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.