Summary
Banks and other lenders are ill equipped to operate a failed mall, office building or hotel, once they have foreclosed on this type of property.
Shopping malls and other such buildings staying vacant brings no income and makes the property more difficult to sell.
A good broker is the answer, One who can find a buyer, negotiate a sale and limit the damage to the bottom line and the structure, itself.
Analysis
If commercial real estate fails, the big losers will be the lenders, as well as the owners.. As a licensed broker specializing in CRE (commercial real estate) I see first hand increasing vacancies and panic selling mostly in the midwest and southern USA and in the sunbelt, Florida, Arizona, California.
There are numerous arms to CRE, retail, industrial, hospitality, and office properties.
There are several big problems; the original mortgages have five or seven year terms and are now coming due. If the properties are still healthy, that is if the vacancy factor has not increased, perhaps the lender might be wiling to refinance, that is, if the lender has the funds to accomplish this.
In retail, where I hang my hat, I see many vacancies in good locations. The tenants have failed and they have moved out, many in bankruptcy. All retail sizes are affected, from the small 1,500 s.f. stores to the large 80,000 to 150,000 s.f stores. Yet, I see many new tenants coming in, some from other parts of the US and some from Europe. Different products and different uses, perhaps, but if the landlord is cooperative and wants to have some income, he will bend to accomodate the new tenants...on price per sq. ft, on store configuration or size, or type of use. A Circuit City store (now defunct) can go to a health club, a childrens day care center or another electrononics store.
The answer is in finding a good real estate broker, one who can successfully negotiate with the landlord to bring the vacancy back on line.
If a bank forcloses, they are not equipped to operate a retail mall, an office building or a hotel. The bank will want an operator who has successfully operated such a place. Again, the broker has many connections in this area and can find a suitable buyer for the property along with tenants to fill the vacancies.
Sandy Schonberger, President
SCHONBERGER ASSOCIATES, L.L.C.
