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Secular Change

Unless you operate in New York or Washington DC, you know most commercial real estate markets still are barely out of intensive care. National vacancy rates for retail and industrial properties remain stratospherically high compared to past downturns, and everybody you talk to is most worried about future demand for office—most companies will look to shed space when their leases roll, not necessarily expand as you would typically expect in a recovery.

By Jonathan D. Miller | Updated on July 12, 2011

 Unless you operate in New York or Washington DC, you know most commercial real estate markets still are barely out of intensive care. National vacancy rates for retail and industrial properties remain stratospherically high compared to past downturns, and everybody you talk to is most worried about future demand for office—most companies will look to shed space when their leases roll, not necessarily expand as you would typically expect in a recovery. Then you digest last week’s really ugly jobs numbers and must realize there will be no easy exit from these rough times.

Now if you’re a regular reader, you know I believe real estate is a cyclical timing play—in fact right now is a better time to buy than sell, although the buying opportunity in the top markets—the global gateway cities was 18 to 24 months ago, and for the most part that window has closed. In this cycle, there may not be much more downside, but the upside will be extremely slow to materialize.

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