The Sky is Not Falling on Commercial Real Estate - May 2010

In the early 1990’s the commercial real estate market was truly devastated.  Thirteen of the sixteen major projects in downtown Sarasota, and many small properties were foreclosed by lenders or the RTC.  Only three major downtown projects survived - office buildings then owned by Northern Trust, Sun Trust and Ron Spector.  Driving much of the 1990 foreclosures were astronomical vacancy rates pushing 30%.  Today downtown office vacancy has stabilized at a survivable 15%.  Unlike the early 1990’s when the market was flooded with vacant newly constructed major retail malls and high-rise office buildings; our market today has no new vacant retail major malls or high-rise  office buildings.  Foreclosures are a reality; some are recession casualties and some the result of poor business decisions.  Clearly many planned and some constructed projects should not have moved forward, but the early1990’s were overall a much more challenging time for commercial real estate than today.  Predicting the future is impossible but with history as a guide and reasonable decisions we will survive and prosper.