When Reality Strikes...Many can't handle the Truth

Implications: The DC regional commercial real estate market is beginning to feel the pain of the slowing economy. And As this writer has been expressing there are those still in major denial. By sitting back and watching Rome burn, they are contributing to the continued decline. At least some landlord's are finally seeing what they need to do.  I had written an article for GLG over year ago which was titled "Why the DC Market is not where the smart money should invest" Now you see why. All the gains of the past 3-4 years are being given back. Those that bought at historically low cap rates with easy credit based on pro-forma projections will be in a world of hurt fairly soon, along with the spec office builders. The silver lining is many of those are being built by institutional developers who hopefully can withstand the down cycle.

Analysis: This article is posted so that there can be not doubt about the state of DC Regional Market. There are those that are apt to put lipstick on the pig, but that doesn't change what is going on and it won't change the ripple effect.

Owners are beginning to offer extensive rent concessions which is good for tenants after years of a landlord's market. Landlords don't offer such unless they see a dearth in leasing activity as the one landlord highlighted in the article. That being said the overall corporate decision is to stay put which is why the article has pointed out the highest lease renewal rates in quite some time.

It was also reported this week that 25% of the area's banks lost money last quarter...shouldn't be a surprise.
As this writer has always written, credit availability drives real estate.

The market players are finally seeing the light...well maybe the enlighten ones at least.