Provident Realty is about to build a $300 million commercial/residential development that borders my neighborhood (The Meadows) in Dallas, TX eight miles north of downtown. Provident's contractor is currently in the process of demolition of a 42 acre site occupied by 1960s apartments. New construction has not started and we are wondering if it will be slowed or halted by the poor economy.
Cr, on the space thing, even without what's under construction, just wait until the existing leases come up for renewal and you'll see the number move.
Today I went to the northwest portion of Colorado Springs. I rarely ever go there so I was suprised by the number of strip mall/office park vacancies. I saw 45 signs in 3 miles and saw as many as 10 at one time looking back while at a traffic light. Hoff&Leigh (local commercial Realtor) signs are everywhere like dead people only in building form.
Welcome to the new week: credit swiss reported to have another couple of billion in write-downs coming down the pipe, and asia stocks follow the wall street friday move down. Obama looking like he might sweep clinton in NH (grasping markets got to consider what that means for stock prices short term at least?)
Purely anecdotal, but... there's a monstrous office building going in between NBC & St. Joseph's in Burbank, but after a fast start the site seems really quiet these days.
Hovnanian leased a brand new building across from its headquarters last year. Now it's up for sublease because of their problems. I think it's like 16,000 sq/ft.
uncontainable awesomeness from a broker (i found this on my bloomberg, no link):
John Giuffre (aka Raghu), a real estate broker with Mark David of
NYC, is pleased to announce his new book: ''Compound Mortgage:
Subprime Mortgage Crisis Made Quantifiable, Containable & Affordable
in 30 Days.''
QUANTIFIABLE
COMPS Quantifies the estimated $400 billion in outstanding subprime mortgage holdings as being only 20 percent more than what these 2 million home owners can afford to pay on their $200,000 (on average) mortgage. According to Raghu, the answer is quite simple: Pay down this 20 percent. The Cost? $80 billion or $40,000 per home.
"Problem Quantified."
CONTAINABLE
"A market need not sell 100 percent of its inventory to be a 'hot'
housing market. It only needs to sell as little as 20 percent of its
inventory to make it a 'booming' market once again," said Raghu.
"Pay-down this 20 percent and you make these homes affordable and
sellable again. In short, we don't have a $400 billion problem; we
have an $80 billion problem."
"These subprime mortgages have been sliced and diced and then parceled out into other investment packages. The net result is that the entire package will fail to attract investors though it may only hold a small portion in these subprime mortgages," Raghu said.
A $1 billion dollar investment package, for example, may only hold
$100 million (10%) in subprime holdings, yet, this small 10% cannot be priced due to the uncertainty of the sub-primes' true value, Raghu
said. The result: No buyers for the entire $1 billion package. COMPS
recommends we pay down the $20 million of this $100 million in
subprime holdings via the home owners themselves. This $20 million may
only be 2% of the entire 1 billion dollar package, but this 2%
contribution reinstates the entire package back to its original value.
In this way, COMPS can reset the value for all the mortgage holdings
piling up on Wall Street. Investment firms can once again find buyers
for their (subprime) real estate holdings. Even better, banks who have
already written down tens of billions from their mortgage related
holdings can re-coup the full value of those losses.
Anand Shah: A Connecticut-based psychiatrist, Ari Kiev, specialises in working in hedge funds to counsel staff and he says some are experiencing symptoms similar to post-traumatic stress. For so-called hedgies, he says, the trigger tends to come when clients start to withdraw money: Aside from the fact that your job may be in jeopardy, you lose confidence in your money, you lose confidence in yourself, you lose confidence in the analyst whos giving you your ideas.
And where there is no confidence, there is no liquidity! But confidence breeds complacency and complacency can undermine market discipline.
I like to re-read Warsh for some chuckles when things get really depressing... First, liquidity is significantly higher than it would otherwise be due to the proliferation of financial products and innovation by financial providers. This extraordinary growth itself is made possible by remarkable improvements in risk-management techniques. FRB: Speech, Warsh--Market Liquidity: Definitions and Implications--March 5, 2007
Play out of the 2001-03 in Silly.con Valley will expose the idea that CRE wasn't as overbuilt as the RRE (this applies to UK as well). In a recession, or depression, does the demand for CRE goes down faster than the RRE or at a slower rate??
ac, are US equities' prices being supported somewhat by the depressed USD? I know on the M&A side, European companies are looking agressively for targets in the US.
...or am I just trying to make myself feel better?
"has anyone noticed that the S&P and DOW have not been setting lower lows?"
IF the S&P holds this week, then yes.
If the DOW breaks 12800 and the S&P 1400 on the downside it could get messy. I'm not much for technical analysis, but a lot of other people care, and people are what move markets...
Quincy k - you are probably right. Must be a slow news day tho, because they are doing the story on sky and bbc too. Course, could be just a distraction to take people's attention off markets and elections...
I do wonder how the "office condo" trend will play into the slowdown in the CRE market. I see a lot of signs for office condos available, one has to wonder if all that inventory is being taken into account . . .
