My sources from ICSC say

No links here; just passing along what clients are saying. Confidence is high, attendance perhaps a little less busy than last year but still robust, perhaps more so than one would expect. I think some developers are pushing hard to start deals that won't go until some deals get signed.

Whether you are making deals is dependent on one thing, and one thing only: location. If you have dirt in a prime space you are busier than ever or at least business as usual. If you are in an exurb or a less prime area, then your deal making is way down.

As I said earlier, I am seeing the signs of breaks in the market. The only fears now are the election, consumer confidence and gas prices. Speaking of which, if you'll excuse me I need to go invest $100 in a tank of gas.

The corner of State and Madison

Boy, talk about memories. The world's busiest street corner. Caron Pirie Scott & Co. Shopping, shopping, shopping.

Now it's one out of three. We'll still have (some) shopping, thanks to Joseph Freed & Associates, at the masterpiece landmark building. The first three tenants? Fox & Obel, Flat Top Grill and Billabong.

Pretty darn good job of leasing, and a nice tenant mix.

Anecdotal evidence from the front

The phone's ringing more than it has been. (Hopefully this does not mess up my golf plans for this week.)

Financing is finally starting to get done. River West just got its largest order of that type in its three months of existence.

A lawyer friend advises that his/her business is up for the first time in months, and mostly because of financings and refinancings. (Yeah, bringing down that interest rate can't hurt when you compare it to LIBOR plus x basis points.)

I know, it is all anecdotal, but the signs keep pointing in the direction I want to see. I also know that maybe I just want to see things go that way and am biased in that direction, but hey, I'm entitled.

Chicago retail leasing down...what does it mean?

Eddie Baeb has a good story in this week's Crain's about demand for retail leasing going down by 22%, led by discount grocers and discount stores. As the story said:

“Stores like Target, Wal-Mart and Home Depot really drive growth,” says Jeff Kuchman, a principal with Oakbrook Terrace-based Mid-America. “When they pull back even marginally you feel that in a big way.”

As the story says, though, there are some good "buts." Developers are listening and building less. If you are in the city, you are probably way worse off than in Kendall or McHenry (and probably Kankakee, too) counties. And some sectors are still growing like gangbusters, such as entertainment and fast food. (And that's even down here: we have a Culver's and an Arby's under construction about a mile from my house.)

It'll be interesting to see how fast any of this changes when the market turns -- and it is turning.
But that's for my next post.

Thanks for stopping by, but now go...

...take a look at this month's Retail Traffic magazine. Normally I breeze through a magazine in a few minutes, but this is the second month in a row that I was compelled to read every page of this publication.

The May issue is just chock full of good information, including David Bodamer's take on retail downturns and the current market David also mentions but also writing near the end that in this slowdown some developments have wisely slowed down. This means, as Neil Bluhm was quoted elsewhere in the magazine, there won't be a crazy 1980s-style glut, particularly as there is not a cash flow crisis.

There's also good stories on rent concessions, interesting JV partnerships, an indoor lifestyle center (which I thought was an oxymoron) from Westfield, and even a preview of next week's ICSC conference. (It even has a very slick website.)

Unfortunately, family obligations are keeping me from going west Sunday, but I am hoping to have some reports from friends and colleagues who will be there. (I'll have to hit this fall's legal conference instead.) Stay tuned.

Like I was sayin' -- mixed signals, but...

...I see more positive signs than negative. See this CoStar review for a nice wrap-up.

The big negative? Jamie Dimon thinks the credit crunch is ending (and so do I, based on what my clients are telling me about their summer pipeline) but that we may have an extended, long-term economic challenge.

The positives?

CBRE Investors (a former client) just finished raising $2.2 billion for its US Fund 5.

GE Cap is giving out big interest-only portfolio loans. (Those guys at HFF, who brokered the loan, are simply phenomenal.)

Cantor Fitzgerald (yes, you read that right) is jumping into opportunistic real estate. I'm still trying to reconcile that in my head.

I'm ever the optimist, but I see a busy summer and fall ahead.

Yes, I read this op-ed correctly.

The theory?

