Same Song, Second Verse

Each year in the Graham Report we have the opportunity to offer conmments on trends and patterns and to express an opinion on what went right and wrong. In considering appropriate remarks here, we went back and looked at our topics of the last three years. In the January 2008 column, we crowed on the positive and robust nature of our local economy. In January 2009, we had to eat crow as the realities of the crash of September 2008 unfolded. Last year at this time, we were beginning to see signs of recovery. Our prediction of "recovery in sight" was accurate, partly. This year's theme is aptly titled, "Same song, second verse" -- although we see signs of the recovery all around us, the commercial real estate market still finds itself picking its way through a minefield of excess capacity, pricing pressures, and lack of job growth.

Credit markets remain tight, and loan to value ratios appear to be trending to levels that predate our careers. Interest rates still remain attractively low, and deals take more equity, which is a good thing. For those owners who resisted the pressure to sell or lease at the depressed rates of the past two years, they now have a chance to ride this one out, and to plan rather than react. Economic indicators point to modest increases in rents and demand. The recovery is still in sight.

Mike Graham, CPM, SIOR — Steve Graham, MAI, CRE

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