Friday, September 23, 2011

Markets Down Sharply, CRE Stats Up But For How Long? And Good News About Shopping Centers and Medical Tenants

Markets are off sharply this morning, with more than 700 points lost on the Down Jones average in the past two days, and European and Asian markets down significantly over fears of a default by Greece, general uncertainty, actions by the Federal Reserve that will push interest rates lower, and a statement by the Fed chair two days ago that we are likely entering another recession.

I'm not sure we ever left the first one.

Some good news. Medical groups are renting retail space in strip malls. Seems to be a trend in different parts of the U.S. According to Globe Street news, in Tampa the Florida Orthopaedic Institute has leased a former Borders bookstore. It will be converted to a clinic skedded to open in January, and will feature x-ray, MRI, clinical offices and facilities for physical and occupationsl therapy.

Retailers that would have shunned medical office in their centers -- even excluded them via mandates -- are welcoming the approach because shopping plaza restaurants and other retailers benefit from the the foot traffic coming to and from healthcare providers. Its all part of a trend of vacant office and retail sites working to reposition themselves as ideal homes for medical/dental space and related businesses.

Interestingly, healthcare has been one of the steadiest of commercial real estate sectors. No matter how badly someone is getting along financially, they still get sick and need to visit their own personal physicials or , worst case, visit emergency rooms. This healthcare sector, still, has been slowed by the economy.

And what is causing the slowdown? Hospital reports are the key: elective procedures have been down during the worst times of the recession. Plus, physkicians are less confident of their long-term status considering the implementation of the controversial healthcare iniatives coming out of the White House, and some worry whether they will continue to be employed by hospitals in the next six months to one year.

Still, acquisition and disposition of medical office buildings seems to be trending back up a bit. A

Monday, September 19, 2011

How Do We Continue Stifling The Economy? Let Me Count The Ways .....

Elizabeth Barrett Browning wrote of love beautifully in the 1800s when she penned Sonnet 43. The first two lines are very well known: "How do I love thee? Let me count the ways."

Let me count the ways . . . those words resonate with me these days as I view what is happening to the U.S. and world economies, what is happening with lending, and its impact -- consequences you might say -- on commercial/investment real estate.

The Associated Press is reporting that President Barack Obama this week will announce $1.5 trillion in new taxes on an already beleagured American economy. The core of the president's plan totals just more than $2 trillion in deficit reduction over 10 years. It combines the new taxes with $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare. Hmmm..... THAT will be mighty popular. My guess is there will be so much pushback from the public about cuts to Medicare that that option will be dropped. But the tax increases will stay in place.

I play chess, too. That's how these things usually work.

Congress, historically, has had a way of fixing serious problems by instituting financial regulations that often make no sense. But the Members of Congress mean well, just ask them! Now the White House, while the printing presses continue to hum 24 hours a day cranking out American greenbacks and flooding the world with a plethora of inflation-raising paper (yes there is inflation; been to the grocery lately?), is poised to further stifle hiring by heaving far higher taxes onto the very people and organizations most sorely needing relief so that they can create sorely needed jobs.

Why the tax spike? All in the name of balancing the budget and reducing the national debt. Both of these issues are important. But so very often, the "solutions" coming out of Washington cause far more harm. Unintended consequences, as I have written about previously.

It is no wonder no one is hiring. Regulations of all kind are a moving target. No one can put together anything as simple as a two-year plan because the rules for doing business may change next month, or next year. Or not. No one knows.

Case in point. My partner and I have a transaction we are trying to close. Every lender we have talked to agrees -- this is a hell of a deal. A transaction that makes sense. Strong buyer. Great property. Nationally known tenant. Willing seller. And immediately afterward, each lender says the following, "this deal makes sense." they promptly hem and haw as to why they can't do the deal.

Banks and mortgage companies are incredibly risk averse these days. If there is any finger-pointing to be done, it would lead in a straight line to Washington DC. The administration, despite its recent clamor urging the public to push Congress to "pass this jobs bill," has more or less declared war on job creators via rhetoric, plans for additional taxes, and an orgy of crushing, oppressive, ponderous regulations designed to punish industry rather than protect consumers. From new financial regs that irrationally directly impact CRE practitioners' ability to advise certain clients, to contradictory labor relations board missives prohibiting companies from expanding. The list is long. The media doesn't help, chiming in without asking any hard questions of those who propose additional onerous regs. Trust me, I know. I am a former working journalist and the dearth of questions from the Fourth Estate of this administration is odd, if not troubling.