Although it is will be painful, the only long-term solution to the credit crisis at hand and the America's economy in general is to allow much higher interest rates, which will begin to redirect capital away from leveraged speculation and consumer borrowing and toward more productive activities such as saving to invest in manufacturing, infrastructure and research and development of new technologies. There will surely be short-term pain during this transition to higher interest rates, but the long-term result will be a healthier economy with a more sustainable growth potential that will ultimately benefit the real estate industry more than the current policies of trying to delay this inherently unstable and unsound house of cards built on leveraged speculation from its inevitable collapse.

Currency is also the problem. The dollar is down some 40%, which is why foreign travel is so tough. And the scary thing is that the dollar could get replaced eventually by the euro or the yuan as the de facto world currency, which would be major-league bad for us. Does the problem really go so far as questioning the fundamentals of securitization, in which case no interest rate can change the market? You tell me.

But raise interest rates now? Boy, that's a leap of faith I can't take. And I am not sure we can either. But this was a very thought-provoking piece that I have to consider going forward.

Wow - an honest assessment

It takes guts to say, "I don't know." As a lawyer I have to do that sometimes. Yes, the answer to a question is just not always in my head or at my fingertips and I may have to look in a book to make sure my gut instinct (if I have one) is right. I'd rather be right than shoot from the hip and be wrong.

That's probably why this story made me chuckle, as a net real estate fund said this in a report: "The market," it asserts in the first paragraph, "is difficult to make sense of at the moment." Why? According to Boulder Net Lease Funds, you have pressure on one side from tough debt markets, rising oil prices and decreased demand, but you also have cap rates shifting as well. (You also have lower interest and bank borrowing costs that can play a factor.)

Before you just discount the source, let me tell you that the Boulder folks are smart. I have had them on the other side of deals in the past and I know they know what they are doing. So, if you are befuddled by the market, I guess you should not feel bad. And if someone tells you that s/he has this all figured out, check the hip for a gun.

And your survival plan is?

NetGain Real Estate has an interesting article out about getting through the next twelve months in CRE. It says the turnaround may take longet than we think because of the consumer part of the economy (I'm not so sure about that), and also "believes that we have seen the worst of the slide and that any further declines in stock and real estate values will not be significant."

I like some of the tidbits on investing, which I think bode people well to read. Rather than repeat them here, go take a look. Some of them seem a little obvious e.g., "Strong lessees have a positive affect on real estate value"), and there are one or two I'd consider disagreeing with for the right price, but that does not bother me. It is worth re-reading and reminding yourself of some sound fundamental thinking in this market.

Final question: are you a survivor, a non-survivor or a new winner?

(Courtesy of Traffic Court.)

Ground leases...oh joy, oh rapture

I've done a ground lease deal or two in my time. They are fun. But if you are buying a building subject to a ground lease you have to make sure you comply with the lease terms or you may have to face the consequences.

Such is the case at the Drake Hotel, where the ground lessor is suing the ground lessee, alleging a default under the lease for, among other things, failing to provide the lessor with copies of financing and hotel management documents. All I can say is good grief. One thing I've always liked about being the ground lessor is the ability to just sit down, be quiet and collect rent. Obviously that isn't the case here, and I have seen and been involved with matters where the ground lessor raised a fuss. Here's an example of one.

Full disclosure: the lessee is represented by my good friend and former colleague, Gene Leone. Gene is quoted in Tom Corfman's story as saying, “In 26 years of practice I have seen some very silly things, this is near the top.” I have not read the lawsuit, read the lease or contacted Gene about this (setting up a golf game with him is my priority), but if Gene said what he said, I'm inclined to believe him. Why? Simply stated: Gene's earned that level of respect from me over nearly a decade. (Additional full disclosure: I have represented Walton Street Capital, L.L.C., one of the JV parties of the lessee, in the past, though not on this deal.)

By the way, I recommend Mitchell Passell's book Empire if you want to learn more about ground leases from a layman's perspective. It is a fun read involving many of the characters of New York real estate, including Donald Trump and Leona Helmsley.

What do you mean, the landlord can make me move?

Michael Mandel hits another home run, this time with an excellent analysis of the relocation clause typically found in leases and suggestions for tenants in negotiating the clause.

