Close your eyes

Sometimes you just have to close your eyes and hope for the best, whether you are on the scariest roller coaster you have ever dared to conquer, sitting in the passenger seat while the driver beside you has road rage, or hoping that the economy will right itself. You just have to pretend that everything will be all right. Well, as recent indicators show, the economy is not healing up the way we would have liked and commercial real estate is sluggish at best. Maybe you should think about keeping your eyes closed for a few more months, maybe.

Unfortunately, the Architecture Billings Index decreased again last month, dropping to 47.2 during May from 47.6 in April, according to the Wall Street Journal. What does this mean? Well, design firms are just not getting hired. Also, that means that new buildings are not getting erected as quickly. If you are a designer for commercial real estate then this is not the kind of thing that you would want to hear. Maybe something more like, “Hey, there is an unlimited amount of stuff that you can draw up for us!” Wouldn't that be nice? Well, I'm not very nice, and neither is the recent ABI.

In addition, according to Bloomberg “the Moody's/REAL Commercial Property Price Index, which measures broad national price trends, dropped 3.7 percent from March and 13 percent from a year earlier. It's now 49 percent below the peak of October 2007 and at its lowest point in data going back to December 2000, the company said.” That's five straight months that the index has fallen! Ugh! Sales of distressed properties are undermining real estate values. However, Green Street Advisors, Inc. is singing a slightly different tune. “Commercial property values increased 3 percent from the previous month and 21 percent from a year earlier, the company said.” So, some things are good and some things not so good? Isn't that life?

No matter what, we are still facing an uphill battle to get back to where we all want to be, at a Phillies game eating some crab fries smothered in cheese. Mmmm, I love those fries! Anyway, things will get better for designers of architecture and Moody's will probably turn around sometime soon. As the old adage goes, “time heals all wounds,” and I believe that to be true, most of the time. However, some people can never get over that time you told them that they were “loud, obnoxious, and embarrassing to be around in public.” Oh well.

What do you think about the current state of commercial real estate? Or, better yet, how do you like your crab fries?

Source Articles by Brian Louis from Bloomberg, and the Wall Street Journal at WSJ.com

#CRE #finance #economy