A lender's job is not to lend money, it is to make money. As is any other public or privately held business. a CEO is held responsible for such. If the company is publicly held, like most big banks, the CEO is beholden to shareholders, which by the way are comprised of moms and dads' mutual funds, pension funds owned by unions (among other organizations),  teachers retirement funds, and so on. These days to lend very much without knowing what regs are going be is a huge risk. In some cases, risks not worth taking unless the lender charges unrealistic interest rates. Which stifles CRE transactions.

When you think about it, risk and reward used to go hand in hand. But with this administration, risk takes on a far more draconian meaning.

Is CRE moving now? Yep, in starts and stops, with many projects being funded by pensions and REITs, and the balance being funded by traditional lenders dealing with buyers with whom they already have a relationship. A contact of mine at a one such huge traditional bank said recently, and this was widely suspected but he confirmed it,  that having accounts there, or transferring funds there, only gets you a look by them. No guarantee they will have any interest at all in your project.

Back to the deal. Smaller transactions are requiring buyer and seller to get VERY creative, utilizing seller financing, lease to own, combination transactions, indentured/collateralized notes held to maturity, and more.

In the larger scheme of things, several CEOs have flat out told Washington the way to grow the economy, and jobs, is for lawmakers and the White House to get out of the way. Proposing trillions of dollars in new taxes at a time when the economy is at a dead stop isn't just getting in the way. It is is all about people who don't understand Economics 101 putting up roadblocks (with a smile and a speech), roadblocks that are candy-coated populist "solutions" being described as needed for growth. Right.

Ever hear of perfuming the pig?

How is the economy stifled? . . . let me count the ways. Did you know the federal government borrows money from banks? Its a guaranteed 3 percent or so return, which is safer than lending to industry that is is sputtering because of regs imposed by that same federal government. No wonder traditional lenders are hesitant to take risk.

Profligate, isn't it?

Until Washington gets out of the way and quits trying to fix things (this White House and its associates in Congress desperately want to be seen as "doing something") that clearly and historically have the ability to heal themselves, we will continue to be plagued with untold and exponentially harmful unintended consequences.

Friday, September 16, 2011

The Standard of Living You Enjoy . . .

. . . Depends on which side of the check you sign.

Owning commercial/investment property is a personal choice. One that frequently has investors weighing personal needs against pure, cold business analysis and decision making.

But what it really comes down to is this:  The standard of living you enjoy depends on which side of the check you sign!

Signing the front of all your checks? You likely work for someone else and pay your bills and taxes like a lot of Americans. Signing the back of lots checks on a monthly basis? Then you are llikely invested in income-producing real estate and enjoying all the benefits associated with homes, an apartment building, a commercial building, a warehouse or two, perhaps even a ground lease or a Triple-Net single tenant structure.

Further, if you leveraged the property at closing you know all too well that the lender was sitting at far greater risk than you on Day 1. Every buyer does it their own way, but there are distinct advantages to borrowing to make a purchase rather than paying cash. Especially since investment real estate is one of the few opportunities in which lenders will loan money for speculative ventures. Think about it -- Lenders will not loan money on stock purchases. They won't loan you money to buy gold. So if lenders are willing to lend, why wouldn't you borrow?

Simply put, use real estate to leverage your money.

Here's another one. Who received at closing -- and continues to receive -- all the tax benefits? That would be you, the investor. Not the bank, which took the majority of the risk. Pretty cool, huh?

In several years, whether you own a small commercial building, that 55-unit apartment complex, or the NNN leased property belonging to a successful national restaurant, when equity increases, you can refinance your property in order to give yourself "a raise" by way of reducing your monthly mortgage payments. Or, you can use your growing equity to acquire more real estate to build your portfolio, and ultimately, your wealth.

So there you have it. Friday's lesson. The standard of living you enjoy depends on which side of the check you sign......

Enjoy your weekend!

Thursday, September 15, 2011

On A Personal Note . . .

