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GLG News by this Author

The Death of the Mall Has Been Greatly Exagerated

September 29, 2008

Analysis of:Economy could close some malls: liquidator | www.reuters.com

With apologies to Mark Twain, the death of the mall in America has been greatly exaggerated. Will there be some malls that are ultimately closed? Absolutely. But that process has been occurring for the last ten years and is not necessarily a result of current economic conditions or the "over retailing" of America. It strikes me that the "prediction" by Hilco is more self-serving than prophetic.

This Should Be A Surprise To No One That Was Paying Attention

September 15, 2008

Analysis of:MALL GLUT TO CLOG MARKET FOR YEARS | online.wsj.com

But then it appears that very few were paying attention to the markets, be them financial or real estate. In the last 8 years, developers have built one billion square feet of new retail space in just the 54 largest U.S. markets. That's billion with a "b", as in one thousand million. Or to put it another way, that is the equivalent of 667 new regional malls (12 per each of those 54 markets). That means that there is now the equivalent of about 38 square feet (or about the size of a small walk-in closet) of retail space for every man woman and child in those markets.  Can anyone say "over retailed"? 

Remove the Rose Colored Glasses

August 6, 2008

Analysis of:CBRE’s Torto Sees CRE Correction, No Catastrophe | www.commercialpropertynews.com

Harry Truman said, "It's a recession when your neighbor loses his job; it's a depression when you lose yours." Clearly Mr. Torto still has a job, but he is, in my opinion, basing his "correction but no catastrophe" assessment of the commercial real estate markets on something other than the facts.

2008 Numbers Are Bad; 2009 Will Be Worse

July 21, 2008

Analysis of:Record Store Closings | online.wsj.com

If you distill the numbers in this latest report, 13% of all retail establishments in this country will close there doors this year. Not too worry though, says the International Council of Shopping Centers, since roughly the same number of stores open each year that close. Perhaps that has been true in past years but I don't expect it to be true this year or next. The impact will be significant on both owners and lenders.  It is time to sound the alarm.

Rearranging the Deck Chairs on the Titanic

July 17, 2008

Analysis of:Grubb & Ellis Company Announces $25 Million Share Repurchase Program and Suspension of Dividend | www.foxbusiness.com

With the recent exodus of executives and the elimination of the quarterly dividend, this is a ship that cannot be righted. This is a company that should be conserving cash, not instituting a share buyback program. Besides, when 41% of the stock is held by insiders, one has to question both the wisdom and the motivation of such a move.  

A TIC By Any Other Name Is a Blood Sucking Insect

July 11, 2008

Analysis of:How 1 Property Sank the Savings of 35 Investors | online.wsj.com

For the better part of five years, TIC (tenant in common) investments were heavily promoted to individual investors as a "safe" and hassle- free investment alternative to whole ownership, primarily to those  wishing to defer taxes on the realized gain from a sold property or properties. These investors were sold a bill of goods and these investments are proving to be disastrous as the markets start their downturn.

Tell Me Again How Housing Has "Bottomed Out".

July 2, 2008

Analysis of:KB Home’s Loss Widens as Inventory of Unsold Houses Mounts | online.wsj.com

The numbers reported by KB Homes are very similar to those reported by Lennar and other major, publicly-traded homebuilders. Sales are off drastically, contract cancellations continue to be problematic and losses are mounting. For the National Association of Realtors and other trade organizations, as well as some well-known analysts, to claim that we have seen the bottom of the housing market is both foolish and irresponsible.

It Isn't What's Above the Surface That Makes an Iceberg Dangerous

June 23, 2008

Analysis of:NAR Report Details Impact of Credit Crisis on Commercial RE | www.cpnonline.com

To assert that "times are tough but not as tough as during the recession of the early 2000s" is to look no further than the numbers, ignoring the underlying issues, which the NAR and many other trade organizations are quite good at. The numbers may not show it now, but the commercial real estate market is, or certainly will be, much worse than during the recession of the 2000s. In fact, we may look back on those days longingly by the time this is all over.

As Warren Buffet Said, "You never know who is swimming naked until the tide goes out."

June 19, 2008

Analysis of:Commercial property in a world of hurt | www.financialweek.com

The underlying dynammics of the commercial real estate markets have not made sense for the last 18 to 24 months. It is only now that the overall economy is in turmoil that we are seeing the consequences of what were bad purchase decisions, bad lending decisions and bad development decisions. But make no mistake, it isn't a bad economy that is the culprit here. The bad economy is the metaphorical tide and now that the tide has gone out, we have discovered that many otherwise bright, experienced, talented players in the commercial real estate markets were, in fact, swimming naked.

Is It Time For The Vultures to Swoop In?

June 9, 2008

Analysis of:Real Estate Woes of Banks Mount | online.wsj.com

The only surprising aspect of this front page Wall Street Journal article is that anyone was surprised by it. While the subprime write-offs, now north of $400 billion, will prove to be the largest, there is still plenty of pain to be felt among a whole host of lenders...and the WSJ article has only touched the surface of the coming pain. 

Multifamily Is a Two-Sided Coin

May 29, 2008

Analysis of:Apartment Starts Will Trend Down After this Year, Held Low by Shadow Inventory, Condo-to-Rental Conversions, Says NAHB Economist | www.multihousingnews.com

We need to stop looking at the "multifamily market" as a single market. Clearly, given the current condominium market (or lack thereof), we need to talking in terms of rental apartments and for-sale condominium product, regardless of whether some of that condo product may temporarily be placed into the rental market. These are two entirely different markets, and if you are looking for proof of that you need look no further than the landscape that is littered with failed condo conversion projects and bloodied with hundreds of millions of dollars of investor and lender losses. 

The Traditional Real Estate Brokerage Model Is Broken

August 30, 2007

Analysis of:Realtors See Drop in Ranks | online.wsj.com

A reduction in the total number of real estate agents in this country is not necessarily bad news for the industry - certainly not bad news for the remaining agents. But is spells trouble for the real estate brokerage businesses, particularly the large, corporate operationsand those affiliated with national franchises. The traditional real estate brokerage model is predicated on a significant and steady influx of new associates into the business, from which these brokers derive the majority of their profits.

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