I've often railed against the mainstream media because of its long-running role as enabler and cheerleader for the conflicted and delusional Wall Street-Washington establishment. Nonetheless, an article in Friday's New York Times has imbued me with a bit of newfound respect for The Gray Lady.
First off, here's a sampling of what some news organizations have recently said about the commercial real estate market:
"Commercial Real Estate Has Hit Bottom: Gosin" (CNBC)
Real estate developer Barry Gosin said he thinks commercial real estate prices have hit bottom.
"We are calling a bottom," Gosin told CNBC Friday. "Our view is that the rents have priced forward, that values have come down significantly, and that some time this year prices will start to turn."
Gosin is CEO of Newmark Knight Frank, one of the largest real estate management firms in the U.S. His firm owns many properties, including the Flatiron Building, in New York.
"Commercial Market May Soon Hit Bottom" (Detroit Free Press)
Commercial real estate investors face another bleak year in 2010, but the market appears to be bottoming out nationally and in metro Detroit, a leading real estate firm said in its annual forecast Monday.
"Many have called commercial real estate 'the next shoe to drop,' but that's really an exaggeration," said Bob Bach, senior vice president and chief economist of Grubb & Ellis, which has an office in Southfield. "It implies that commercial real estate could wreak damage on the financial system equivalent to the subprime residential mortgage losses, which is highly unlikely because the value of outstanding commercial mortgages is a fraction of the value of outstanding residential mortgages.
"US Commercial Real Estate Woes Manageable, Morgan Stanley Says" (Dow Jones)
The nation's commercial real estate troubles look like a manageable problem to Morgan Stanley (MS).
A team of six analysts at the firm said Thursday that commercial real estate as a whole is "only a moderate headwind for the economy," and that property values bottomed in mid-2009.
They further predicted that the nation is headed for a "multi-staged" and "gradual" recovery, with values remaining stable this year. The positives, as Morgan Stanley sees them, are building into an attractive distressed-investment environment.
Compare those reports to the one published in Friday's Times:
"Further Slide Seen in Commercial Real Estate"
There are 920 football fields of available office space in Manhattan. More than 180 major buildings totaling $12.5 billion in value — from Columbus Tower at 1775 Broadway to the office tower 400 Madison Avenue — are in trouble, meaning in many cases they face foreclosure or bankruptcy, or have had problems making mortgage payments. Rents for commercial office space fell faster over the past two years than in any such period in the last half century.
“I have been in the business for 12 years. I have never seen it this bad,” Peter Von Der Ahe, vice president of investments for the brokerage Marcus & Millichap, said of New York City’s commercial real estate market. According to more veteran colleagues, he said, things have not been so dire since at least the early 1990s.
And that is not the most sobering assessment.
“It hasn’t hit bottom,” Mr. Von Der Ahe added.
Could The New York Times be the new no-spin zone?
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