No matter whose name is on the deed . . .

Tuesday, September 13, 2011

Some More 'Interesting" Properties For Sale

In this business you come across more interesting properties being offered than that which the general public is largely aware. Some you marvel at. Others are just cool. And the rest, well . . . . 

All either work for development, or just living in fascinating environs. My druthers, of course, lean toward properties that have some return on investment down the road -- true commercial/investment properties.

Your mileage may vary depending on your interests. Nevertheless, some of these are just plain fun. Take for example:

-- In my "backyard," a 40-acre parcel that includes centuries old caverns, used by Native Americans long ago, and for decades a tourist attraction. But the larger land area, known as Olentangy Indian Caverns, is ripe for development. I am working on putting buyer and seller together on this one.

-- "The Mushroom House," a 4,100-square-foot-plus home in in New York. It is designed to resemble a stem of the Queen Anne's Lace plant.

-- Over in neighboring Pennsylvania, you've got an old, very traditional church converted into posh condominiums, complete with stained glass.

-- The "Schnabel House" in Los Angeles is described as a $13 million "village of sculptural forms."

-- "Dome Homes" are the latest rage in New Mexico. Energy efficient, "cozy," and constructed with a mixture of steel-reinforced concrete and polyurethane foam, these solar-powered structures appeal to those wanting minimalist living combined with an urge for the back to nature life.

-- And finally, if you long for the days of the Cold War, when you knew who the enemy was, go to There you will find all kinds of abandoned, de-commissioned missile bases in the U.S. ready for conversion to homes, businesses -- you name it.

On a related note, I once visited a business that had made its new home in Columbus at Rickenbacker Airport -- the former Lockbourne Air Force Base, site of a Strategic Air Command base during the Cold War of the 1950s to 1970s. There, a business has made its headquarters in the old ready-room area and former officers quarters at the base. One of the access points to their offices is down a ramp, that in the 1960s, pilots of fighter jets and support aircraft would be running up and out of onto the tarmac if on alert status during national defense emergency.

Me? I'm fixated on the Olentangy Indian Caverns property right now and figuring a way to use the flat areas in a highest and best use fashion, while somehow helping those who wish to preserve the open space and natural features that comprise the caverns.

Something for everyone, right?

Sunday, September 11, 2011

Day Of Remembrance

On this Day of Remembrance, I had a late morning appointment. I drove by a suburban high school on my way. There I saw kids practicing rugby. I saw two soccer teams, decked out in their school colors, getting ready for a game. A few miles down the road, at a newer art gallery, there was a brass band warming up on the lawn. Getting ready for an outdoor concert.

Ten years ago, everything changed. And yet, in a sense, nothing has changed.

 .... That is the enduring strength of America, and its citizens.

Saturday, September 10, 2011

9/11 . . . Never Forget

Yesterday, I took part (toward the end: I was tied up on the telephone for some time) in a Twitter discussion that takes place pretty much every week, called CREchat. A collection of commercial real estate agents and brokers from numerous companies exchanging best practice ideas. The topic was how brokerage, leasing, construction, etc. has changed since the United States was attacked 10 years ago.

A final question was posed: Where were you that day and what were you doing when you heard the news?

Today, as 9/11 Remembrance Ceremonies are kicking off around the United States right now, images of 10 years ago flash through my mind -- like they were yesterday:

- Sitting at my home office, hearing first on the radio that an aircraft of some sort had hit one of the World Trade Center towers.

- Stepping around the corner to turn on a television after the radio broke in for the third time with an update, only to see almost immediately --live -- the second passenger aircraft hit the second tower. My first instinct, being a former working journalist many years ago, was amazement that NBC had obtained such incredible footage from the incident I had first heard about. Only when Matt Lauer suddenly exclaimed that a second jet had missiled into the second tower did I realize....

- Watching smoke pouring, billowing, into the atmosphere like a volcanic eruption. Only this was no natural event. When I learned that peoples were jumping out of buildings, I turned it off. Then back on later, but turned away if that tape was shown. I didn't need to witness someone's agony, their no-win decision when faced with heat and inability to breathe vs. a 100-story freefall to the pavement below. I rationalized, saying it was decent to give them one last bit of privacy in their final moments. But to be frank, it was to protect me.

