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We just recorded a new Teleclass where we outline the Distressed Commercial Asset Life Cycle. You can get a free copy here for the next 2 weeks and then it will change to our latest teleclass and topics change twice a month.

Get yours now: http://www.investortours.com/free_teleclass.php 

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We are all waiting for spring … when all things are born anew!

AND before you can get green shoots like these in the commercial real estate markets … the first step is the market fundamentals have to stabilize. At some point rent and occupancy simply must stop falling and enter the category of “No Change” as the analysts in our industry survey the national markets. Only then can the turnaround … and those little shoots … begin to emerge.

Here’s a sign we may be seeing some stabilization sooner than most pundits had predicted.

Most of the national “experts” reported in the press over the last several months have gone on record predicting it will not be until the 3rd quarter (and most then say “at the earliest”) until we see the Commercial Real Estate Markets recover.

Here is a report showing 16 of 28 major markets in the US where multifamily rents are NO CHANGE in the fourth quarter of 2009. See the report at this link …

Could this be the first sign that some “green shoots” are on the way – might they be curled up under the surface yearning to emerge when the sun comes out all the way? Stay tuned …

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Here is another sign of the times with regards to the concept of the “Strategic Default”. If you are underwater on your mortgage it would appear the lawyers are lining up to “help”.

I just ran into this website with it’s “Pay or Go” calculator. http://payorgo.com/

You plug in your numbers on what you owe and what you pay and it will tell you whether you should keep Paying or Go … walk away and trigger your “Strategic Default”

Is this the 2009 property specific version of “ambulance chasing”? I am certain this law firm could help you if you decide to “go” rather than keep paying. And this all begs the question is walking on your mortgage now socially acceptable. You be the judge and as one reader emailed me … “whether it is socially acceptable or not, the question of whether it is ethical remains.”

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In this economy, where many individuals and businesses bought at the peak and are now under water on their loans, is it now Socially Acceptable to walk away from those loans? Are we to the point where a “strategic default” – as this has come to be known – is simply idle water cooler banter amongst investors.

Today Bloomberg announced that Morgan Stanley is doing just that for the second time in 2009. And the Wall Street Journal has had a series of articles on single family home owners and the epidemic of strategic defaults in home loans

More on Morgan Stanley …

Read the rest of this entry »

Can you say “BUBBLE”?

Here is a bar graph of US Commercial Property Sales closed from January 2000 to June of 2009. It so clearly tells a tale of Boom and Bust. A picture is so worth 1000 words.

Interestingly the peak is earlier than you might think. It is centered around April of 2005 – April of 2006.

This graph is taken from the just released First American CoreLogic “Commercial Market Monitor” August 2009. Get your copy here.

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With Retail Property in the tank across the nation … a couple week’s rent is WAY better than nothing at all. Retailer business owners are in an equal scramble to make a buck from the shrinking consumer spending pie … and Time Magazine is reporting that this is leading to some creative win:win solutions across the country in the form of what they are calling “Pop Up Shops”. Here’s the skinny …

The value proposition:

• I will rent your space for a couple months and give you some extra cash flow
• If you let me try out a new retail concept without having to sign a long term lease

And the “Pop Up Shop” is born.

Now we have all seen these types of stores before. You know the ones … the Halloween Costume shop that pops up for just a couple weeks in October. And any number of holiday focuses shops at Christmas – the Hickory Farms store anyone? The difference now is this is a real main stream trend.

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Last night I was watching television when an ad came on – in prime time – promoting a foreclosed/distressed Commercial Property Auction. “Who wants to by an empty Home Depot location … step right up”

I thought to myself, “This really is a sign the end is near – meaning it is seriously time to buy!” I have never seen anything like this before. Sure, the “no money down” guru crowd does a lot of work with TV… but that’s usually late night infomercials … and yes I do own a Carleton Sheets course from the 90’s.

Then today I saw the same ad in the Wednesday Wall Street Journal – a half page spread in “The Property Report”. That’s more like it.

Here’s the website for the auction. They have no less than 9 empty Home Depots to move.

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The Pontiac (MI) Silverdome – former home of the Detroit Lions – just sold for $583K. That is not a typo …. $583,000

It cost $54M to build in 1975. Just think what that is in today’s dollars !!

 
The Glory Days?

• Back in 1994 Brazil beat Italy in a world cup game in this building.
• Michael Jackson, Madonna and Elvis all played there
• Pope John Paul II, once delivered Mass from the field
• But the Silverdome’s biggest event was Wrestle Mania III in 1987, when 93,000 fans packed into the stadium to watch Hulk Hogan body-slam Andre the Giant. That was the biggest turnout ever for an indoor sports event.

The Detroit Lions NFL team hasn’t played there since 2002 and the buidling was costing the city of Pontiac $1.5M to keep up.

The new owners are going to host MLS Soccer Games (GO SOUNDERS!)

Here’s the full article.

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CNN Money is reporting today the 22 banks that received the most help from the Treasury bail out programs collectively have cut $10 Billion from their small business loan balances in the last 6 months alone.

They make more money and the small businesses that drive the economy take it in the shorts. Just how is this supposed to make sense? I thought the fed and the banks were working together to enable them to continue to make loans.

Small business activity is what will lift us out of this mess and instead of a loan they are getting what my teenage son would say is a, “Kick in the Nards.”

Where did all the money go? Hmmm

Here is the full article

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 In a more normal market … where there is a reasonable volume of Property for sale and a reasonable number of Buyers … we recommend you build your Lead Generation System around active Brokers and Commercial Agents. In normal times the vast majority of Properties change hands through the Commercial Broker & Agent networks.