Seeking Clarity In The Market

Business owners and leaders are seeking clarity in several areas and those are: legislative issues, financial regulation and healthcare, employed consumer is back and spending again. They need clarity that expansion is on the horizon.

Stimulus is being withdrawn from the economy and slowdown has caused the recovery to pause. Although similar pauses have occurred from recent recessions in recovery, the downside risks are now back on the rise, but positive indicator's still outweigh the negatives. Rising risk of a double dip will certainly put everyone in a "wait and see" mode ala 2009.

Where is all this distressed inventory? This was suppose to be the next big wave to hit. Besides a few local shopping center hit and misses, there hasn't been much. When there has been distressed inventory on the market, the only ones that can afford to purchase the distressed debt are well off investors or institutions. Slim pickings for the small private investors and when it becomes available it typically gets picked up fairly fast. Good to stay in the know if this is a product class you are interested in chasing after as an investor.

Although CMBS securities aren't expected to peak until 2012 and most lenders are currently playing the "extend and pretend" game when dealing with workouts.

Leasing is up year over year, gross leasing is up, vacancies rates and rents have somewhat stabilized. There has been strong demand for core quality products in top-tier market with other major markets including Minneapolis that are starting to follow, then the secondary markets will also follow. Some of these investments are being bid up and investor's are after strong fixed cash flow. Smart money is looking for stable markets where others may not be. This will spread as investors continue to look for value add properties in secondary markets.

It's still all about the jobs, commercial real estate can't go anywhere with healthy labor growth. There has been some job creation here in Minneapolis but simply not enough as claims are trending up again. 

Interesting time that will depend on job creation and economic recovery.