This clause gives the landlord the right to move a tenant within the building (or sometimes even to another comparable building, which I would fight hard if presented to me) if the landlord gives adequate notice, pays expenses, etc.

Scary? Well, it does not happen very often, usually only to accommodate a major tenant in the building. I agree 100% with Michael, especially when it comes to floor and light and that the tenant should never pay more money or have its pro rata share increased by reason of the move. (However, if the new premises are smaller the numbers should decrease.)

I would add only one other point to consider negotiating: try to limit the number of times the tenant can be relocated.

Maguire to go private?

Maguire's name came up at lunch with a friend a few weeks ago in connection with the direction of the market and the failed attempt to sell the company. Now I am reading that Robert Maguire is trying to take the eponymous company private by dumping its non-OC assets, distributing the proceeds to shareholders and then going private with the remaining OC assets.

The independent directors are apparently saying no dice to the initial proposal because it is too iffy. My question: is this a sign of desperation or need for liquidity or loan issues, or a sign that the company, whose shares are down some 50% in the last year, might be a good bargain in a depressed market? Mr. Maguire surely knows more about his own company than we do. Guess we'll have to watch this.

Denial = not just a river in Egypt

According to this report from CoStar, lenders are saying that while they don't expect a collapse, they are not eager to jump back to the 2004-2007 days, are selling CMBS portfolios, and have instituted thorough vetting processes.

And here is more anecdotal evidence about the credit crisis holding up deals from Robert Manor at the Tribune, including one unidentified developer using the word "meltdown" and reports, "even the strongest institutional borrowers are having difficulty getting money." (Exception: Self-storage, which may be why I have not seen Kenny Pratt post in forever.)


Good! I'll be the first person to say this should happen. Due diligence should be just that: due and diligent. The years prior to now were insane. Forget the legal fees; think about what is healthy in the market. Maybe I am in denial about how bad things really are, or maybe I am out of that league, but what I do know is that things are cyclical and it is nice not to have to worry about too much going on sometimes.

Now, I wonder how these lenders will feel about larger deals as they need to find 6% returns, as I mentioned yesterday. Hard to say. They may be too spooked or they may not. Delinquencies will be an interesting factor to consider; it appears the lag is catching up and delinquencies are rising, in which case people on the sidelines with cash may be looking for bargains from lenders who foreclose or do a deed-in-lieu. Case in point: I am watching a retail property in my area that I am hoping to get a group together to buy if it goes belly-up.

So let's see how all the predictions come out.

Finally, let me say one thing on very small commercial deals: I have lenders beating on doors to do small deals with interest rates over 6%. But again that is on small deals and for people with great credit.

(Courtesy of Deal Junkie.)

Linens & Things finally pulls the Chapter 11 trigger

It was really a matter of when, not if, right? 20% of the stores are closing, they have DIP financing and may even be able to pay some creditors.

Four stores are closing in Chicago: three in the north/northwest 'burbs (Palatine, Schaumburg and Skokie) and the Michigan Avenue store at 600 N., a location that commands high rents. What typically happens in a Chapter 11 is that the leases get rejected by the debtor, leaving the landlord out of luck.

This probably won't be the last BK, even if the economy picks up. The question now is who is next.

And what are Warren and Charlie going to say?

I'm kicking myself for not being in Omaha this weekend to catch the Warren and Charlie Show live tomorrow. Oh, well. Maybe next year.

Will they have any thoughts about dirt? Usually no. But if you think I would not bet against Sam Zell, what about betting against Buffett? Go ahead, at your peril. (Of course he's had a misstep or two; if he hadn't he would not be as good as he is.) I will be curious to hear his thoughts about taking a chunk of AmEx and the Wrigley deal.

Treasuries are low? Then CMBS makes sense, or so says Sam

Think about it. We had lenders jumping all over each other in pricing while Treasuries, about the safest investment there is, were at higher rates.

Now interest rates are back down. And CMBS is not exactly at record-high default levels, is it? (Granted, the market lags, but get real.)

So the ever-quotable Sam Zell is saying that it only makes sense for institutions to return to the CMBS market, and that he is seeing the first steps of an easing in the market. This is especially true if lenders hold to the 6% floor we've been hearing about, as those are the kinds of numbers that allow money to be made. And spreads are down to boot.

