CR appears to have abandoned labels while Tanta is using them for jokes...you guys need to get your shit together, you'll never make the big time at this rate...
It sounds exactly like Residential 18 months ago, except their collapse will happen in a much more compressed manor. If it wasn't started by now, it'll never get built
CR: The following quotes sound like residential real estate about 18 months ago...
Jeez, practically verbatim...
I've been a bubblehead since Fall of 2004, but I thought what is happening now was going to happen in late 2005, then 2006...
I never bought the complete doom & gloom scenario, but I have to admit the odds of it have improved incredibly. For instance, you just don't hear a lot of happy talk about the financial markets, for once, just about every commentator admits they have no idea how it will play out.
What worries me most are the similarities to the late 1920s, protectionist sentiment rising, over-production based on seemingly assured increases in demand well into the future...
Things sure would have been better if this had played out two years ago...
I think the most vulnerable sector of CRE is retail.
In two years, you will see acres of empty mall parking lots and some malls all-but-abandoned. The retail shake-out will hurt the oldest and seediest retail properties the most. But even in new malls, a lot of stores will be empty and begging for anchor tenants.
You will know retail is falling when Starbucks announced they are cutting back expansion plans by 10%.
Retail will get pounded due to the mass building binge fueled by MEW driven consumer consumption. Now that MEW is all-but-gone, retail is white shoes and today is the first day of fall. However, don't underestimate the pounding office will take. All the spec building over the last couple of years didn't anticipate this deep recession we are about to enter. As always, it comes down to supply versus demand. In this case, supply will outstrip demand for many years to come.
I started in commercial RE in 1965 and have never seen cap rates and debt service coverage ratios this low.Interest rates in 1965 were 6%; cap rates were 8%.
Did you see Kunstler's graph on retail space per capita a few months back? Absolutely staggering. Overbuilt doesn't even begin to describe it, and they're still going.
Starbucks has hit several barriers. One is competitors have increased. MacDonalds has coffee rated better by Consumer Reports and its new profit is from coffee related products. Others are doing the same.
Starbucks has also about exploited its potential customer base as far as it can. Instead of upper class customers who don't care about price, new customers do care about price. (I think that the size of the "don't care" clientèle is shrinking also)
What part of "Probably a lot of assets just WON'T trade" do we not get? That pretty much sums it up....
Time to go fishin'..... for about, the next five years....
i wonder that too. i think most people have some sort of experience with residential in either owning it or selling it. but commercial RE is like any other asset class - either you know it or you dont.
plus, CRE is much more analytical. its got fundamentals, and people make calculated decisions based on them.
there is no "intangible worth of ownership" here. perhaps some speculation on the direction of rents, but mostly its about cap rates and opportunity costs for capital.
i'm still seeing 6.75% ten year money out there with 1.2X DCR and 75% LTV.
its the cap rate compression that hurts. from 7% to 8% in my field.
but then again i dont live/work in the burbs and have no idea what empty strip malls are like.
I think it is interesting that commercial real estate posts get significantly less buzz on this blog than other subject matters. I wonder why...
Not as sexy? People don't move in and out of position on a daily basis? Too analytical and calculating? Now, you take those mortgage brokers with their bordello! (up thread), ya gotta love that. Maybe you work that into CRE and people will take notice.
If you want to see an example of the insanity in the commercial realestate market check out Harry Macklowes proposed purchase in NYcity .7000000000 purchase price with 50000000 down.seems he is having trouble getting the financing.I wonder why?
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ESTRAGON:
(giving up again). Nothing to be done.
CR appears to have abandoned labels while Tanta is using them for jokes...you guys need to get your shit together, you'll never make the big time at this rate...
It sounds exactly like Residential 18 months ago, except their collapse will happen in a much more compressed manor. If it wasn't started by now, it'll never get built
Commercial can't fail with all these new tanning salons and martial arts studios popping up.
OT but germane- also incredibly funny, ballsy and sad at the same time.
Nutshell: Moody's wants to charge $3,000 for a freaking seminar on CDOs! But who's going to train the trainer??
http://www.moodys.com/cust/content/Content.ashx?source=StaticContent/Free%20Pages/Products%20and%20Services/Downloadable%20Files/north%20am%20trng%20schd.pdf
Denial - it ain't just a river in Egypt.
bacon dreamz, I think some posts - like the WaMu posts - doesn't need a label. It's just a current story.
I've added a CRE label to this post. Thanks for the reminder!
Best Wishes.
"Commercial can't fail with all these new tanning salons and martial arts studios popping up."