- Watching transfixed, saddened, empty, as I watched first one, then another tower, collapse. Knowing that perhaps tens of thousands of people had died in that instant.

9/11 As Seen From Space

- Calling school to check on the status of classes.

- Calling clients and telling them to postpone all projects, that nothing was going to be the same after this. That news cycles and editorial focus had been extraordinarily altered for weeks, if not months, to come.

- Racing to Wal-Mart to buy a five-gallon gas can, thinking it would not be a bad idea to have some extra fuel on hand. Called two friends advising them to do same. Knowing gas prices could spike, or we might face shortages, um ..... I filled seven cans, and drove home with 35 gallons of gasoline. The crazy stuff that goes through your mind in times of great distress.

- Calling friends and loved ones to see if they had heard the news.

- Watching the sky in the days following and marveling at how I could not remember a time when there wasn't a passenger aircraft, or helicopter, or general aviation airplane in the sky at least once a day. A sky utterly empty. Surreal. But no more surreal than turning on the television and seeing live pictures of a still smoking pile of debris, two 100+ story towers reduced to a dangerous pile of rubble a few stories high.

- Heading out of Columbus a few days later to a state park campground, just to get out of the city, and away from the news. Seeing more American flags posted in one small area than I had probably seen in my lifetime. But a normally bubbly, ebulient, sometimes loud park setting utterly quiet for three days. People respectful, somber, thoughtful, pondering....

- Watching what was one of the best speeches I have ever heard given by President George W. Bush to a joint session of Congress, and in the audience, then British PM Tony Blair, lending the collective support not just of Great Britain, but of the world. 

- Knowing that our national pain was felt worldwide. Knowing that our known enemies around the globe had surely been warned not to trifle with us that week.

- My first flight approximately three weeks later. Passengers eyeing each other while waiting. Far different than pre-9/11. Odd seeing armed National Guard soldiers in various airports. Though I did notice, also, that while long guns appeared ready to go, sidearms were missing magazines. Curious.

- In later years, three nephews serving in the U.S. Army. All of them serving time in "the sandbox," playing active roles in the war against terrorists.

- Fast forward 9/11 plus seven years. Trips to Washington DC. To Arlington National Cemetery both times, the latter trip to bury a good friend and colleague. Both trips including somber, reflective visits to the Pentagon Memorial.

- Being startled at how low passenger jets come into the DC area, particularly on The National Mall, as they approach Reagan National Airport. It took a while to get used to.

- A return trip to Columbus from DC including a stopover at Shenksville, Penn., the crash site where passengers on Flight 93, informed of their likely fate by loved ones on the in-flight phone, fought back, pushed their way into the cockpit and attempted to regain control of the aircraft. They didn't do it to save themselves. They had an idea what their fate would be, but regaining control could save lives on the ground, perhaps in Washington, or New York. The terrorists' ultimate destination, we believe, was unknown to the passengers, though conventional wisdom says either the U.S. Capitol or White House was the intended target. They crashed at 500+ miles per hour into a farm field southeast of Pittsburgh. Charred evergreens are visible in the distance, as jet fuel exploded and the plane's aluminum skin was vaporized or turned into shrapnel.

- Talking to a first responder at Shanksville, who no longer goes on EMT runs, but will take calls to  fires. A sharp, quiet-spoken man, he opened up about that day, and how he saw things no person ever wants to see. Littering the ground, hanging from trees, and so on. The smell of av-gas so prevalent that he occasionally wakes up at night, sweating from nightmares, convinced he smells aviation fuel. Telling of a rustic cabin well into the woods, beyond the tree line that was covered with pieces of razor sharp bits of aluminum from the aircraft skin, violently thrown into the woods by the force of the explosion.

- Fast forward to the past week, watching and reading news coverage regarding the past 10 years.

- New Jersey Gov. Chris Christie beginning his remarks now honoring residents of that state who perished on that day. As he notes, this day is not about any of us. It is about those whom we lost on September 11, their families, and those since whom we have lost in the fight for freedom.

- Watching Sarah McLachlan singing "I Will Remember You" at the Shanksville dedication a few moments ago.