Does this mean the downturn's over? Heck no. The Germans have not bombed Pearl Harbor, and I think you'll see some interesting shaking up on some properties or developments being pushed back, regardless of cache or quality. But if buyers and developers can get reasonable financing, that's a sign that we're back to reasonable times.

A 6.6 cap = a bad market. How times have changed....

Boy, have they. Retail Traffic has a great story about insitutional investors hedging their bets in 2008.

The thoughts from ING Clarion, are that the days of cap rate compression are finally over and that investors are no longer deploying capital indiscriminately. Gee, what gave you the clue, Holmes?

Here's the good stuff. The crystal ball from ING is that this is probably another V-shaped downturn, with values bottoming at a 6.6 cap (remember the days of 9s and 10s, anyone?) in Q3 and turning around in 2009.

I know that you are only talking a 60 bp change in rates, but when they are that low those rates could mean big dollars on huge assets. I wonder how they reconcile the turn with a predicted rise in effective retail rents of only 3% over the next three years? Is it because fundamentals are still good and the downturn is credit and consumer economy based? It'll be interesting to see how this plays out.

Bottom? What's a bottom?

Jordan Crouch asks whether we are near the bottom of the market and provides some support of that. And Michael Mandel weighs in with G&E's thoughts regarding leasing:

Commercial real estate fundamentals lag the economy, but one market indicator in particular provides an early warning sign of impending changes. Office sublease space has increased by 12% from its recent low in the second quarter of 2007, ending the first quarter of 2008 at 81.9 million square feet. During the last downturn in 2001, sublease space more than doubled after three quarters of softening. Thus, the office market is feeling the effects of the weaker economy, but the pace of softening so far has been gradual.

I thought the CBD (central business district) numbers looked good but the suburban numbers were not.

Then I heard an opinion in the news today that we are Japan in 1992, a country of spenders turning into a country of savers because of impending retirements, and that we should expect a 15 year doldrum. There's a Yale economist who as a similar opinion. And now we read that hone prices are, not shockingly, down 12%.

Personally, I don't see it. We're not Japan. The WaPo will tell you why.

Does that mean we will have another 23 year run-up? Probably not. But hopefully a prolonged downturn is unlikely with good central banking policies and sound thinking. Let's hope the Fed does the right thing this week.

Sam sure doesn't pull punches

Sam Zell calls the estimated difference between the $6 billion Harry Macklowe paid for the EOP Manhattan properties and the $7 billion he paid for them "Macklowe stupidity.'' Ow. You must have a thick skin to play at that level.

While people do not want to overpay:

The pace of commercial real estate deals may pick up as U.S. pension funds such as the California Public Employees' Retirement System move money into real estate, Zell said. "I don't think they can afford to sit on the sidelines and get 2 percent from Treasuries when they need 7 percent'' of returns to pay retirement benefits, he said of the funds. That could lead to an "opening'' in credit markets.

Makes sense to me, but we have to see what the rest of the dirt world says and does.

The world's best law firm disclaimer

My blog disclaimer is OK, and hopefully somewhat witty.

But if really you want to see something funny, at least by lawyer standards, click here. Patrick Lamb, another BigLaw refugee, started his own law firm a few months ago, and his website is now up and fully functional. I especially liked the crack about tax lawyers for the IRS Circular 230 disclosure.

I like his billing ideas. But most of my transactional clients like paying me by the hour. I hope this changes with time.

Big Boxes doing well? Makes sense to me

I know we keep hearing about plans to cut, cut, cut and recession this, recession that, but MarketWatch says these retailers are still expanding.

I keep seeing and hearing about LOI after LOI and lease after lease. Keep 'em coming. Certain boxes (Wal-Mart comes immediately to mind) thrive in these kinds of conditions as people cut back to essentials. (Maybe it is just like staying at a cheaper hotel or using generic brands, etc.)

(Courtesy of Traffic Court.)

Rambling, semi OT weekend thoughts

Good infrastructure is a key to good, well-valued dirt.

I am starting to think we need an Eisenhower-era level project to fix infrastructure problems, be it publicly or privately financed. Can our ridiculously school taxes go to roads instead? At least I use the roads.

