Pivot Point before the Summer

Looks like the commercial real estate sector will solely be dependent on REFI's able to be accomplished with some sort of gov't help. If you look at the value of property and the ltv, the refi candidate doesn't have a chance. Take a look at all the debt maturing over the next 36 months, it is absolutely staggering the reit debt spread out among office, retail, office and industrial.
Some of these loans have no takers, GGP is still looking for major help, MGM is on life support and although there is cash flow among the NY REIT giants there still is a declining rental market and severe asset deflation taking place. The resetting of values will take us back 10-20 years. TIME has always been the ally of deep commercial re holdings, time is running out and patience is wearing thin with holders of massive debt as prices and rates fall. Goldman says we need 10 Trillion of spending to stop the deflationary forces, they are right and gold hangs tight to a trading range of $900-$1,000, you will start to see gold and the bond market be the barometer over the next three months as we look to these experts on the forecast of the economy. Do not look at equity pushers, they are not the analysts , the debt underwriters are. They have to know the sustainability of progress going forward. Equity pushers are just that, you heard it all already, dollar cost average, buy when there is fear, market has a bottom, all great lines but no substance like the group writing debt.

As far as the Central NJ market, a lot of inventory hit the street this week, on the office and industrial side. Oh yea, that Prologis deal is finally inked for the +/- 192,000 sf, yes the numbers are crazy but its better than VACANCY. Boy times have changed!

Christopher Galiano- Managing Director, SIOR
NAI DiLeoBram & Co.
cgaliano@naidileobram.com

March and Sales are still Frozen

We will have to wait a few more months for the banks to get their act together before the spring thaw arrives for lending to resume. Sales prices on all commercial property are slowly declining and rental rates are following. We are a reset stage in the economy. We are at point where if owners haven't reset yet they will be. Sellers are already calling their brokers and reducing prices quickly to get the sale done.

A lot of empty space at Exit 7, 7A,
8A has its canyons too
9 has some health and Exit 10 is doing relatively fine
Office sublet space is rapidly unfolding
So it looks like a little more concessions for the tenant looking to sign a 5 year deal.

Chris Galiano, SIOR
NAI DiLeo Bram & Co.
732-985-3000