Wednesday, January 7, 2009

What's Going On?!

#1 Question from commercial real estate tenants, buyers and owners, "what's going on out there?"
There's absolutely no visibility. Its like flying a jet with instrument conditions down to the runway with not even a look at the runway lights ahead. Why? Because, no one knows with any credibility whether or not sales will be off 10,20 or 30-50% in 2009. One thing is for sure ,sales will be down.
I will add one important notable quote from the holiday party circuit. From a major industrial owner with over 100 tenants "None of my tenants aren't in any even minor default." Why is that, I asked? "Because the landlord is the LAST company to get burned in an economic pullback, if there is no premises to operate from because of failure to pay the rent, then game over, out of business, and companies will do whatever it takes to not be declared in default of their lease." That news was very encouraging.
The banks are still frozen, I think they turned DOWN the temperature in December even more. Local banks are lending to local companies with proven track records and impeccable histories other than that, stand in line and take a number for any major line of credit. Office rents have continued to slip, with even more concessions now available for a 5 Year lease. Industrial rents are slowly heading south and with sublet space being the new talk of the market which we have not seen in a long time. Stay tuned< buckle up turbulence ahead and not minor but moderate to severe.