Where I live roads are literally crumbling. One main artery, US 45/52 from the Will County line north, is almost impassible. Yes, it is THAT bad, so much so that some have called for its closure. I found similar problems near O'Hare yesterday.

The one good thing our current governor has done? Open road tolling.

Are the rumors of an increase in residential refinancings true? Or are a lot banks just really messed up in underwriting? I was happy to see National City staying independent for the time being. (But they certainly not out of the woods, as this story reminds us. And other banks, too, are not immune.)

And what's up with RBS? Would buying LaSalle along with ABN/AMRO have made a difference?

River West is happily taking orders, which I hope means there's life in this market yet. I guess we have to face that deals will be done, whether with willing sellers, distressed sellers or banks dumping properties handed to them by borrowers. A title company colleague told me the other day that 30% of his/her company's business was "touched" in one way or the other by the foreclosure process.

I really like the idea of creating a NYBOR rate tracking the borrowing costs of US banks as a benchmark instead of LIBOR. Fine, call me a xenophobe.

Quote of the Day, Week, Month and Year?

"Amateur hour is over." So says Tony Thompson in this GlobeSt.com interview.

He's so right in so many ways on this one. The interview was an interesting read. If I have time to give you more analysis later I will but I am buried in work and meetings today. Telling thought: no NNN investing, because he says that is something you should see G&E/Triple Net about. (Well, he also admits he has a "very limited" noncompete.)

I think I know another reason he started this and left the old shop which I will not disclose here. I told a good friend my thoughts over three years ago, and we'll see whether I was right. I'm probably not.

Spire misses tax deadline -- but they aren't the first to do so, either

Tom Corfman has a story at Crain's this morning stating:

Garrett Kelleher failed to pay nearly $430,000 in property taxes due nearly two months ago on the proposed site of the Spire, even as the Irish developer was launching a lavish, five-city Asian tour to trumpet the massive skyscraper.

Corfman goes on:

The 2,000-foot-tall Spire project would challenge even the most seasoned developers. And the failure to manage a routine task like property taxes raises questions about Mr. Kelleher’s ability to complete a multi-billion dollar project that demands the highest level of concentration.

The reason? According to a spokesperson, an error in the address for the bills.

I personally think Corfman is the best real estate writer in Chicago out there, but, putting my lawyer cap on, I can tell you this happens to the best of developers. It often occurs in the early phases of a development because a tax bill does not get to the right person or the right address because records have not been updated or whatever.

But that also does not mean I think this should be a free pass for the Spire, especially these days when you can get and check these records online. The fact of the matter is, when you have a project that is this high profile, you'd better dot the i's and cross the t's because if you don't, people will be watching. And we are watching.

Most sectors holding steady in Q1...is this a bottom?

Hard to tell. But Moody's, through NREI, reports that most sectors held their own in the first quarter, with limited service hotels being the notable exception. You could plausibly argue that this is a sign that things are not bad, or you can argue that things are just starting to move down and that banks will own a lot of dirt soon. Case in point: a lunch with a friend recently who predicted that many, many buildings on deals s/he worked on will be going back to the lenders soon. Heck, look at the Macklowe portfolio -- and now he's willing to sell 50% of his company since no "quality" bids came in for the GM Building (wow and ouch - and the New York Post report is even uglier).

It looks like retail is still doing well, which I guess is good for me. Now, I wonder aloud whether all the possible BK filings we're hearing about in the news could impact this, but again, it comes down to location. Yes, there are stores going dark, but plenty of retailers are also building. I'll bet a nickel the ICSC conference in Vegas next month will be, in the words of Arte Johnson, verrrry interesting.

What the heck is a "small firm" anyway?

Super-blogger Susan Carter Liebel had a good post yesterday about solo practitioners and small law firms winning not on price but on value provided to their clients. She cites a story from The Complete Lawyer by Marcie Shunk captioned "Welcome to the Age of the Smaller Firm."

The thesis of this article? Small law firms are the real wave of the future.

That's all fine and dandy, until you read on. Susan's post is spot on, as is the general concept of the Shunk post, but I do have to take some definitional exception to the term "small firm." It seems to me that, according to this story, anything outside the AmLaw 200 is considered a small firm.

