by Colleen Edwards on October 30th, 2009
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Today, Andy Zighelboim from Colliers International, Silicon Valley, talks about the low occupancy rates in existing commercial buildings and how rising unemployment will keep those buildings empty. When reports come out about half a million jobs lost, the rest of the equation is that 100 million square feet of office space has been emptied.
Andy believes that the numbers reported of untenanted commercial buildings is underestimated. Many a company that has stayed open during the recession has done so only with numerous staff layoffs. Those companies, locked in place with an existing lease, stay in space that is much too large for the number of staff members left. Subleasing is not an option for the holder of the master lease, so the leaseholder holds onto the extra space until the next negotiation for lease renewal comes around. That space is not reported as vacant space, yet it will become vacant when the lease renews unless the company starts hiring again.
by Colleen Edwards on October 29th, 2009
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Andy Zighelboim, Senior VP at Colliers International in the Silicon Valley, is taking to the long view on commercial real estate—and doesn’t like what he sees: too many commercial buildings with too much debt, and too little opportunity to make a refinance make sense.
The quick math course sounds like an old joke—“Man walks in a bank…” If, indeed, an investor wanted to secure a loan for a shopping center in 2007, he or she might have looked at a 70 percent loan-to-value on a hypothetical $10 million investment. The investor would have contributed $3 million; the bank financed $7 million. Today, with the commercial market on its knees, the same shopping center is worth $6 million. The loan is coming due… and who is going to refinance it, knowing that it is going to be worth even less next year?
Says Andy, optimism is a great thing—but you just can’t kid yourself that this isn’t going to be a long, tough road with $1.4 trillion of commercial debt on the books, all coming due between now and 2017.
by The Real Story Newsroom on October 29th, 2009
If you’ve outgrown trick or treating and want to spend Halloween someplace warm, try Davies Symphony Hall Saturday night. The 1922 silent cinematic masterpiece, Nosferatu, directed by F.W. Murnau, will be shown on a giant screen accompanied by the 8,264-pipe Ruffatti organ.
Nosferatu, a Symphony of Horror, is the earliest surviving screen adaptation of Bram Stoker’s Dracula. It is so similar to the Dracula plot, that Stoker’s widow took the director to court—and lost—on charges of copyright infringement. So Count Dracula became Count Orlock, and his quest for a woman, pure in heart, willing to give her blood to him has thrilled audiences for decades.
Today the film is hailed as classic example of German Expressionism and has a strong cult following. Check out the make-up of Max Schreck, the actor who plays Count Orlock. It’s still the standard for undeadliness to which all other vampires aspire.
Saturday’s screening will be accompanied by organist Dennis James, who has presented live accompaniments for silent films internationally since 1971. The performance begins at 8 p.m., so there will still be time to sneak across the street afterward and party at the SF Haunted Halloween Ball at City Hall.
by Colleen Edwards on October 28th, 2009
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Andy Zighelboim, Senior Vice President of the Investor Services Group with Colliers International, Silicon Valley, is talking this week with The Real Story about the commercial real estate market. Today: his take on how banks are going to deal with so many loans coming due, and such precipitous drops in the value of the properties.
Remember, Andy says that about 65 percent of the commercial loans make no sense for refinancing. But get this: he also says that some of the banks and special servicers of these loans are looking at the situation with the motto “Extend and Pretend”. This means that the lending institutions will look for some nominal paydown, bump up rates, and look at the loan again in twelve months—an interesting thought, but with an accelerating amount of debt due and values continuing in a downward spiral (since foreclosures will affect commercial values just as surely as they reset residential housing prices) this wait-and-see attitude is going to hurt.
by Colleen Edwards on October 27th, 2009
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With commercial real estate values down 30 percent to 50 percent, the first spike in the number of distressed loans hit in May–and according to Andy Zighelboim from Colliers International, Silicon Valley, that’s just the beginning.
Of the outstanding loans on commercial properties, he says approximately 65 percent won’t be refinanced. And whereas the big banks took the hit for the subprime residential loans and subsequent foreclosures, the numbers look very different on the commercial property side of the ledger: the big banks only hold about 28 percent of the outstanding debt.
The rest—a staggering 72 percent of the paper—is owned by regional, community and local banks. According to Andy, this failing in the commercial properties sector will be the fall of hundreds of small banks throughout the country.
by The Real Story Newsroom on October 27th, 2009
When you’re starting your search for a home, should you get prequalified or preapproved? Most lenders say: both! Each provides you and your seller with specific information that will give you an advantage during the sales and negotiation process. They will also help you prepare for the budgetary realities of home ownership.
Here’s an overview:
Prequalification is a ballpark estimate of how much you might be able to borrow. It’s offered by most lenders and no cost, takes just a few minutes and is based on a casual overview of your income, assets and other debts. It is not guaranteed, but designed primarily to help you set your price range when shopping.
Preapproval involves a more formal process and provides real estate professionals proof that you’ve been conditionally approved for a specific amount. It’s also available at no cost from most lenders. You will need to complete a loan application, have your income and assets verified and a credit check. A letter of preapproval will let the seller and the seller’s agent know you’re serious and ready to take action. It can also strengthen your negotiating position, especially if you are competing with other offers.
A word of caution: a letter of preapproval is issued for a specific amount at a specific interest rate, both of which may change during the course of the deal. Stay in close contact with your lender to make sure you have updated documents.
