IMPERSPICUITY

Yes, "imperspicuity," will rule the commercial real estate market for many more months! It's meaning:" Want of perspicuity or clearness; ambiguity."

Confusion in the business has already set in and many commercial markets are totally paralyzed: no sales and almost no leasing activity. In this interim of market stagnation a new (but very old) commercial market is slowly emerging.

In my opinion, the emerging commercial real estate market will be unintelligible for most commercial real estate practitioners accustomed to the stilted financing methodologies used over the past two to three decades.

It's clear that now the greatly anticipated commercial meltdown has begun! In case you don't know, UCBH Holdings Inc's United Commercial Bank, a San Francisco-based lender with $11.2 Billion ( and deposits of $7.7 billion)in assets, was seized by federal regulators last Friday.

This seizure cost the federal government $1.5 billion FDIC deposit insurance fund.

According to Bloomberg.com, " Banks are buckling under the weight of souring real estate loans caused by the worse recession in 25 years."
"Commercial real estate loans have been the leading cause of bank failures in the past two years. The loans total $ 1.1 Trillion according to FDIC.

Add to this news from Philly, "It just a hint of the harrowing state of affairs in commercial real estate, where vacancies are on the rise across virtually all sectors, rents and property values are dropping, building owners are low on funds and financing options are drying up."

" There's a tremendous amount of pain coming", declared Sid Smith, managing partner of Newmark Knight a global real estate service firm,"

"Of the $3.5 trillion in outstanding commercial debt, an estimated $$535 billion will mature over the next two years according to Marcus & Millchap a national commercial real estate brokerage firm. Meaning $22.29 billion will be due for full payment, or refinancing, every month for the next 24 months.

The emerging commercial market will offer some great opportunities for those in-tune with the old fashion, tried and true, and highly sophisticated valuation tools and techniques of the past and those buyer-investors who are not blindsided by the glitter of tenant "brands."

The key now is one word: PATIENCE.


Bill McInerney, Commercial Realtor
Call: (617-816-3933)

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Bill McInerney offers: Commercial & Investment Property Research, Acquistion and Consulting Services.