Hey, if Kermit said so, it must be true.

So by the end of the year that's over 200 million sq ft of unneeded space that will have been put up in '07 and '08.

That can't be a good thing, and I bet that a decent chunk of the planned '08 projects are killed before backhoe meets dirt.

aaaah... CRE about to fall off a cliff.

I have my suspicions that this is CR's favorite meme. That this is where he thinks the rubber will really hit the road.

here in Bellevue (burb of Seattle) rents are going UP! I would be amazed if it lasted all that long though...

"I have my suspicions that this is CR's favorite meme."

Mish has been on CRE pretty hard as well, as in the other shoe dropping.

Given the apparent consumer retrenchment, there couldn't be a worse time to build retail in most areas. Unless I was building in a very underserved area with tenants already in the bag, there's no way I'd be putting any retail space up.

And the CRE bubble is I suspect much more widespread (not just CA and FL) than most suspect. I was back in Rochester NY a couple of weeks ago after over 2 years away. The amount of new strip malls, food outlets and low rise office space was very surprising. Some of it was replacement, businesses moving from 70's strip malls to new space, but most of it was truely new business. With no rise in population, and a place like upstate having little to no median income growth, it can't be justified. The bubble is everywhere.

Who manufactures construction cranes?

Would be nice to see a chart of governmental construction spending....especially state higher ed.

WillyDog - I'm betting on C to go down. They were downgraded this AM and the SWFs are saying they need more money than is available. Plus they have reasonable room to drop.

Inflation numbers come out March 16th or thereabouts, right? If these rachet upward, will the Fed continue to cut rates? Or are we in for a crazy veering from one extreme to the other. From low interest rates to avoid recession (impossible probably) to suddenly higher interest rates to quench inflation? I get the feeling that economic policy in Washington has run off the rails.

OT

Gulf investment agency Dubai International Capital (DIC) said on Tuesday it would take "a lot more money" to rescue Citigroup Inc following investments from Abu Dhabi, Kuwait and Saudi Arabia's Prince Alwaleed.
"It's going to take more than that to rescue Citi," he had earlier told a private equity financial conference.

The Abu Dhabi Investment Authority, a sovereign wealth fund owned by the world's fifth-largest oil exporter, last year bought a 4.9 percent stake in Citigroup, which has been hammered by write-downs linked to the U.S. subprime mortgage crisis.

Citigroup at 9-year low on capital, write-down worries
| Reuters

Chris, why not sell the banks? The golden rule still applies. No, not that one, the one that goes:

He who has the gold, makes the rules.

I'd be delighted to have my broker owned by a rich SWF in Asia or the Middle East that could guarantee that my account would not suddenly disappear in a bankruptcy or whatever. I say sell MER and MS and the others, to the degree necessary, to people who are substantial enough to guarantee their solvency.

Average Joe,

The Fed will never give up.
They don't care about the dollar or inflation just their friends on Wall Street.

Listen to Ben's Recent testimonies.
When asked about inflation in the economy he saids there is no problem in core inflation.

Gold is not in a bubble BTW. To reached old inflation adjusted high it would need to be in the $2200.
You do not get a bubble when you are below your all time high.

Good thing banks aren't already f'd. Oh wait.

Really Scary Fed Charts: March

anyone else have trouble not reading "single white female" when they see that? maybe its just me....
nades 03.04.08 - 9:24 am | #

Nope...not just you

Actually, I was the property manager for an office building downtown, across from the court house, for several years. It was a large 2-story building divided into suites, mostly leased to lawyers. The second floor used to be leased to the Dept. of Health and Human Services, but they moved out twenty years ago and it was vacant.

What a pain it was to manage this building. The a/c kept breaking down, most of the lawyers never paid their rent on time, and it flooded every time we got a good rain. I couldn't rent any of the upstairs suites without leasing at least half of them at once, because it wasn't economically feasible due to the separate a/c unit which was left turned off. The entire building hadn't been remodelled since 1975, although we always put up fresh paint and sometimes new carpet when one of the downstairs suites became vacant. The upstairs though was in need of serious rennovation.

