I've been mentioning this for quite awhile folks......Everyone reading the blog and looking at my "commercial real estate" tags can view prior comments.
Basically retail consultant Howard Davidowitz,of Davidowitz & Associates, is saying that as Americans save and spend less, due to the financial crisis, it's clear there's too much retail space. Just visit Web site deadmalls.com and track retail's growing body count. Most concerning to Davidowitz are Luxury Retailers and "private equity retailers" (formerly publicly traded and then taken private via use of debt by private equity companies).
Among the brandname stores Davidowitz says are in trouble:
Nordstrom
Neiman Marcus
Tiffany
Jeweler Zale Corp.
Saks
J.C. Penney
Sears
Until I can get some revised blogs up I thought I would keep people abreast of my thoughts so I'll keep the content coming here! I see it taking about a month for things to get done.
I hope everyone enjoys the video below. Boy, this guy is PESSIMISTIC!
Dan Ross
Showing posts with label commercial real estate. Show all posts
Showing posts with label commercial real estate. Show all posts
Saturday, February 21, 2009
Wednesday, January 14, 2009
Commercial Real Estate - Updated Posts
March 2008 I talk about a slowdown that is being seen in that sector of the market
http://betterbizbooks.blogspot.com/2008/03/commercial-real-estate-is-now-slowing.html
October 2008 I discuss how the slowdown is impacting malls
http://www.blogger.com/posts.g?blogID=6814453905154617386&searchType=ALL&txtKeywords=&label=commercial+credit+market
In late November I talk about the commercial real estate markets tanking and Ross Perot, a multi-billionaire based here in Dallas, getting impacted as one of the funds he invested in was hit. Then he got hit the following week or two in ANOTHER fund that closed due to redemptions.
http://betterbizbooks.blogspot.com/2008/11/commercial-real-estate-finally-tanking.html
Here is a 12/2008 observation of mine re: commerical real estate.
http://betterbizbooks.blogspot.com/2008/12/great-follow-up-interview-on-commercial.html
Finally, my take today.....
1) I've seen a few restaurants NOT opening in the Plano area that were scheduled to.
2) I have heard of a restaurant chain that was opening 2 restaurants a week in early 2008 scaling back to 1 or so by 2009.
3) I don't see strip centers filling up at the same rate they used to.
4) I've heard from friends/associates in the industry (or friends of them) that TONS of deals aren't happening. People can't get access to the capital, which is a good thing in my opinion. We need to "fill in" the capacity we have (open store sites), re-model what is already outstanding and then FIND NEW tenants for the locations that will inevitably end up closing in 2009. All we have to do is look around to see the impact.
The commercial real estate market of the last few years was driven by consumers being on a HUGE spending binge. The consumers are more leveraged than ever, their credit is being cut off and that reduced spending is going to work its way "through the system." Some spending will happen but I think we are talking about a MAJOR seismic change for 2009. Fast growing areas will see new projects but ALOT of businesses will be impacted as the U.S. consumer pulls back and tries to save $$$ vs. spending more than they make, going into debt galore :) I think, at a minimum, that is a 20% shift in consumer spending. Think of negative savings vs. 4%-5% savings. That alone is nearly a 10% swing and then, if you take into account that consumers must begin paying off their debt in 2009 (As Oprah/Suze Orman are proposing to their viewers) than you could easily see spending cut by 10% just to PAY off previous spending.
Dan Ross
http://www.DanRoss.info
http://betterbizbooks.blogspot.com/2008/03/commercial-real-estate-is-now-slowing.html
October 2008 I discuss how the slowdown is impacting malls
http://www.blogger.com/posts.g?blogID=6814453905154617386&searchType=ALL&txtKeywords=&label=commercial+credit+market
In late November I talk about the commercial real estate markets tanking and Ross Perot, a multi-billionaire based here in Dallas, getting impacted as one of the funds he invested in was hit. Then he got hit the following week or two in ANOTHER fund that closed due to redemptions.
http://betterbizbooks.blogspot.com/2008/11/commercial-real-estate-finally-tanking.html
Here is a 12/2008 observation of mine re: commerical real estate.
http://betterbizbooks.blogspot.com/2008/12/great-follow-up-interview-on-commercial.html
Finally, my take today.....
1) I've seen a few restaurants NOT opening in the Plano area that were scheduled to.
2) I have heard of a restaurant chain that was opening 2 restaurants a week in early 2008 scaling back to 1 or so by 2009.
3) I don't see strip centers filling up at the same rate they used to.
4) I've heard from friends/associates in the industry (or friends of them) that TONS of deals aren't happening. People can't get access to the capital, which is a good thing in my opinion. We need to "fill in" the capacity we have (open store sites), re-model what is already outstanding and then FIND NEW tenants for the locations that will inevitably end up closing in 2009. All we have to do is look around to see the impact.
The commercial real estate market of the last few years was driven by consumers being on a HUGE spending binge. The consumers are more leveraged than ever, their credit is being cut off and that reduced spending is going to work its way "through the system." Some spending will happen but I think we are talking about a MAJOR seismic change for 2009. Fast growing areas will see new projects but ALOT of businesses will be impacted as the U.S. consumer pulls back and tries to save $$$ vs. spending more than they make, going into debt galore :) I think, at a minimum, that is a 20% shift in consumer spending. Think of negative savings vs. 4%-5% savings. That alone is nearly a 10% swing and then, if you take into account that consumers must begin paying off their debt in 2009 (As Oprah/Suze Orman are proposing to their viewers) than you could easily see spending cut by 10% just to PAY off previous spending.
