Today property owners, and management firms, need to focus on the important of "the retention of ALL tenants."
Many small and mid sized retail and professional firms are facing severe financial pressures under the present economic conditions.
Many small firms were caught up in the belief that they could continue to pay higher and higher rents forever. Many landlords, thinking only of short term gains, kept raising rents to unprecedented levels.
Everyone was party to the folly: property owners, managers of properties, brokers, agents, bankers, appraisers, assessors and tenants.
The days of reckoning are here and with a vengeance.
In my opinion after 30 years in the commercial real estate field is that this "recession-downturn-almost depression," is going to linger for a long time. Don't anticipate a V shape or U shaped recover.
Anticipate at best a "straight-line" mini-craw out of this recession with both some minor ups and downs.
The best indicator we have to go on, again in my opinion, is the long sad downturn which began in 929's and lasted until after WWI, to the late 1940's.
Like it or not the entire real estate industry is in for major changes.
Sadly, everyone, everywhere, overbuilt and over-developed. We now have much more supply than sold, financially viable demand. The over-supply keeps growing with each and every vacancy.
If a tenant is having financial difficulties the options are bleak: would you rather have no income from the space for the long haul: three to six years; or would you settle for occupancy with a rental-lease income near your break even point?
Until we have stable and long term financial liquidity and readily available credit and capital for commercial tenants, the market for commercial leasing will remain bleak.
Right now do what you can to retain each and every tenant. If you are faced with vacancies do expect a miracle; but be realistic and in my opinion now settle for near your break even costs.
BIll McInerney
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