People are talking about the slow down of sales not only in residential housing, but in commercial real estate in general.  What you don’t hear much about is the demand that is becoming pent up by buyers hoping to invest in commercial real estate.

When dealing in homes we all know there is a dearth of buyers because home prices are still declining.  Why buy a home that will almost assuredly be worth less in a year from now than it is today?  Good question with no especially great answer forthcoming.

Dealing in commercial properties is really a different matter even though it is being shoved into the same basket as housing.  People are really afraid to go into the stock market.  Every day there is more bad news regarding stocks and the economy.  Every day another captain of industry bites the dust albeit with a  severance package most would kill for.  The investor has very good reason to fear where the market is going in the next 12 months or more.

Commercial real estate does not have those great drops in value or battered returns.  True, some office buildings are getting smacked with vacancy rates that have risen significantly in the past year. However, even in those cases most have such a cushion built in them that we have not seen even this catagory of commercial property going into foreclosure.

Then why the slow down?  It’s simple.  Property owners have been doing so well with their properties in the past 5 or 6 years that they aren’t pushed to sell.  However, if they really wish to they can sell easily by simply allowing the buyer to achieve a modest return.  This isn’t really a very painful or costly move for most sellers. 

The fact is that by pretending this is still 2004 or 2005 they are missing an extraordinary chance to take some significant profits.  They are betting the farm that the market will go back to rapid run ups in value in a year.  In my view that is very unlikely to happen at least for a few years.  Investor psyches have been severely impacted by what has been going on in the economy in general.   They have learned a very hard lesson, once again, that they simply cannot get sloppy or emotional when investing their money. 

The encouraging news is that more sellers are starting to realize that even though their property is not worth the pie in the sky number they have attached to it, it is still worth a hansome price.  If this idea continues to take hold we will once again be back in a market that is more than fair to the seller and gives the buyer a reason to invest in real estate.  Hang on because I think we are getting there.

In the meantime developers came up with an idea to conodminimize an office park. When they started up in the very late 1970’s they became popular, then they fell out of favor for many years and then became wildly successful in the new century. Soon industrial condos came into being and also sold like wildfire.

Hotels have joined the condo bandwagon and now, the latest trend, retail condos. Take a look at this article regarding the new concept.

Let me know what you think about green buildings.

Retail buildings have been considered especially difficult to build green because of the multi-tenant aspect. Large tenants have very particular standards to meet for their corporate branding of each and every store. How could they conform to the same standards as all of their competitors? The answer is that it may not be easy but it’s getting there.

An article that sheds a great deal of light on retail green constructions is found the September, 2007 issue of Retail Traffic Magazine in an article entitled “California Greening“. It will tell you how far we have come and will be going.

For most people, live goes on as usual. They cut a deal to buy a property, go to some lenders and get a loan. Even with lots of doom and gloom and gnashing of teeth in the air loans are, by and large, available for most people buying commercial real estate.

If you would like to get a basic education on the credit problems affecting Wall Street and scaring the bejabbers out of the rest of us today, look at a pretty good article to be found in the October 1st issue of the National Real Estate Investor that can be found at www.nreionline.com and read the article entitled “A CMBS and CDO Primer”.

After you read it and feel you now understand the national debt workings, call your local bank and get the loan you wanted before you read the article.

Let me know what you think about the debt market.