22 Deals in One Month

No, that is not a typo. My month has been, well, let's just say it's been pretty encouraging. The tally consists of 3 leases (in excess of 11,000SF, retail and office only) and 19 closed commercial sales. Several of these were the purchase of non-contiguous foreclosed lots, an office building, etc. I am closing out the month of April with a small retail lease that was completed yesterday morning.

As far as I can tell right now, buyers are still able to obtain financing. I personally witnessed this occur several deals. I've also seen some banks behave as if they actually want to lend but make the process so arduous that it's all but impossible to get a loan. I would just prefer if these folks fessed up and not wasted everyone's time. It's going to be a while before I'll feel comfortable recommending them again.

Most of the leasing I've been involved with consists of new start-up business taking advantage of the current rental climate and companies shuffling to similar chunks of space where the rent is cheaper. I don't blame many of them as retail and office rents are down as much as 50%-60% in many places. The Sarasota vacancy report was released earlier in the week and the numbers are not good. Lots of negative absorption out there. I expect this to continue throughout the summer and am hopeful things will turn around in the fall.\

No, that is not a typo. My month has been, well, let's just say it's been pretty encouraging. The tally consists of 3 leases (in excess of 11,000SF, retail and office only) and 19 closed commercial sales. Several of these were the purchase of non-contiguous foreclosed lots, an office building, etc. I am closing out the month of April with a small retail lease that was completed yesterday morning.

As far as I can tell right now, buyers are still able to obtain financing. I saw this on several deals. I've also seen some banks behave as if they actually want to lend but make the process so arduous that it's all but impossible to get a loan. I would just prefer if these folks fessed up and not wasted everyone's time. It's going to be a while before I'll feel comfortable recommending them again.

Most of the leasing I've been involved with consists of new start-up business taking advantage of the current rental climate and companies shuffling to similar chunks of space where the rent is cheaper. I don't blame many of them as retail and office rents are down as much as 50%-60% in many places. The Sarasota vacancy report was released earlier in the week and the numbers are not good. Lots of negative absorption out there. I expect this to continue throughout the summer and am hopeful things will turn around in the fall.

I'm often asked why some properties are moving and others are not. There are a variety of factors in play here, but the most significant is pricing. If landlords and sellers aren't eager to make deals happen, there's no real point in even listing a property for sale at all. Yes, there is a lot of pain - and sometimes anger - involved in coming to terms with what your property may be worth. The problem is, it's only worth what someone will pay. As agents, we do not set the prices, the market does. And the market is changing on a daily basis. If you're a landlord, it's best to bring some some cash in than none at all. If you have a premium location you'll certainly be able to obtain marginally better rents.

Media's Effect on Spending

Not necessarily a post about commercial real estate per se, but I find it interesting how heavily the media plays into general economic fear. No doubt we are facing some strong economic headwinds, but one really needs to question how much worse the constant flow of instant information makes things. Interesting read. See link below for the rest of the article. From The Washington Post.

Frugality fuels recession's vicious cycle
Even those whose jobs are safe are spending less, which holds down growth
By Michael S. Rosenwald
The Washington Post
updated 4:57 a.m. ET, Thurs., April 16, 2009

WASHINGTON - Denise Kimberlin and her husband, Craig, of Woodbridge are government contractors who make nice livings. They recently got raises. They don't fear losing their jobs.

Yet, something is driving them to change their spending habits. They have cut back by at least $250 a week on clothes, dinners out and other discretionary spending.

So, too, has Bob Scanlon, a Brookeville executive with the Transportation Security Administration. He feels his job is secure. But recently he decided to lop $50 a month off his family's cable bill. When they dine at their favorite restaurant, they go on half-price Tuesdays.

The frugality of the Kimberlins and Scanlons and millions of other Americans who still have their good jobs feed back on the economy, holding down growth and encouraging other worried workers to trim their spending — causing the whole vicious cycle to run another lap.

"It really can become and does become a self-fulfilling prophecy," Denise Kimberlin said.

Psychological traps
Economists say many still-flush consumers are handcuffed by psychological traps that cause them to tighten their purse strings even though economic hardship is not their reality. Underscoring the crucial role that consumer psychology will play in turning around the economy, President Obama and Federal Reserve Chairman Ben S. Bernanke have both been on the hustings this week sounding notes of optimism.

"Traditional economics assumes that we are all rational, that we approach these things very rationally, take in all the information, and then weight it and make a decision," said Thomas Gilovich, a Cornell psychologist and co-director of the university's Center for Behavioral Economics and Decision Research. "To a behavioral economist that seems clearly untrue."

Denise Kimberlin said she began cutting back after the holidays, when at family gatherings and work parties she heard stories of people losing their jobs and people saving money around the edges. The stories made her wonder, "What if?"

These perceptions are reinforced by the blare of the news media. When network news anchors Brian Williams and Charlie Gibson lead their broadcasts with bleak news about the economy and consumers clamming up, people who don't necessarily need to cut back decide to anyway.

In August, the three major TV network newscasts spent a total of 85 minutes covering economic news, according to the Tyndall Report, which monitors newscast content. In September, when the banking crisis began and layoffs spiked, the coverage totaled 403 minutes. In the same month, Gallup's polling shows upper-income consumers dropped their total daily spending to about $160, from a high of $185 in May.

By last month, after what must feel like an eternity of stories about creative ways strapped people are saving money, they had cut back further — to $101 day.

Click here for the rest of the story.