Commercial Vacancies, the Next Real Estate Bubble to Burst

Ki. This is very interesting information.  Why am I continuing to hear the "experts" on the business channels recommending that we invest in commercial real estate and REITS????

Folks need to pay attention to these numbers because, depending on the influence of the commerical real estate lobby, this may be where the government decides to dump a few hundred $Billion. 

WAIT!  The government didn't intervene with CIT, they are not likely to do much abut the commerical defaults, unless there are large banks with money invested in large commercial projects. 

I'm not sure what will happen to all of the commerical paper out there when a number of investors start defaulting due to impossible cashflow requirements !!!

As a short sale specialist, and having done CCIM I am waiting for commercial short sales. Stefan Swanepoel has committed that short sales will be done in commercial. As good as the economy is in Oklahoma City, retail is down everywhere, and strip centers that were financed two years ago and then built are remaining vacant. If I was investing in commcercial which has a different market cycle than residential, I would look to shorts.

NEGOTIATE NONDISTURBANCE COVENANTS IN LEASES.

In negotiating commercial leases for clients, I have been requiring that the owner/lessor provide a "Nondisturbance Covenant" that requires the owner/lessor to provide the lessee with an Estoppel Certificate that they are not in default with their lender/servicer.  In the event of default, we require all rent to be deposited in a segregated account until the default is cured or otherwise instructed by a court order to disburse funds.  Needless to say the owner/lessor is not happy with the provision, but in these days the lessee needs to be protected and their ability to retain their rights and remedies against a defaulting owner/lessor preserved.  The same advice is given for residential lessee's.

Ki,

We really have not seen this in our city yet and hopefully will not.

Very Interesting to see some numbers attached to what we've all been reading.  I think Inman News was reporting about this a while back (not figures, but the bursting of the commercial bubble)

Commercial short sales could be interesting.  Save your pennies eh?

Very interesting but not surprising since many of these projects were years in the making and building.   No one could have predicted this deep recession and how it would impact commercial listings.

I am not opposed to a "correction" in the commercial area. I think commercial rent has been a little out of control lately. 

As a facts and figures (and analogy) guy, thank you for putting a face with the name.

Louis, thank you for the great advice.

Very excellent information.  I do not think we have seen the worst yet in commercial :-(

This is a little scary to be honest.

Where are the 'green' buildings and 'green' rentals in all of this?

Are they renting or selling faster than the existing 'nongreen'?

In the last year I have run into three firms striving to 'green' existing commercial properties as the talk is that there alot more to do (money to be made) on existing properties than there are new ones coming on board.

Any thoughts on how this will turn the Commercial real estate market around in the next few years?

Our commercial market saw an increase in vacancies last year, including space at the new shopping centers, some bigbox, and a little restaurant space. Rental rates a little soft. Industrial is mostly owner occupied so a bit more stable. Our area is not seeing any short sales. Local banks still lending with good credit and down payment, but not on start up restaurants. Little to no "green" activity or interest.

I'm a Realtor and working on a commercial lease and have been trying to find out the leased rates for other commercial properties in the same area. Where is this info avail?