COMMERCIAL REAL ESTATE CRASH?
There is much mystery in the topic of the credit crisis, but not as much mystery as the ?huge crash in commercial real estate? which we see on the horizon. It is looming but no one is warning us! It?s a very strange situation. It might have hit private sectors but Main stream news is hardly covering the topic. There could be reason for this, especially as it could be a catalyst for the market, which at new highs and weak is just looking for the perfect excuse to start heading south.
All of the components of real estate value are going in the wrong direction simultaneously, Occupancy rates are going down. Rent rates are going down and the capitalization rate ? the return that investors are demanding to buy a property ? are going up. This is a slap in the face. And is imploding more and more each day. Commercial real estate has over the last several months taken a tremendous setback both in rents and in cap rates, depending on the type of product, the value of real estate is down anywhere from 25 to 75 percent.
Many of the big wigs on wall st are now very hesitant and are using ?extreme caution? before putting money into commercial real estate, especially office space, because properties are losing tenants at a dramatic rate.
U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody?s/REAL Commercial Property Price Indicies already have fallen almost 41 percent since October 2007. A move that has not been seen for many years. It is solid evidence that this is a very big problem that won?t go away quickly.
In order for the commercial real estate market to start its healing process, trust in people and banks must be restored and we cant see this in the short term.
The four keys to restoring this confidence, at the moment are by
1) Making sure consumers have jobs,
2) Having them see their home prices go up instead of down,
3) Giving them access to credit
4) Letting them see an increase in their 401k.
We see this problem continue to worsen down the track, and if it hits mainstream news it will spook investors, and those invested in the global markets. We have to monitor this situation and investigate things further as time progresses, but this needs to be mentioned and is a big deal. We feel that it is not being put out in the open for a reason, and as we move into 2010 there might be more evidence of why this has occurred.
About the Author
John an accurate world renounced trends expert with a solid background is responsible for bringing tomorrow news today for his clients. For more details please visit. : http://www.forecastfortomorrow.com
Source: http://www.lufkinhbo.com/2012/02/Commercial-Real-Estate-Crash-Coming/
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