CHICAGO, IL, Oct., 28, 2009 - (by Tom Vincent, CCIM) In the last post, Media’s mixed messages on the downturn: Your Feedback, we reviewed the abundant feedback and many perspectives on where the economy is headed. Most agree that the recession is not over and that economic conditions may get worse before they begin to improve.
I also believe the recovery may be an economy significantly different from what we have known. A majority of the American population has not gone through an economic downturn like the one we are enduring now. Already we can see some of the results of this downturn – people are saving, not spending. Discount merchandisers are doing well, other retailers are scrambling. I believe that when the economy recovers, the consumer will not consume! Japan went through a collapse of their economy and they could not get the populace to spend – they saved. I believe something similar will happen here.
Another problem I see coming in the near future pertains to local, community banks. Large banks were given TARP money, smaller banks did not qualify. Large banks get their money from the Fed cheaper, small banks pay the going market rate. Small banks have been the source for money for most local commercial real estate projects. Many small banks are not lending or if they are, the parameters have greatly changed.
The question to ask then is: What is going to happen to commercial real estate? How can we be proactive and make economic realities work for us rather than against us? Any suggestions?
The question is also posted on LinkedIN HERE, or you can view this post and related posts on my blog www.tvincentccim.wordpress.com.
Tags: banks, commercial, development, downturn, economy, Fed, investment, lenders, lending, reader feedback, real estate, recession, recovery, Retail, TARP