Seriously, I Just Got This Email Regarding Commercial Real Estate

You know why people hate real estate agents? Because there's a perceived notion out there that real estate agents are all after the commission without regard to whether or not the purchase (or sale) is right for the CLIENT.

I want to share with you an email I just received that drives home exactly that. (I took out any references to the sender, or the company name that sent out this doozy):

There has never been a better time for business owners to purchase the commercial property their businesses occupy. It's a fact, and I'll tell you why.

The 20-year fixed interest rate on commercial loans projects continues to be historically low -- the effective rate for May is 5.52%. And that's fixed for 20 years! On top of that, the continued elimination of most up-front fees makes a commercial loan an unbeatable alternative to conventional financing . . . and a no-brainer for any business owner who recognizes the wealth-creating power of commercial property ownership.

The Experts in commercial property financing (that's us) make the purchasing process easy and simple because it's ALL we do. If you're the least bit interested in owning your commercial property, call me today

Is this guy doing ANY market research? Probably not - he just wants a deal. The fact is all RELIABLE DATA and market forecasting point to exactly the opposite - there's a perfect storm brewing in commercial real estate and if you think the residential foreclosure market got hit hard, just you wait.

"a no-brainer for any business owner who recognizes the wealth-creating power of commercial property ownership"?!?!? This must be a joke, right? It used to be "don't wait to buy real estate, buy real estate and wait". Not anymore. You'll be turning cartwheels of joy if you just wait around and get ready to pounce when the timing's right - but that time's certainly not now.

Commercial Real Estate Foreclosure Recovery? Not By a Long Shot

Lately, I've heard rumblings that we're actually entering into an economic "recovery". With high unemployment and massive household debt, that's hard to believe. Remember, many people have financed their expensive lifestyles and the bills are coming due. Financial services, home-building, auto workers, even lawyers, brokers and other traditionally well-compensated fields are feeling the brunt.

Here's the mission statement for why we're in for a rough stretch of commercial real estate: everyone borrowed too much!

Not painting a pretty picture as well is the long-term impact of colossal government spending and national debt which has yet to be felt. Jobs just cannot be created fast enough to fill the gaping holes in commercial real estate debt-service. In fact, you can make a case for the first time in quite a long time, American's standard of living may have begun to fall - low wages, shrinking insurance benefits, bankrupt pension plans, and how about that 401K for retirement?

Where will the new high-paying employment options to stir recovery be? Here's a few:

• Technology: engineers and scientists still will be highly desired as new high-tech products can increase sales to global markets.
  
  
• Healthcare: as the population ages, we'll continue to see demand for medical services, doctors, nurses, therapists, caregivers, etc.
  
  
• Education: if there's one area that's in desperate need of qualified individuals it's the teaching industry, especially for education targeting engineers, scientists, and doctors for jobs leading to innovations in their particular field of study.
  
  
• Housing: as long as the U.S. population continues to grow (which it will), homebuilders will eventually recover as all these people still need places to live.
  
  
• Wealth Management: We'll eventually have to pay the bills for all the borrowing that's been done.
  

The problem is that there aren't many good paying jobs around right now and the only way out of a doomed commercial real estate market is job creation. Even those with the most rosy-colored glasses point to an overall gloom and predict a prolonged slow recovery process. I don't think we're there just yet.

The Long Road Back - Commercial Real Estate: Absolutely No Demand

Commercial foreclosures are looming in the future. Here's more bad news for commercial real estate owners: there's no demand for your product. Looking to increase cash flow to meet expensive debt service? Not a good bet. As tenants continue to downsize to cut costs, landlords are facing serious challenges as their stifling mortgage statements stare them in the face month after month. In today's marketplace, commercial real estate is seeing the following trends:

• Retailers are closing their weaker stores, and concentrating mainly on only the strongest of large shopping centers
• Apartment renters are doubling up or moving back in with their parents or siblings
• Office tenants want big accommodations in rents and concessions.
• Warehouses are suffering record vacancies.
• Hotels are seeing "below break-even" occupancies, as families are eliminating travel more and more as a means to curtail their spending.

It's not new construction that we'll need in the commercial real estate world. New demand must be the keyword for the commercial real estate world to weather the upcoming storms of commercial foreclosures and commercial reos. Remember that employment growth always follows the growth of the economy, and unfortunately, real estate is typically the last to see any improvement.

And the Market to Watch Is..... (Drumroll please)

Well, unfortunately, according to the Emerging Trends, there really is no market to watch at this point. They are not bullish on any particular place. But they do say that investors tend to favor the following:

• Global gateway markets on the East and West coasts—featuring international airports, ports, and major commercial centers.
• Cities and urbanizing infill suburbs with 24-hour attributes—upscale, pedestrian-friendly neighborhoods; convenient office, retail, entertainment, and recreation districts; mass transit alternatives to driving; good schools (public and/or private); and relatively safe streets.
• Brainpower centers—places that offer a dynamic combination of colleges and universities, high-paying industries—high tech, biotech, finance, and health care (medical centers, drug companies)—and government offices.
• Barrier-to-entry markets where geographic constraints—rivers, lakes, oceans, and mountains—limit development and help control overbuilding.

And what do investors tend to shy away from these days? Try these attributes:

• Midwest manufacturing centers—automaker travail deflates interest to new lows;
• Secondary and tertiary cities—anywhere you can’t fly direct to from the global pathway centers;
• Hot-growth bubble-burst markets, which collapsed under plunging housing prices;
• Fringe areas—the exurbs and places with long car commutes or where getting a quart of milk means taking a 15- minute drive.

So where does Las Vegas rate in all of this? Like the military, don't ask - don't tell... But if you'd like to register at www.CommercialREOs.com for some nice timing plays when the time is right, please be our guest and do so.