August 3rd, 2011, By Dana Haugh
With a debt deal finally settled and an economy hanging on by a thread, the first plan of action for anyone who owns, leases or invests in property is to decide what to do next. All trends have been pointing toward a positive growth in the commercial real estate sector, but will this continue now that the government has decided on a course of action that focuses primarily on spending cuts? The months, weeks and especially days leading up to the deadline had most business executives shaking in their boots, fearing potential default, plummeting stocks and the mass hysteria that would ensue. However, despite the widespread fear, investors still seem to hold faith in the United States economy (bless them).
Now that we have a plan to keep our spending under control, how is that going to affect those of us in the commercial real estate world? Well, it will certainly stunt our growth. Dennis Russo in the CRE department of Herrick, Feinstein LLP law firm says “Economic sluggishness plus austerity tends to equal a less-than-fertile environment for vitality and growth in commercial real estate . . . The health of most sectors of the commercial real estate economy depends on growth and vitality of the GDP and for the time being I just don’t see where that growth will be coming from.”
Russo makes a valid point and I fear a retreat into the dark three years we just emerged from might be coming on the horizon. My advice to
investors and commercial real estate junkies—Don’t Panic. Don’t make any rash decisions. Don’t sell all your properties. Don’t leave the country (just yet). Take a look at the economy and make wise decisions based off what you see and what you can foresee. Take advantage of the “buyer’s” market and reevaluate leases, renegotiate pricing, reassess what you’re worth. View the current financial situation as an opportunity to make decisions you might not necessarily do in a healthy economic environment—like buy your office building for a lower price than what you’re paying to lease it or consider flexible work spaces, take advantage of cloud computing and free up space in your office to lease out to others.
Just, please, Don’t Panic.
Information gathered from GlobeSt