Dan Ross
http://www.DanRoss.info
Monday, December 15, 2008
Great Follow Up Interview on Commercial Real Estate
KB Toys bit the dust this week, filing for bankruptcy. Big Box tenants (anchor tenants) that have declared bankruptcy as well include Circuit City & Linens N Things, which causes problems for commercial real estate developers. Then, lets not forget Starbucks and their recent problems. While Starbucks isn't an "anchor tenant" from a space perspective they do drive traffic to market centers. I've seen them pull out or close 3 different projects within 3-4 miles of my house. At some point, other coffee retailers are going to go on the offense as I think Starbucks is finally getting TOO defensive and missing out on some great opportunities/traffic. Developers won't forget what they have done....
Dan Ross
Dan Ross
Wednesday, November 26, 2008
Commercial Real Estate FINALLY tanking...
In March I knew that problems in the residential real estate market would, at some point, pour into the commercial real estate market. Yet some brighter folks continued to "LEVERAGE UP" and appear to be getting burned. It took longer than I thought to be honest. I am going to look for some CMBS statistics during that period.
Last week the MBS market for commercial real estate took a beating and really took a toll on a few funds.
http://betterbizbooks.blogspot.com/2008/03/commercial-real-estate-is-now-slowing.html
From the WSJ:
Last week's record plunge of the commercial real-estate securities market has claimed its first major casualty: a $1.5 billion fund with investors including Texas billionaire H. Ross Perot and members of his family, said people familiar with the matter.
Other hedge funds and money-management firms that invested in real-estate debt face the potential for more margin calls. These include a $2 billion fund managed by Petra Capital Management LLC, a firm founded by Andy Stone, one of the founders of the commercial-mortgage securities business. Guggenheim Partners LLC is someone being watched closely as well.
Of interest to Dallas residents, "Parkcentral Global Hub Ltd., the fund overseen by Parkcentral Capital Management LP, a Plano, Texas, firm controlled by the Perot family, peaked this year at $2.5 billion in assets. It used borrowed money to amplify its bets, said people familiar with the matter, and began dumping assets last week.
"That leverage helped hasten the fund's meltdown as the commercial mortgage-backed securities, or CMBS, market cratered last week, and the borrowings also could leave lenders with tens of millions of dollars in losses, the people said."
"A Parkcentral spokesman Tuesday confirmed that the fund has been forced to liquidate to pay off creditors, but he declined to elaborate. He blamed the "unprecedented upheaval of the capital markets in general and the freezing of credit markets in particular."
Dan Ross
http://www.BetterBizBooks.com
Last week the MBS market for commercial real estate took a beating and really took a toll on a few funds.
http://betterbizbooks.blogspot.com/2008/03/commercial-real-estate-is-now-slowing.html
From the WSJ:
Last week's record plunge of the commercial real-estate securities market has claimed its first major casualty: a $1.5 billion fund with investors including Texas billionaire H. Ross Perot and members of his family, said people familiar with the matter.
Other hedge funds and money-management firms that invested in real-estate debt face the potential for more margin calls. These include a $2 billion fund managed by Petra Capital Management LLC, a firm founded by Andy Stone, one of the founders of the commercial-mortgage securities business. Guggenheim Partners LLC is someone being watched closely as well.
Of interest to Dallas residents, "Parkcentral Global Hub Ltd., the fund overseen by Parkcentral Capital Management LP, a Plano, Texas, firm controlled by the Perot family, peaked this year at $2.5 billion in assets. It used borrowed money to amplify its bets, said people familiar with the matter, and began dumping assets last week.
"That leverage helped hasten the fund's meltdown as the commercial mortgage-backed securities, or CMBS, market cratered last week, and the borrowings also could leave lenders with tens of millions of dollars in losses, the people said."
"A Parkcentral spokesman Tuesday confirmed that the fund has been forced to liquidate to pay off creditors, but he declined to elaborate. He blamed the "unprecedented upheaval of the capital markets in general and the freezing of credit markets in particular."
Dan Ross
http://www.BetterBizBooks.com
Monday, March 3, 2008
Commercial Real Estate is now slowing down dramatically...
Now commercial development is slowing down quickly.....
"Spending on U.S. building projects in January fell by the most in 14 years as the housing slump worsened and construction slowed on hotels and highways. The 1.7 percent decrease, more than twice the fall economists forecast, followed a revised 1.3 percent drop in December that was steeper than initially reported, the Commerce Department said today in Washington. Construction spending has contracted for four straight months.
Homebuilding is in a third year of declines as sales weaken and builders halt new projects to lighten inventories.
Stricter borrowing rules and lower demand are also restraining commercial developers, creating an even greater drag on growth." <--This is what the FDIC is worried about as it then really puts the pinch on regional banks that might have overextended themselves to real estate development in the last few years. Are these banks capitalized properly to handle bad commercial loans and bad residential loans at the same time? Dan Ross http://betterbizbooks.com/
"Spending on U.S. building projects in January fell by the most in 14 years as the housing slump worsened and construction slowed on hotels and highways. The 1.7 percent decrease, more than twice the fall economists forecast, followed a revised 1.3 percent drop in December that was steeper than initially reported, the Commerce Department said today in Washington. Construction spending has contracted for four straight months.
Homebuilding is in a third year of declines as sales weaken and builders halt new projects to lighten inventories.
Stricter borrowing rules and lower demand are also restraining commercial developers, creating an even greater drag on growth." <--This is what the FDIC is worried about as it then really puts the pinch on regional banks that might have overextended themselves to real estate development in the last few years. Are these banks capitalized properly to handle bad commercial loans and bad residential loans at the same time? Dan Ross http://betterbizbooks.com/
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