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Retail industry braces for shopping center collapse

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posted on Jul, 23 2009 @ 12:09 PM
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The weakening commercial real estate market is braced for a bust that experts say could cause even more damage to the local economy than the housing collapse.

"Any projects built in the last five years, especially those built near new residential developments, are at risk," said Shari Olefson, a Tampa real estate attorney with Fowler, White and Boggs. "I'm hearing from a lot of owners who just want to walk away, just as homeowners are turning over the keys."

Florida cities already are among the nation's hardest-hit by home foreclosures. Similar problems in the commercial real estate market would cause the recovery of the economy to take even longer. That's worrisome because estimates call for the commercial real estate market, valued at about $6.7 trillion nationally, to see half of its loans due over the next three years.

At the same time, U.S. banks have been charging off soured commercial mortgages at the fastest pace in nearly 20 years, according to a recent analysis by The Wall Street Journal. At the current pace, losses on loans to finance offices, shopping malls, hotels, apartments and other commercial property could reach about $30 billion by the end of 2009.

www2.tbo.com...

Anyone who has been claiming we are going towards a recovery better take a look at what is really happening, because there are signs all over that THINGS ARE GETTING WORSE, not better.

I do have a couple of questions for members.

Have you made enough preparations, or are you going to wait hoping that the economy recovers?

[edit on 23-7-2009 by ElectricUniverse]




posted on Jul, 23 2009 @ 12:47 PM
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reply to post by ElectricUniverse
 



I do have a couple of questions for members.

Have you made enough preparations, or are you going to wait hoping that the economy recovers?


Hey, hey, hey, Obama is going to save us all, I'm just going to sit back and continue to watch American Idol and drink the Kool-aid, there's no need to worry. I can't wait for ACORN to come around and pass out all the Blue Pills.


This is horrible, we all knew it was coming though, well ones that have been paying attention anyway. I'm somewhat prepared, enough to last a month or two.

So we will see, all I know is that its about to get really bad.



posted on Jul, 23 2009 @ 12:52 PM
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reply to post by ElectricUniverse
 


Once the commercial real estate bubble bursts, its over for life as we knew it. Lets hope it doesn't happen, but think now what you will do when/if it does.

My husband is a tax accountant for a commercial real estate firm. He isn't panicking just yet, but he is aware of the situation.

We've prepared as best we can for a number of scenarios. No one can predict which direction the blast will come from, but we can try to be ready to live off the grid. We will be following our instincts and acting accordingly in any case.



posted on Jul, 23 2009 @ 01:10 PM
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Maybe, but the stock market has been soaring. Nasdaq up 12 straight days!!



posted on Jul, 23 2009 @ 01:21 PM
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Same here in the UK, go round any town/city centre and there are shops closed down, there's been a fair few large retail chains gone under too.

Tinned food and bottled water for me.



posted on Jul, 23 2009 @ 01:24 PM
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Originally posted by Make Speed Limit 45
Maybe, but the stock market has been soaring. Nasdaq up 12 straight days!!


8-10 point average daily gains are Soaring? I hardly think i would constitute that as a great indicator of how the economy is going. Once the Commercial real estate goes, it is going to get a lot worse.



posted on Jul, 23 2009 @ 01:34 PM
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reply to post by ElectricUniverse
 


there is evidence of this all over Las egas..Empty retail buildings by the tons!

newly built buildings without parking lots. new targets..empty...complete brand new strip malls without one tenant...

buildings near the strip closing down.

one would think there are many small businesses getting ready to collapse, but people have been saying this for some time now, and still things keep on keepin on...

I thik it is coming down to everyone being felxible..from landlords, to banks to the businesses lowering their cost and their prices..

people have to adapt, and I think that is why we are not seeing the "great depression 2" ...yet



posted on Jul, 23 2009 @ 01:58 PM
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Do you mean this might be the end for Strip Malls across the Nation?

That's the best news I've heard since this Recession/Depression started several years back!

Strip Malls have been a blight on the American landscape since the 1960s. They really needed to go anyway.

This is good news for E-Commerce on the Web, but bad news indeed for local mom-and-pops that populated these Strip Malls. Wealth will still be spent by Consumers, but if those E-Commerce Websites are outside of your local area, then you are just shipping your dollars off to some other community. This is redistribution of wealth, not an indicator of the lack of wealth.

The times have been a-changin' far longer than this Recession. Some things such as mentioned in this article were inevitable. Next to Payroll, the biggest expense to any business is property/lease/real-estate. A Brick-and-Mortar business with a huge lease can't really compete with the lower prices that an E-Commerce Site on the Web that doesn't have a huge lease. Even if the economy hadn't changed, this would have happened, and as Small Businesses closed shop in Strip Malls, Real-Estate Investors and Bankers would have felt the pinch. All the current economy did is accelerate this change.

