Commercial Real Estate
I was glancing through the Greater Fort Wayne Business Journal and noticed these commercial real estate closings:
- Penney’s to pare store count. JC Penney Co. plans to close 130 to 140 stores over the next few months. It plans to “optimize” its national retail operations.
- HHGregg considers bankruptcy. Indianapolis-based HHGregg Inc., the 61-year-old seller of appliances and electronics, is preparing to file for bankruptcy. It grapples with slumping sales
- Family Christian Bookstores closing all store locations. Family Christian Bookstores is going out of business and has launched liquidation sales at 240 stores in 36 states. That includes stores at Jefferson Pointe and Coldwater Crossing in Fort Wayne.
A recent article at Zero Hedge predicts The Next Domino To Fall: Commercial Real Estate
“Talk about an overvalued market set up for a fall. It isn’t just malls becoming empty retail wastelands. It’s Corporate America shifting to flex-work and work-at-home, slashing the need for floor after floor of costly business-park office space.
It’s about restaurants moving to smaller spaces as they move to serving more meals via delivery services.
“Commercial real estate is grossly overbuilt in retail and office space. Combine sky-high valuations with cratering demand, and we don’t have a liquidity crisis. We have a collateral crisis, with billions in short-term CRE loans coming due. These loans must be rolled over into new loans. The assets supporting the debt are no longer worth the loan balance.
“Unless the Federal Reserve intends to buy up every dead and dying mall in America, this is one crisis that the Fed can’t bail out with a few digital keystrokes.”
The authors say we have been through two waves, with a third, the biggest, to come.
- The first wave to hit was Factory Closings characterized by the DotCom bubble offshoring, outsourcing, and downsizing.
- The second wave was the collapse of Office Space and the housing bubble. Those hurt beside homeowners were mortgage brokers, real estate, builders, contractors, remodelers, and insurance.
- The third wave and the biggest to come is the Retail Space. Those affected are malls, strip malls, shopping centers, big box stores, and franchises.
How important is commercial real estate to a community?
Bill Florent Co-Founder of Selequity and former CFO of Cassidy Turley said, “It is not news that commercial real estate plays a seminal role in our nation’s economy.
Commercial real estate provides places for people to live, work, eat, drink and receive a full range of services. Services from massages to medical exams, shipping to hair styling. It matters not whether an individual is renting an apartment or a company is leasing space, these buildings make up our building environment. Ultimately this environment exists to produce income for the owners and investors in those buildings, which in turn generates tax revenue for local, state, and the federal government.
Just one fact: The office building industry contributed $227.6 billion to the U.S. economy in 2013 alone, roughly twice the annual contribution made by pharmaceutical or auto-industry Research & Development annually.
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As investors, we are in business to make a modest profit on any deal. We can help homeowners out of just about any situation. There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home, and how we can help you sell it fast to resolve any situation.
Give us a call today at 260-202-2222 to let us know how we can help YOU!