- More events at in New York City at Ground Zero today and tomorrow....

The Family Fountain at 9/11 Memorial In New York City
I had thought about a trip to Shanksville this weekend to witness the dedication of the Flight 93 National Memorial. But I will make it another time. I have intentionally refrained from looking online to learn about the memorial design, or look at artists' sketches, or at work completed to date. When I go, I want to see it for the first time with no preconceived notions.

And clearly, a trip to New York City needs to be scheduled, as well. I know little about that design, nor its meaning, either. I have not been to the Big Apple in more than 15 years. A long time since I walked through the financial district and spent time at Battery Park. I remember those towering buildings, and how they reached to the sky. When I go I will honor those who died, trapped, and those 343 firefighters,  and countless police officers who died while attempting to rescue office workers. In all, nearly 3,000 dead that day. In New York City. At the Pentagon in Washington DC. And outside a sleepy town called Shanksville, 40 remarkable people, passengers and crew, on United Flight 93, whose final resting place is an open field. Forty people who, in less than 30 minutes, learned their likely fate, voted on what do do, and did it. The Heroes of Flight 93.

Ironically, on this day in 1813, nine small ships defeated a British squadron of six vessels in the Battle of Lake Erie. A rag tag bunch of American seamen defeated the most powerful navy in the world. Not unlike what these brave souls did. They stood up in the face of terror, knowing before pretty much all other Americans, what was happening to their nation. A perspective that none of us had. And successfully defended this nation against one last attack, making the ultimate sacrifice with their actions.

In all, as has been previously reported .... September 11, 2011 marked the most people killed on American soil on a single day since the Battle of Antietam more than 100 years previously.

Tomorrow is a day, like the attacks on Pearl Harbor in 1941, that needs to live on. And not just in our collective memories. We will age, we will die. But the stories need to be preserved and passed on. The internet is a great tool for doing just that. So that our children, and our children's children understand what happened on that day. The incident and the aftermath needs to be handed down in words and story and music.

There have been more terror attempts, some known, others we will never know about. Those who don't like individual freedom continue to wish the worst against the United States.

The events of Sept. 11 changed our lives, but in ways that were impersonal. Yes, how we travel, how we react when planes fly low overhead, and how we look at our kids.

But also . . . also in ways that force us to imagine the lonliness of a complete stranger who has lost their child. Or parent. Or lost their life's best friend ....

Never, never forget.

Thursday, September 8, 2011


"No Future But That Which We Make For Ourselves . . . "

-- Unknown

Tuesday, September 6, 2011

An Ignominious End For One Of The Supremes' Worst Eminent Domain Decisions -- Kelo

How many of you, whether commercial/investment real estate practioner, or investor, are aware of the Kelo decision of many years ago?

By some accounts, the most notorious (yes, I used the N word) decision made by the U.S. Supreme Court, outside of the horrid Dred Scott decision of the 1800s.

First off, lets review what eminent domain typically has meant -- until Kelo vs. City of New London (Connecticut). Eminent domain is the power of government to seize real property, if it cannot be purchased, usually to benefit something loosely defined as "the public good." The landowner is compensated at an appraised fair market value. The public good, historically, was for construction of a freeway, a highway off ramp -- typically something that had to do with public utility infrastructure.

Until Kelo.

Susette Kelo

Let me digress a moment. Notable emiment domain cases -- The very first emiment domain "taking" in the U.S. was the land that ultimately became Arlington National Cemetery. It was an estate during the Civil War owned by the Custis family, and overseen by Robert E. Lee, who married into that august line. Lee, who had chosen to lead the troops of the Confederate States of America, which had seceded from the U.S., was -- technically -- the enemy. Its property taxes, which Mrs. Lee dutifully went to pay, were not accepted (on purpose). Because the taxes were -- technically -- overdue, the estate was seized. And Federal bureaucrats, wanting to make a point, started burying Union dead on the property.

A "near" eminent domain situation occurred in Shanksville, Pa., in recent years. All property owners but one had sold or donated their land to the U.S. government for purposes of erecting a permanent memorial to honor the passengers on Flight 93 -- the flight where passengers, knowing the plane was likely headed to Washington DC or New York City and certain death -- fought the hijackers. Tragically, the plane crashed in a farm field, killing all aboard. But their bravery saved perhaps thousands who might have perished had the United Airlines aircraft been successfully used as a gas-filled missile against a government building. That memorial will be dedicated this coming Sunday, September 11, on the 10th anniversary of the 9-11 attacks upon the United States.

