The totality of incompetence by industry analysts, industry trade organizations and news outlets...

Implications: The ECONOMIC news is not getting any better, as a matter of fact its getting worse. And yet there are still those in the commercial real estate industry that keep looking for the silver lining as if that is what is going to save the day. What this does is create false expectations which by now, the public is demonstrating more wisdom than the so called professionals. A Perfect example is the latest report on consumer spending...Gee why aren't all the retailers jumping for Joy? The reason is simple. The consumer spent their money on basic needs food, fuel and living essentials. Very little discretionary was happening.

Analysis:  This writer predicted the current state of the commercial real estate market not only in terms of investment sales as the article points out but the lack of overall leasing activity in most if not all of the major markets over a year ago. Remember all those folks that predicted the credit crunch would be over by the end of the summer 2007.
Guess what, it going to be 12 months next month and there is still no resolution in sight, not even close based on the subject article.

Commercial brokers who just at the beginning of 2008 had predicted the fundamentals were still good to excellent for leasing activity are just now FORCED to change their tune, otherwise lose all credibility.  

For those within the industry and those who report on those same folks about how the market is soon to recover still do not read or follow the economic state of affairs. How tunneled vision can they be?


As this writer has been saying repeatedly, the commercial real estate market takes months to begin feeling the effects of an economic downturn. And yet there are still those who track it like it was a daily commodities market.  


My Colleague Mr. Leonard rightfully pointed out the poor reporting being done by such publications as the Wall St. Journal. They state the obvious with whatever spin they are being fed, but take no initiative into really doing their research on the topic of commercial real estate.

To know commercial real estate you need to know the economic drivers and trends that effect the industry. The commercial real estate industry does NOT exist in a vacuum never has never will. 

At least this article provides the necessary insight and facts to back up its conclusions.  


It will be no doubt be a long haul before the CMBS market returns and when it does it will be in a different configuration than it is now and has been.  

Of course it has to start with the rating agencies that are still in denial. They have stated they don’t like the proposed regulatory changes they will be forced to swallow...too bad about them. And as this writer has stated previously as far as I am concerned as well as should any intelligent investor of any variety be concerned, the rating agencies have lost all credibility and should have lost all investor confidence. But sadly that is not the case as yet.  


Therefore any commercial real estate owner looking to finance or refinance a property, better be prepared to pay higher interest rates with less than favorable terms and much more equity required. This will not change for several years. The last debacle lasted almost 7 years...

The next prediction based upon the Federal Reserve is the failure of many banks that have construction loan exposure.  

So let us see what the experts and news media will have to say and report on this development. I am sure they’ll be an air of surprise on their respective parts.