Anyway, this building had been on the market for sale for 25 years. It came with a parking lot about a block away, and the owner (a millionaire out of Minnesota who's a friend of our family; we manage and sell his properties down here) wanted $425,000 for both. He would take $325,000 for the building alone, but wouldn't sell the parking lot without the building, since the former added value to the latter.

Over the last 25 years, we had exactly one offer on this property, but that deal fell apart as soon as the buyer got the inspection report.

Last year, I sold the building to a lawyer from another town, who thought he wanted to be a landlord. He had a friend who's a contractor, so he didn't ask for an inspection. He offered $255,000 for the building but didn't want the parking lot, which was inexplicable to me since there is no other parking downtown.

The owner wanted at least $320,000, and it took me several days of emails back and forth to convince him to accept the offer. Finally, I wrote to him, "Look. This building has been on the market for 25 years. You spent $10,000 repairing flood damage last year. The upstairs cannot be rented without major rennovation. This is the only offer we've had for over 10 years. Take the deal." So he finally agreed and instructed me to rope off the parking lot and put it on the market for $200,000, which I did as soon as the deal closed.

Well, it wasn't very long after that the tenants were calling me asking for other office space to rent. The new landlord, this lawyer, had jacked up their rent 30%. Not only that but he had fired the janitor and told them if they wanted cleaning services, they had to pay an additional $100/month each. He also wanted them to pay for electricity based on the price per square foot of the suites they rented. And they had no parking. I couldn't help them, because that was the only office building we had been responsible for and there really wasn't any other office space available downtown. Several of them have since left the building, deciding to rent cheaper offices elsewhere and commute.

But this lawyer went ahead with his plan. He rennovated the upstairs, probably to the tune of about $45,000. He replaced the two a/c units, probably for another $10,000. But he let the elevator certificate expire and didn't reconnect the emergency phone line.

I had warned him about that. The previous owner had let the elevator certificate expire after the upstairs became vacant. But according to the law, the elevator must remain functional even if it's not being used and it must have an emergency phone. You would not believe what it took to get this elevator recertified and a phone line connected. It took several months and cost $4,500 twenty years ago.

So, this lawyer called me last week wanting a floor plan for the upstairs, which I had already given him but he had lost, because he needed to prepare an evacuation plan to get the new certificate. I told him I'd fax it over to him, and I asked him if he'd been draining the elevator pit, which he's supposed to do twice a week. He said, "I feel like you sold me a money pit."

"Well," I said, "You wanted to buy a building."

This clown has spent a small fortune buying and rennovating an office building, and he's going to have to spend even more money maintaining it. Meanwhile, his tenants are leaving, because the rent he's asking for is exhorbitant and doesn't include janitorial service, electricity or parking. He hasn't had any new tenants move in. It also hasn't rained here lately. Wait till that happens and the ground floor floods, or better yet wait till we get a hurricane, which we're due for, and watch the result.

So much for commercial real estate.

But I don't think it's just Syracuse that can't support this crap; upstate is not the only place where unsupportable stuff was being built or planned. What was called "backwards thinking" by the megamall opposition here in Syracuse is now starting to look pretty smart.

Too bad Ithaca didn't resist this. Our box-store to population ratio has got to be 4-to-1 these days.

Broward Horne

Thanks for the pictures of Belleview. I lived there in the late sixties when it was a sleeply little village bedroom community to Seattle. My sister took Ballet lessons at a little studio above a store from an old Russian master. As a kid I used to ride my bike everywhere. I am sure that the Blueberry Farm where I had my first job and the little strip airport near Spirit Ridge are long gone. Most cities do not have buildings that tall. I hope it has not lost most of its community feel and sharm.

OK, Tanta, just because of you I had to actually read GM's breathless piece of trash. It's like, you know, kid-speak. The only difference is that GM's collection of two sentence unrelated paragraphs contain actual diagrammable complete sentences while conveying no real information. And, this is a business reporter?