For an example, every business in the Office Building my company is located in has closed up shop. The only two businesses to remain are the Beauty Salon and an E-Commerce Web Developer. Both are buying up the vacant offices to vastly expand their businesses, as business has been exceptionally good for both of them. Still, there is far more Commercial Space per city than there are Salons and E-Commerce Web Developers. As more Brick-and-Mortar Retailers go the way of the Dodo, Real-Estate Investors and Bankers are going to feel the pinch even more...although I'm not quite sure if we should be weeping for the Real-Estate Investors and Bankers much. I feel sympathy for the Mom-and-Pops and Small Business owners who haven't evolved quick enough to compete in a Global E-Commerce Economy, but not for the Investors and Bankers.



posted on Jul, 23 2009 @ 03:43 PM
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Originally posted by Make Speed Limit 45
Maybe, but the stock market has been soaring. Nasdaq up 12 straight days!!


What does that have to do with the economy?



posted on Jul, 23 2009 @ 03:51 PM
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reply to post by fraterormus
 


I believe the problem is not strip malls but actual super malls. The strip malls have been dying away since mega malls showed up. Commercial Real Estate in general is suffering from lack of consumerism which will have a domino effect on everyone from the sales clerk to the accountant to the transportation and distribution industries. Its a bigger deal than Mom & Pop Dollar Store closings. Which in and of itself, is also very bad news.



posted on Jul, 23 2009 @ 04:33 PM
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reply to post by Hazelnut
 


No the problem is in almost every commercial unit type from single tenant retail and office to the large multi-tenant properties. Office vacancy in Los Angeles jumped from 8% last year to around 15% at present (well not really because this is based on q1 reports from local brokers).

The large vacancies put downward pressure on the values of commercial properties which means that the loans made available to commercial property owners have a danger of being insufficient by not being able to cover operating costs as well as the previous loan. Right now, the property owners are sucking up the difference, but when that fails, the entire system will need a fat bailout or our economy disintegrates.



posted on Jul, 23 2009 @ 04:39 PM
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reply to post by wutone
 


You are much more articulate and informed than I am. I'm just doing my best to understand so much very quickly. My work knowledge is based on the wealth management industry focusing on retirement benefits. The big picture is still coming into focus for me.



posted on Jul, 23 2009 @ 04:48 PM
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Considering the rate of spending of Americans put many in debt, that led to mega shopping centers on every corner, I say this is the result of Americans not spending every cent they own. It will never recover the way it was, because that amount of spending cannot be maintained. The economy shouldn't return to it's former height, because that type of consumerism was unmaintainable. I saw bring back local stores and mom and pop shops as oppossed to massive stores all over the place.



posted on Jul, 23 2009 @ 10:00 PM
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The commercial market is just another domino to fall in the scheme of things. The housing bubble put all kinds of money into the hands of consumers via home atm machines (refinance). The it became easy for more people to buy this new atm and withdraw money.

It is only natural that if a person has access to a wad of money in a society that glamorizes conspicuous spending and consumption (just turn on MTV), they are going to throw money at the commercial structure of the economy.

8 years of steroid (home atm) enhanced commercial growth is based on the housing bubble.

8 years of commercial growth will come crashing down. So imagine, or remember, what everything was like 9 years ago in terms of commercial activity.

Then take out all the investments that helped kick start (or were used to kick start) the last 8 years.

Then add the chain reaction downward spiral.

This could get real ugly.



posted on Jul, 24 2009 @ 06:09 AM
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Well this whole industrial revolution we've been experiencing started with a bang, it's been nothing but bangs and bombs throughout i'm not shocked that the en$tire system is falling like ill placed dominos and making quiet a bang as they go - as someone pointed out this was going to happen anyway as the effect of the internet displaced shops.

Maybe we're working towards a world in which less land is needed to run our lives, shops can all exist in virtual space which would dramaticly decrease waste, energy and resource usaage and free up more room for the expanding population. Ppl worried this is the end of life as we know it need to chill out, its probably the start of something better.



posted on Jul, 25 2009 @ 03:22 PM
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anyone know how flexible banks /lenders have been re-negotiating the terms of CRE leases.....i believe i heard the most popular thing has been to extend the loans from 3 years to 5.....but i imagine this is just a modest % of the loans (but possibly for the bigger stores? i dunno)....

it sounds like kicking the can down the road a bit to me.....but in this instance i really don't see anything wrong with this because this will just slow the fall.....which i think is good



posted on Jul, 25 2009 @ 06:49 PM
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I work in the mall industry(GM of a regional mall) and things are bad but not nearly as bad as some of the doomsayers are claiming. Retail got bloated and the industry is shaking itself out and getting back to being lean and mean. This kind of thing happens about every 10 years in the retail industry although it's admittedly worse this cycle. Our property is actually growing and so are many others around the country. The economy WILL turn around, book it. When times like this happen new businesses replace the old/tired ones and this cycle is no different, it's just a deeper downturn than any of the others since the early 80's. Are things bad? Yes. Is the world about to end? Hardly.



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