After I watched Mubarak step down this week (He is the Egyptian dictator version of Brett Favre (he’s out/he’s in/he’s out)), I turned my attention elsewhere and began reading the Winston Churchill biography, The Last Lion, and came across this quote from Churchill: “I like a man who grins when he fights.”
I do too Sir Winston.
As we go about our prospective challenges and opportunities in the upcoming week, it made me want suggest we do it with a smile. Here are some stories from this past week:
The Uneven Comeback
• Link
• Two Sentence Overview: A rather ominous WSJ article, describing bifurcation of return in values of CRE (Class A buildings in quality markets seeing values that have increased 30% from 2009 lows with some trophy assets even approaching 2007 bubble prices). The flip side is that Class B assets in secondary/tertiary markets are suffering driving CMBS delinquencies up to 9.34% from 1% in 2007 and keeping office vacancies at near high levels (18% nationwide).
• One Sentence Takeaway: Low interest rates and “pretend and extend” have caused this rise in Class A property values, but Sam Zell is right – increased interest rates (which is inevitable) is going to change the game in a big way.
Whose Market is it anyway?
• Link
• Two Sentence Overview: Since 2008, there is no doubt tenants have had the leverage in negotiations with the ability to drive rates down and concessions up. As this JLL report indicates, the “tenants market” may be in its final hour (percentage of tenant favorable markets are projected to fall from 94% to 31% by 2012).
• One Sentence Takeaway: With very little construction in the past few years and decreasing supply of large blocks of space, we believe the Landlords will have a growing ability to decrease concessions and hold (even increase) rates for the larger contiguous blocks.
Top 10 CRE challenges in 2011
• Link
• Two Sentence Overview: So many great points to highlight in just two sentences, but here are a few: we lost 8.4 million jobs during the 2008-2009 recession and only gained back 1.1 million in 2010 (we are growing but we have a long way to go to get to pre recession unemployment). QE2 and extension of Bush tax cuts provided a short term boost but higher government spending/mounting national debt/concern of higher taxes/declining dollar/rising inflation and the inevitable increasing interest rates are HUGE concerns going forward.
• One Sentence Takeaway: With “pretend and extend” and low interest rates, this recovery is quite a different scenario from the market clearing made possible by the Resolution Trust Corp. in the early 1990’s.
Hiring: All talk and no Walk
• Link
• Two Sentence Overview: Even though hiring expectations are at near four-year highs, those good intentions are not translating into new jobs. Companies are opting to sit on record levels of cash, buy back stock, and continue to keep margins high by doing more with less.
• One Sentence Takeaway: This article doesn’t mention the uncertainty of health care costs that weigh on employers as well – hopefully some of these sentiments will translate into the type of job growth we need for a robust recovery.
I do too Sir Winston.
As we go about our prospective challenges and opportunities in the upcoming week, it made me want suggest we do it with a smile. Here are some stories from this past week:
The Uneven Comeback
• Link
• Two Sentence Overview: A rather ominous WSJ article, describing bifurcation of return in values of CRE (Class A buildings in quality markets seeing values that have increased 30% from 2009 lows with some trophy assets even approaching 2007 bubble prices). The flip side is that Class B assets in secondary/tertiary markets are suffering driving CMBS delinquencies up to 9.34% from 1% in 2007 and keeping office vacancies at near high levels (18% nationwide).
• One Sentence Takeaway: Low interest rates and “pretend and extend” have caused this rise in Class A property values, but Sam Zell is right – increased interest rates (which is inevitable) is going to change the game in a big way.
Whose Market is it anyway?
• Link
• Two Sentence Overview: Since 2008, there is no doubt tenants have had the leverage in negotiations with the ability to drive rates down and concessions up. As this JLL report indicates, the “tenants market” may be in its final hour (percentage of tenant favorable markets are projected to fall from 94% to 31% by 2012).
• One Sentence Takeaway: With very little construction in the past few years and decreasing supply of large blocks of space, we believe the Landlords will have a growing ability to decrease concessions and hold (even increase) rates for the larger contiguous blocks.
Top 10 CRE challenges in 2011
• Link
• Two Sentence Overview: So many great points to highlight in just two sentences, but here are a few: we lost 8.4 million jobs during the 2008-2009 recession and only gained back 1.1 million in 2010 (we are growing but we have a long way to go to get to pre recession unemployment). QE2 and extension of Bush tax cuts provided a short term boost but higher government spending/mounting national debt/concern of higher taxes/declining dollar/rising inflation and the inevitable increasing interest rates are HUGE concerns going forward.
• One Sentence Takeaway: With “pretend and extend” and low interest rates, this recovery is quite a different scenario from the market clearing made possible by the Resolution Trust Corp. in the early 1990’s.
Hiring: All talk and no Walk
• Link
• Two Sentence Overview: Even though hiring expectations are at near four-year highs, those good intentions are not translating into new jobs. Companies are opting to sit on record levels of cash, buy back stock, and continue to keep margins high by doing more with less.
• One Sentence Takeaway: This article doesn’t mention the uncertainty of health care costs that weigh on employers as well – hopefully some of these sentiments will translate into the type of job growth we need for a robust recovery.
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