--
"If the DOW breaks 12800 and the S&P 1400 on the downside it could get messy. I'm not much for technical analysis, but a lot of other people care, and people are what move markets..."
Here is my forecast...
Scam Market Will Be Down At least 10% by April, From Fridays Close, To Fully Factor the Recession
Key words are at least and that would not be the end of it (juts a near-term target). The off-and-on slide will continue into 2010 with tech carnage that will resemble 80%+ drop during 2000-02. A reasonable bottom may form in 2010.
The current recession that we are in will prove to be no ordinary recession. Scam Lovers who have faith in the Fed will be sorely disappointed. Blind faith has its consequences. Sorry, but Fed can do lot more harm than good, as hard as that may be for many to believe. Showering money on irresponsible bankers does an economy no good.
75 million? WOOF!
Some Brand Name Bloggers Say Stress of Posting Is a Hazard to Their Health (go easy on CR & Tanta)
Some Brand-Name Bloggers Say Stress Of Posting Is a Hazard to Their Health - NY Times
Pre booked space apparently
Reuters article if you dont have WSJ subscription: here
Provident Realty is about to build a $300 million commercial/residential development that borders my neighborhood (The Meadows) in Dallas, TX eight miles north of downtown. Provident's contractor is currently in the process of demolition of a 42 acre site occupied by 1960s apartments. New construction has not started and we are wondering if it will be slowed or halted by the poor economy.
Provident Realty :: A Visionary Approach To Success
FFDIC, word to the wise, including our hosts.
Cr, on the space thing, even without what's under construction, just wait until the existing leases come up for renewal and you'll see the number move.
Today I went to the northwest portion of Colorado Springs. I rarely ever go there so I was suprised by the number of strip mall/office park vacancies. I saw 45 signs in 3 miles and saw as many as 10 at one time looking back while at a traffic light. Hoff&Leigh (local commercial Realtor) signs are everywhere like dead people only in building form.
12.6% sound huge...
slightly OT
Anxious New York traders seek therapy
The Hindu : Opinion / News Analysis : Anxious New York traders seek therapy
Welcome to the new week: credit swiss reported to have another couple of billion in write-downs coming down the pipe, and asia stocks follow the wall street friday move down. Obama looking like he might sweep clinton in NH (grasping markets got to consider what that means for stock prices short term at least?)
Purely anecdotal, but... there's a monstrous office building going in between NBC & St. Joseph's in Burbank, but after a fast start the site seems really quiet these days.
CR,
I could be mistaken, but I thought you mentioned that you were going to post a free sample newsletter on the site.
We must surely now have reached critical mass. The only unknown is just how this is going to unfold. But unfold it must
"Still, Reis said 2007 was the sector's strongest year since 2000, with asking rents climbing 9.6 percent and effective rents up 10.6 percent."
What are effective rents and how close are they and asking rents to the rent paid by the lessee.
TIA
TIA:
Effective rents are asking less concessions. Concessions on a stabilized property are usually less than a percent or two of total rent.
2008 is looking worse and worse as we enter the year. I wonder how bad the news will be in a few months.
Hovnanian leased a brand new building across from its headquarters last year. Now it's up for sublease because of their problems. I think it's like 16,000 sq/ft.
UK CRE takes a dive.
Somehow that article seems to belong over here. Appraisers cut commercial valuations by 4% in November alone.
The world has never before seen an economy this large and leveraged decelerate and unwind this fast.
So, nobody knows what will happen next. Past cycles may not be a guide.
uncontainable awesomeness from a broker (i found this on my bloomberg, no link):
John Giuffre (aka Raghu), a real estate broker with Mark David of
NYC, is pleased to announce his new book: ''Compound Mortgage:
Subprime Mortgage Crisis Made Quantifiable, Containable & Affordable
in 30 Days.''
QUANTIFIABLE
COMPS Quantifies the estimated $400 billion in outstanding subprime mortgage holdings as being only 20 percent more than what these 2 million home owners can afford to pay on their $200,000 (on average) mortgage. According to Raghu, the answer is quite simple: Pay down this 20 percent. The Cost? $80 billion or $40,000 per home.
"Problem Quantified."
CONTAINABLE
"A market need not sell 100 percent of its inventory to be a 'hot'
housing market. It only needs to sell as little as 20 percent of its
inventory to make it a 'booming' market once again," said Raghu.
"Pay-down this 20 percent and you make these homes affordable and
sellable again. In short, we don't have a $400 billion problem; we
have an $80 billion problem."
"These subprime mortgages have been sliced and diced and then parceled out into other investment packages. The net result is that the entire package will fail to attract investors though it may only hold a small portion in these subprime mortgages," Raghu said.
A $1 billion dollar investment package, for example, may only hold
$100 million (10%) in subprime holdings, yet, this small 10% cannot be priced due to the uncertainty of the sub-primes' true value, Raghu
said. The result: No buyers for the entire $1 billion package. COMPS
recommends we pay down the $20 million of this $100 million in
subprime holdings via the home owners themselves. This $20 million may
only be 2% of the entire 1 billion dollar package, but this 2%
contribution reinstates the entire package back to its original value.