Anyway, the lone holdout at Shanksville was asking a king's ransom of the U.S Parks Service. He relented when informed that he had two choices. Since he wouldn't donate the land, he could accept the government's generous offer (it was), or the land would be taken and he would be paid market value. He relented and accepted the government's offer. And he was being chastised by pretty much every one of his fellow townpeople for utter greed in the face of a national tragedy, not that he necessarily cared.

In the late 1960s, there was a plan to build a new state highway north of Columbus. It would have plowed through my boyhood home (I was a boy then). A compromise was reached that had the freeway following alonside a river, then turning and following alongside a railroad bed. The compromise took very few homes and helped decrease the cost of the project. But the rear few acres of an enormous cemetery would need to be purchased for all legs of the freeway to be connected. The cemetery refused to sell. State law had to be changed to allow for the property to be condemned for use as a highway. You see, at that time there was no provision in the law, on the books since the 1800s, to be used for a public roadway. But if the city had wanted to put a dump on the cemetery property, it would have had no trouble. The cemetery was compensated and the the expressway was constructed. Today it is one of the most heavily traveled north-south roads in Central Ohio.

So, eminent domain. The term is taken from the legal treatise, De Jure Belli et Pacis, written by the Dutch jurist Hugo Grotius in 1625, who used the term dominium eminens (Latin for supreme lordship) and described the power as follows:

"... The property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way. But it is to be added that when this is done the state is bound to make good the loss to those who lose their property."
Some U.S. states, including New York and Louisiana, use the term appropriation as a synonym for the exercising of eminent domain powers. The term "condemnation" is used to describe the formal act of the exercise of the power of eminent domain to transfer title to the property from its private owner to the government. This use of the word should not be confused with its sense of a declaration that property is uninhabitable due to defects. Condemnation via eminent domain indicates the government is taking ownership of the property or some lesser interest in it, such as an easement. After the condemnation action is filed the amount of just compensation is determined. However, in some cases, the property owner challenges the action because the proposed taking is not for "public use," or the condemnor is not authorized to take the subject property, or has not followed the proper substantive or procedural steps as required by law.

In Kelo, the argument was, indeed, that the proposed taking was not for public use. And that was the crux of the debate. Specifically, the subdivision being condemned was not to be used for a hospital, or a freeway, or a utility right of way. In fact, the subdivision was to be turned over to a private developer to be turned into a high profile development. The "public benefit" to the community was to be the far higher tax revenue that would come to city coffers. It was to be used as part of a comprehensive redevelopment plan that promised 3,169 new jobs and $1.2 million a year in tax revenues to New London.

After the city voted to take the property, a lawsuit was filed in 2000. To sum up, after several failed court appeals, the issue made its way to the United States Supreme Court, which in 2005 voted to affirm the lower court decisions, thereby okaying the taking of private property that could be turned over to private developers for economically beneficial purposes.

The Court held in a 5–4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment. The City of New London eventually agreed to move Susette Kelo's (the case was named for her) little pink house to a new location and to pay substantial additional compensation to other homeowners.

A hue and cry rose up around the U.S., and a number of cities and states passed ordinances and laws to outright ban or sharply restrict government confiscation of real property for third party economic development. At issue was the argument of private property rights. That taking land for purposes other than that freeway or off ramp or what have you, for purposes of turning it over to private development, was nothing more than theft by legislative fiat. Much of the public viewed the outcome as a gross violation of property rights and as a misinterpretation of the Fifth Amendment, the consequence of which would be to benefit large corporations at the expense of individual homeowners and local communities

The Site Today

So why the history lesson? Why my passion on this subject? First off, there is without question a place for eminent domain. There is no doubt in my mind that it is necessary and is often used very effectively for the public good. Now, with that said, my developer friends may disagree with me on this, but IMHO "taking" land through condemnation in order to give it to private developers is morally wrong. Most Americans agree.

