February Snow and Markets Fall Too!

Looks like we are going to reach lower lows in rental prices in 2010, the monster 1,300,000 sf box at Exit 8A leased to Williams Sonoma , the 500,000 sf to GIII took a small chunk out of the empty space but at 40% discounts to the 2007 mkt. ie: returns of cash on cash below 5%, not what investors were looking for went construction started. Nowadays 5% is better than -30%.

There will be slightly more sales in 2010, with gov't increasing cap. gains causing some sellers to sell vs. fish. The only problem is ALL this can't happen fast enough as the spiral of descending rents continue.

Increase in commission rates and incentives JUST for showing space will continue to be the norm in 2010, where almost any credible deal is a good deal vs. the pick and choose your deal of 2007. If I hear about one more group that has or is putting together a distressed asset fund then I reckon we will have One heck of a frenzied auction for these CMBS assets as they unwind, and the price of settlement will be lower than most folks realize.