Not over til its over

I'm glad to see people saying the recession is ending or slowing. That does not mean it is over for commercial real estate. Consider the following:

1. Lenders are not lending what borrowers need, and loan activity is declining. I'm not sure whether that is a function of less demand or just futility. I've heard some real horror stories from clients, regardless of credit.
   
2. If this is truly a jobless recovery, then it will be hard for the office sector to rebound. Add the sublease market to the equation and you see what I mean. And delinquencies appear to be on the rise.
   
3. Ditto the hotel sector. With less business and leisure travel RevPAR isn't going to rebound just yet.
4. And retail? Well, there it is a matter of location. The best ones will still be ok and go forward. But tenants are smelling blood. And retrades like that makes it hard to price deals and loans going forward.

Now, that does not mean things will not somehow turn on a dime and we'll all be yelling "winner, winner, chicken dinner" at Christmas time. Just remember, when people are too optimistic or too pessimistic, they are probably wrong.