Don't forget the hookah lounges. Huge growth potential there.
CR: The following quotes sound like residential real estate about 18 months ago...
Jeez, practically verbatim...
I've been a bubblehead since Fall of 2004, but I thought what is happening now was going to happen in late 2005, then 2006...
I never bought the complete doom & gloom scenario, but I have to admit the odds of it have improved incredibly. For instance, you just don't hear a lot of happy talk about the financial markets, for once, just about every commentator admits they have no idea how it will play out.
What worries me most are the similarities to the late 1920s, protectionist sentiment rising, over-production based on seemingly assured increases in demand well into the future...
Things sure would have been better if this had played out two years ago...
"If they can't get their prices now, they can afford to wait."
Right. Your price isn't what the market will pay, it is what you deserve to get.
We've all heard this song before. It will be fun to watch.
I think the most vulnerable sector of CRE is retail.
In two years, you will see acres of empty mall parking lots and some malls all-but-abandoned. The retail shake-out will hurt the oldest and seediest retail properties the most. But even in new malls, a lot of stores will be empty and begging for anchor tenants.
You will know retail is falling when Starbucks announced they are cutting back expansion plans by 10%.
Still holding SRS, at least to $125.
Rich,
Retail will get pounded due to the mass building binge fueled by MEW driven consumer consumption. Now that MEW is all-but-gone, retail is white shoes and today is the first day of fall. However, don't underestimate the pounding office will take. All the spec building over the last couple of years didn't anticipate this deep recession we are about to enter. As always, it comes down to supply versus demand. In this case, supply will outstrip demand for many years to come.
I started in commercial RE in 1965 and have never seen cap rates and debt service coverage ratios this low.Interest rates in 1965 were 6%; cap rates were 8%.
Absolutely correct about retail, IMO.
Did you see Kunstler's graph on retail space per capita a few months back? Absolutely staggering. Overbuilt doesn't even begin to describe it, and they're still going.
rich
saw a brief article on Starbucks a bit back.
Starbucks has hit several barriers. One is competitors have increased. MacDonalds has coffee rated better by Consumer Reports and its new profit is from coffee related products. Others are doing the same.
Starbucks has also about exploited its potential customer base as far as it can. Instead of upper class customers who don't care about price, new customers do care about price. (I think that the size of the "don't care" clientèle is shrinking also)
link
What part of "Probably a lot of assets just WON'T trade" do we not get? That pretty much sums it up....
Time to go fishin'..... for about, the next five years....
Commercial real estate typically lags resi by 6 to 9 months.
I think it is interesting that commercial real estate posts get significantly less buzz on this blog than other subject matters. I wonder why...
I think it is interesting that commercial real estate posts get significantly less buzz on this blog that other subject matters. I wonder why...
Since Sam Zell sold,REIT index funds are down about 25%.
i wonder that too. i think most people have some sort of experience with residential in either owning it or selling it. but commercial RE is like any other asset class - either you know it or you dont.
plus, CRE is much more analytical. its got fundamentals, and people make calculated decisions based on them.
there is no "intangible worth of ownership" here. perhaps some speculation on the direction of rents, but mostly its about cap rates and opportunity costs for capital.
i'm still seeing 6.75% ten year money out there with 1.2X DCR and 75% LTV.
its the cap rate compression that hurts. from 7% to 8% in my field.
but then again i dont live/work in the burbs and have no idea what empty strip malls are like.
I think it is interesting that commercial real estate posts get significantly less buzz on this blog than other subject matters. I wonder why...
Not as sexy? People don't move in and out of position on a daily basis? Too analytical and calculating? Now, you take those mortgage brokers with their bordello! (up thread), ya gotta love that. Maybe you work that into CRE and people will take notice.
CRE is a bit esoteric for J6P: just because you see a for lease sign doesn't mean end of the world. Terms like spec suite downtown do.
CRE is a bit esoteric for J6P: just because you see a for lease sign doesn't mean end of the world. Terms like spec suite downtown do.
plus, us J6P's don't now who the builders / holders of CRE are
If you want to see an example of the insanity in the commercial realestate market check out Harry Macklowes proposed purchase in NYcity .7000000000 purchase price with 50000000 down.seems he is having trouble getting the financing.I wonder why?
hello i think this is great to you
Costa Blanca estate agent offers spanish property for sale from apartments to villas new builds and resales.
spanish property for sale
hello i think this is great to you
Costa Blanca estate agent offers spanish property for sale from apartments to villas new builds and resales.
spanish property for sale