Happy New Year! Welcome, 2010!  Good-bye and good riddance to 2009...that year where most companies and individuals realized the pain that was building up from the ills of previous years!

While we look to 2010 with hopes of growth and profits, we must recognize that the New Year will not be the year when everything gets better...not everything.  Instead, 2010 will likely be the year when those parts of our economy that have not yet settled down, begin to do so.  And, it will likely be a year when many companies will continue their own recovery and begin to position themselves once again for growth.  That's a very good thing!

2010 will be the year when many corporate tenants, having already renegotiated their major leases, will look for additional opportunities in their second and third tier leased properties.

Perhaps 2010 will be the year when corporate owners will actually be able to sell their properties at reasonable prices, not the few rock bottom fire sale transactions we saw in 2008 and 2009.  Capital might even loosen up a bit, so that our corporate clients will be able to once again engage in sale / leaseback discussions at reasonable prices!

Many of those companies that have realized all the value they expect to get from their leased real estate, those that are poised to pick-up where they left off before the horrible economic storm blasted so many of them, will again begin to hire and ready themselves to be first out of the gate as the recovery builds momentum.  Some will even see growth in 2010.

But, remember that more challenges still lurk around the corner.  These challenges include at least two pillars of worldwide economic fundamentals that require substantial and realistic fixes.  If viable resolutions are not put into practice soon, and if the recovery loses steam too early, our global economy could find itself stalled once again and further down the hole than it was in 2008 and 2009.

Those two pillars, of course, are banking and commercial real estate, both of which are tied very closely together.  Trillions of dollars of commercial real estate debt is held by banks and other financial institutions in the U.S., either directly or indirectly.  Many commercial mortgage loans are currently in arrears and / or in violation of debt coverage ratios and other requirements, thereby placing those loans into technical default.  Many banks, seeking not to foreclose or officially acknowledge the obvious, have attempted to work out solutions with delinquent borrowers providing flexibility in previously agreed upon mortgage terms, allowing payment extensions, interest rate reductions, and more.

Keeping loans out of the default column may appear to help borrowers in the short-term. But, doing so basically masks the reality of the commercial real estate debt markets.  As a result, commercial real estate investors and banks, many of which are publicly held, appear on paper to be more solvent than perhaps they really are.

Economic growth, when it occurs, can hide a lot of sins.  In many respects, that's what led to the situation in which the world currently finds itself.  If the recovery picks up speed and sustains itself in the near term, both commercial real estate and banking markets could realize gains that could heal many of the ills referenced above...many, not all, and only if the recovery truly actually takes hold.

One way or the other, 2010 will be an exciting year for many in the corporate world. What do you think?

Wishing you growth, peace, and profits, and of course, a very Happy New Year!

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