In this way, COMPS can reset the value for all the mortgage holdings
piling up on Wall Street. Investment firms can once again find buyers
for their (subprime) real estate holdings. Even better, banks who have
already written down tens of billions from their mortgage related
holdings can re-coup the full value of those losses.
Jeeze Bacon, your posts are always funny, but that one takes the prize.
Anand Shah: A Connecticut-based psychiatrist, Ari Kiev, specialises in working in hedge funds to counsel staff and he says some are experiencing symptoms similar to post-traumatic stress. For so-called hedgies, he says, the trigger tends to come when clients start to withdraw money: Aside from the fact that your job may be in jeopardy, you lose confidence in your money, you lose confidence in yourself, you lose confidence in the analyst whos giving you your ideas.
And where there is no confidence, there is no liquidity! But confidence breeds complacency and complacency can undermine market discipline.
I like to re-read Warsh for some chuckles when things get really depressing...
First, liquidity is significantly higher than it would otherwise be due to the proliferation of financial products and innovation by financial providers. This extraordinary growth itself is made possible by remarkable improvements in risk-management techniques.
FRB: Speech, Warsh--Market Liquidity: Definitions and Implications--March 5, 2007
talk about talking your book... wow
Distribution rate on newsletter?
iow, how hot is it!
only 24 comments on this thread and 28 visitors on-line:
Market will rise sharply today.
--
It indicates two things to me:
Play out of the 2001-03 in Silly.con Valley will expose the idea that CRE wasn't as overbuilt as the RRE (this applies to UK as well). In a recession, or depression, does the demand for CRE goes down faster than the RRE or at a slower rate??
Jas
Okay, call me cynical, but this may be Bush's plan to jump start the economy...
May affect oil price too.
Iranian boats 'harass' U.S. Navy, officials say - CNN.com
Compound Mortgage:
Subprime Mortgage Crisis Made Quantifiable, Containable & Affordable
in 30 Days.
a link
Blogger: Blog not found
My observation, is that tranches are already in place to handle the alleged losses, so no new method is needed.
Market will rise sharply today.
It will be interesting to see if they do... has anyone noticed that the S&P and DOW have not been setting lower lows?
sterligerl-
That Iranian report has about as much credence as China saying they are no longer going to buy our treasuries.
The rumor was probably started by someone who has a large call option that is ready to expire.
Iranian navy, hah. Probably one of their 20 foot bass boat with a guy on the bow holding an RPG
ac, are US equities' prices being supported somewhat by the depressed USD? I know on the M&A side, European companies are looking agressively for targets in the US.
...or am I just trying to make myself feel better?
"has anyone noticed that the S&P and DOW have not been setting lower lows?"
IF the S&P holds this week, then yes.
"has anyone noticed that the S&P and DOW have not been setting lower lows?"
IF the S&P holds this week, then yes.
If the DOW breaks 12800 and the S&P 1400 on the downside it could get messy. I'm not much for technical analysis, but a lot of other people care, and people are what move markets...
"Iranian navy, hah. Probably one of their 20 foot bass boat with a guy on the bow holding an RPG"
That "guy on the bow holding an RPG" goosed oil prices.
Brinksmanship, economic warfare. As it happens, the Iranians sell oil.
ac- "If the DOW breaks 12800 and the S&P 1400 on the downside it could get messy."
Understatement.
Quincy k - you are probably right. Must be a slow news day tho, because they are doing the story on sky and bbc too. Course, could be just a distraction to take people's attention off markets and elections...
I do wonder how the "office condo" trend will play into the slowdown in the CRE market. I see a lot of signs for office condos available, one has to wonder if all that inventory is being taken into account . . .
For an explanation of what supposedly happened in the Persian Gulf look up Gulf of Tonkin Incident.
"because they are doing the story on sky and bbc too."
Well, that settles who circulated the rumor. It must have been started by an IB as opposed to a HF if it's drawing media attention.
Hedge funds generally don't have much in way of an advertising budget, unlike the investment banks.
CR,
Will you post a free sample newsletter?
--
"If the DOW breaks 12800 and the S&P 1400 on the downside it could get messy. I'm not much for technical analysis, but a lot of other people care, and people are what move markets..."
Here is my forecast...
Scam Market Will Be Down At least 10% by April, From Fridays Close, To Fully Factor the Recession
Key words are at least and that would not be the end of it (juts a near-term target). The off-and-on slide will continue into 2010 with tech carnage that will resemble 80%+ drop during 2000-02. A reasonable bottom may form in 2010.
The current recession that we are in will prove to be no ordinary recession. Scam Lovers who have faith in the Fed will be sorely disappointed. Blind faith has its consequences. Sorry, but Fed can do lot more harm than good, as hard as that may be for many to believe. Showering money on irresponsible bankers does an economy no good.
Jas
Anyone noticed today that etrade is in the 2s. It will get delisted if it doesn't do something pronto.
Any mention of live-work or adaptive re-use in CRE?