If you were aware of Kelo, did you hear the latest from that huge proposed development? First, this much has been well known -- Pfizer, the giant company that was to benefit from the court decision, pulled up stakes and left town in 2009 citing financial difficulties. Specifically, their tax credits were about to expire. The houses, of course, had been razed long before that.

With no developer willing to step in and work the project that the city had pushed for years, gaining it scorn from Americans from coast to coast, the land was left an empty lot. The Fort Trumbull project, as it was known, was a dismal failure. After spending close to $80 million in taxpayer money, there was been no new construction whatsoever and the neighborhood became a barren field. The entire lot area was eventually turned into a dump by the city.

What has changed in just the past few weeks adds insult to injury, for many. Following Hurricane Irene, which hit the east coast and New England just eight days ago, the City of New London designated the site as a place to dump storm debris, and citizens can be seen doing just that in this video on the local paper’s website.

An ignominious end to a judicial travesty. Familes moved, and for what? In a very perverse sense, the property now is truly being used for the public good. For the city has a place to dump its storm debris . . . .  That is public good.

The things that make you go Hmmm.

Sunday, September 4, 2011

Happy Labor Day Weekend

To all, I hope you enjoy your Labor Day weekend!

Here in Central Ohio, we saw high 90s temps and humidity yesterday, then thunderstorms and a deluge of rain today. Tomorrow?  We are supposed to have a high temperature of 66!! But it will be clear.

If you have had your picnic, or if it is still yet to take place, ENJOY!

Friday, September 2, 2011

Open Minds Necessary In Climate Where Jobs Reports, Retraction In Product Availability, Pent-Up Demand Create Mixed Scenarios

Recently, I wrote of the perfect storm that is emerging in CRE as we combine pent-up demand, low inventory of quality Class A and institutional properties, and the movement of institutional buyers toward secondary (and occasionally even tertiary) markets.

I have noticed in just the past seven days or so that a number of commercial listings are disappearing from online sites like LoopNet, and Exceligent, which we use locally, but those same properties don't seem to be changing hands. Speculation among myself and many peers on this phenomenon the past week is focused mostly on the likelihood that Sellers feel they can't move the product, so take it off market and try again next spring.

It may not get any better. Today's jobs report is making a gloomy forecast -- for many -- even gloomier. No net increase in jobs since 1945 is a stat that made my jaw drop. Job lines in many markets, combined with companies looking at, perhaps, further retrenching will surely put some more pressure on commercial/investment real estate. And I'm sorry, but I'll say it --  as if problems weren't bad enough we have a White House that seems hell bent on attacking employers through rhetoric and regulation. Which is especially problematic at a time when we need markets that encourage employers to hire and expand.

There are a few bright spots, of course. Multifamily still remains hot and bidding wars for quality properties are not unheard of. I have a single-tenant retail site in contract. An offer written and presented the same day the listing was published. A competing offer came in the same day from a REIT, likely doing the same thing we were -- scouring markets for new product multiple times a day.

Further, investor groups are taking advantage of lender difficulties and snapping up homes large and small. I know of an initiative from one group to acquire luxury homes at a discount, adding them to portfolios of rental estates in different parts of the nation.

So we may be in for more than just a few months of rough sledding, as I often say.

I remain optimistic. There are opportunities for investors, whether they are acquiring or disposing of inventory. Its about being creative, thinking outside the box. As we say in an exchangor organization to which I belong, "what is the seller willing to do to help the buyer take the property?" Its not always about price reduction, if that is necessary.

Sometimes it means an acknowledgment from the seller that the market dictates price, not what one "hopes." Sometimes the answer is owner financing, in full or in part. Some sellers are receiving full price for their property, but taking a collateralized indentured note that matures a few years down the road. You would be amazed what you can do with a holster full of creative tools. I counsel with my clients, whether they are buying and selling. There are pros and cons to any scenario you can envision. It comes down to what is in the best interest of the buyer, or seller, at any given moment in time, both in the short term, and when addressing their longer term wants and needs.

Success for the next 12 months will mean brokers and agents thinking outside the box, and buyers and sellers being open-minded about every possibility imagineable for them to achieve their financial goals.

More plainly stated: The party that digs in their heels and refuses open, frank discussions will likely end up very disappointed.