as your going to get. After that we're on our own.
By the time the dust settles, Wachovia will merge and toxic debt as we know it will become
options held by the USA. We can all agree SOMETHING MAJOR had to be done AND quickly.
Office and warehouse pricing needs to be unfrozen with a blowtorch asap as to allow the systems to function in an orderly fashion. Retail leasing will suffer in Q4 but the real impact on the economy will be lending will be back with a fury. Without lending all the NJ firms report sales off 65-85%.
I don't think you see much written about the desert-like feeling of a 105 degree desert , dry with no real sellers, some buyers and few lenders. Yes, there are deals getting done, but they were teed up early in 2008 if not 2007 and are only now closing.
All in all, if this gives us the time we need to sort out the balance sheets then its all worth it. Then we can judge what and which assets are really worth.
Chris
By the time the dust settles, Wachovia will merge and toxic debt as we know it will become
options held by the USA. We can all agree SOMETHING MAJOR had to be done AND quickly.
Office and warehouse pricing needs to be unfrozen with a blowtorch asap as to allow the systems to function in an orderly fashion. Retail leasing will suffer in Q4 but the real impact on the economy will be lending will be back with a fury. Without lending all the NJ firms report sales off 65-85%.
I don't think you see much written about the desert-like feeling of a 105 degree desert , dry with no real sellers, some buyers and few lenders. Yes, there are deals getting done, but they were teed up early in 2008 if not 2007 and are only now closing.
All in all, if this gives us the time we need to sort out the balance sheets then its all worth it. Then we can judge what and which assets are really worth.
Chris
Tuesday, September 9, 2008
September 2008
Is Lehman the next BearStearns, we'll know on Wednesday 9/10.
The REITS are holding their own but the retail #'s are hurting the store growth in the USA, if the
reits like ProLogis have Int'l exposure, then they are growing in Asia while flat in the Americas.
However the US reits with retail only exposure are flat lined from here on till the end of 2008.
Locally, we are at a pivot point , oil continues to fall hard and we could have $2.75 per gallon gas in a few weeks. Making trucking to Exit 8A less expensive and possibly filling more space down there as a result. Time will tell. Small flex is doing well Everywhere, office is still stumbling along while medical office space is behaving well and continues to grow.
Stay tuned,
Chris
The REITS are holding their own but the retail #'s are hurting the store growth in the USA, if the
reits like ProLogis have Int'l exposure, then they are growing in Asia while flat in the Americas.
However the US reits with retail only exposure are flat lined from here on till the end of 2008.
Locally, we are at a pivot point , oil continues to fall hard and we could have $2.75 per gallon gas in a few weeks. Making trucking to Exit 8A less expensive and possibly filling more space down there as a result. Time will tell. Small flex is doing well Everywhere, office is still stumbling along while medical office space is behaving well and continues to grow.
Stay tuned,
Chris
Wednesday, August 13, 2008
Stalemate Sales Market
Buyers don't want to pay 2006 prices, seller's aren't moving off the highest closing sale numbers attained in their market. Thus no new supply, limited demand , creating stagnation and it looks like it will here for the rest of 2008. With very few foreclosures in the commercial arena, there will be a fall/winter scenario being set-up for the pivot pt. to move the mkt. in one direction or the other. The best bet right now would be for LOWER prices and even more lower prices as we get into 1st quarter of 2009. Local lenders are trying their best to gather mkt. share from the big guys as they try to get their house back in order.
Thursday, August 7, 2008
August- Commercial RE Still Holding
OK, folks, looks like the tenant has more negotiating power in August vs. July. There are VERY FEW MAJOR DEALS getting done. CB Richard Ellis stock plunged on the 2008 sales volume news and Jones Lang along with Grubb&Ellis followed suit. Its all 100,000 sf and under deals getting done. A very hot area is 10,000-50,000 sf for some reason. We are talking warehouses...as far as office space ....one by one sublet space is coming up in bldgs.. as large companies cut back and those cheap sublets really do effect the psychology of the landlord's asking rent direct. The closing sale prices have FROZEN up, nothing new coming on the market and NO price reductions.
Surf's up
Chris
Surf's up
Chris
Tuesday, July 15, 2008
Big Banks Freeze Up
The lending at the Big Banks has frozen up.
Local lenders seize the opportunity, Columbia Bank, Peapack-Gladstone among others writing multi-million dollar loans.
Steve and Barry retailer files for the big one.
Looks like the retail rents have once again fallen way south, office rents are holding but more concessions for tenants are coming quickly in the form of free-rent.
Industrial rents are slipping but holding in key mkts. where the vacancy factor is less than 5%.
Less and less and less bigger deals are happening. Lots of 50,000 sf and under flex deals becoming the mainstay of the mkt.
Chris
Local lenders seize the opportunity, Columbia Bank, Peapack-Gladstone among others writing multi-million dollar loans.
Steve and Barry retailer files for the big one.
Looks like the retail rents have once again fallen way south, office rents are holding but more concessions for tenants are coming quickly in the form of free-rent.
Industrial rents are slipping but holding in key mkts. where the vacancy factor is less than 5%.
Less and less and less bigger deals are happening. Lots of 50,000 sf and under flex deals becoming the mainstay of the mkt.
Chris
Saturday, July 5, 2008
July 4, 2008 Review
Second half of 2008 kicks off Monday:
Tale of the Tape:
Office Space is primarily holding up around key transportation spots around the Garden State.
Suburban office market is generally weakening under the $4.00 per gallon gas and some developers are offering gas cards for prospective tenant employees on deals that are made at their buildings.
Warehouse Space: The 8A mkt. has softened big time with many >100,000 sf availabilities,
flex space is holding rates below 30,000 sf.
Markets north of Exit 9 are in great shape especially Raritan Center and in and around the Port.
However there seems to be a trend toward the weakening as the vacancy in some of these mkts. were at all-time highs.
Retail Space- More retailers will be falling as the consumer shops at Walmart and the food markets.
Very few bright spots on the trend now deepening into minor to moderate vacancies across the main retail roads of the Garden State. The Costco's and BJ's are getting good traffic but looks like the rebate cks. have helped and they will not be around in the 4th quarter.
Chris Galiano
Tale of the Tape:
Office Space is primarily holding up around key transportation spots around the Garden State.
Suburban office market is generally weakening under the $4.00 per gallon gas and some developers are offering gas cards for prospective tenant employees on deals that are made at their buildings.
Warehouse Space: The 8A mkt. has softened big time with many >100,000 sf availabilities,
flex space is holding rates below 30,000 sf.
Markets north of Exit 9 are in great shape especially Raritan Center and in and around the Port.
However there seems to be a trend toward the weakening as the vacancy in some of these mkts. were at all-time highs.
Retail Space- More retailers will be falling as the consumer shops at Walmart and the food markets.
Very few bright spots on the trend now deepening into minor to moderate vacancies across the main retail roads of the Garden State. The Costco's and BJ's are getting good traffic but looks like the rebate cks. have helped and they will not be around in the 4th quarter.
Chris Galiano
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