Huh? These are all super firms that are mentioned here. But I would not call them small by any means. Oppenmheimer, Wolff & Donnelly has 107 lawyers by my count. Keesal Young? 70. Bartlit Beck? 65. Jones Walker? Around 230!

There are plenty of real small firm lawyers that are doing first-rate work. Throwing out the best boutique firms in the country as examples of great small firms seems a little left field to me. It almost tells me that people think the days of "real" small firms may be going by the wayside. If that's the case, then so be it. But if this thesis is true, then show me lawyers in firms of less than 10 or 20 people servicing some Fortune 1000 clients.

Net, gross, modified, gross...huh?

Someone near and dear to me asked me to draft an office lease for some property that person owns. I received a hand written, one page term sheet with a base rent figure.

What freaked me out until I read it more carefully was the treatment of gross and net items in the lease. Those of you in the know (probably all of you if you are bothering to read this far) are aware of leases such as bond leases, net or triple net leases, gross leases, modified gross or plus-E leases, and the like. (You can find what I think is a good recent summary written by Michael Mandel here. New York is a whole ballgame of its own sometimes, especially dealing with the form Manhattan leases with their crazy long riders.)

All I was reminded of was this: you cannot just draft blindly and assume every deal is the same. And the terms I mentioned above, while very, very helpful, are not always precise. (It reminds me of my first plus-E lease in Texas.) For instance, I am drafting a so-called "gross" lease here, but the tenant will have separately metered premises and will pay for half of the trash removal. The landlord is apparently covering everything else. (We'll see once I finish the first draft and discuss it with the client.)

And for you clients: don't get annoyed when we ask what you think might be crazy or dumb questions. It is for your protection, not to run up the bill.

OK, I can finally talk about this one

I have said time and again that I do not make news, I just report it. So, if I know about a deal (whether I am working on it or not), I don't leak it. Not my job, and I do not even want to think about the privilege and confidentiality issues that abound. (I also don't want my clients worrying about it.)

The good news is that GlobeSt.com reported today that a deal I worked on last year, the redevelopment of the New City YMCA property in Chicago, is moving along. Roundy's Supermarkets, which we discussed here recently, has signed an 80,000 sf lease. (Full disclosure: I did not negotiate that deal.) Other tenants are in the works, and, as my friend Jeff Berta says, “Unfortunately, we cannot announce any particular names at this time.” They are still talking about how to deal with some of the residential portions of the property.

I'm looking forward to a summer groundbreaking for multiple reasons.

Tony Thompson didn't stay away long

Triple Net Properties/NNN Realty Advisors merges with Grubb & Ellis, Tony Thompson steps aside, and guess what? He's right back in the game with Thompson National Properties, L.L.C.

The NNN world has been very slow lately. I have some thoughts as to why but I cannot share them in public right now. It seems like this play will be more of a value-added company rather than a NNN play, which is a smart thing to do. Thompson should have the savvy and the capital (both in equity and ability to raise money and find loans) to do well.

The woes of a Libor bounce

If you are in my business, you know about Libor, which is an acronym for the London interbank offered rate. For those of you not familiar with it, Libor, is a benchmark for fixing loan rates around the world. It has increasingly been used in commercial real estate over the last few years over the old standard of US Treasuries. There are Libor "contracts" of varying lengths, such as 30, 90 and 180 days that we use as a benchmark interest rate. So, in other words, if I have a loan that is "6-month Libor + 225" that means the interest rate is 2.25% above the rate for a 180 day Libor contract at a given time (and then usually subject to adjustment each six months).

Now, in addition to the loan rate floors that I wrote about the other day, we have a new wrinkle: Libor rates are spiking the last few days, due in part, it seems, to possible "growing concerns among bankers that their rivals weren't reporting their true high borrowing costs, for fear of signaling to the market they were desperate for cash." What this means? Harder to get a decent loan rate, that's what, but that's also mainly due to the floors.

Before you jump off a cliff, remember that Libor a year ago was over 5%. Now it's gone up 20 bps in two days, but still around 2.9%. So don't panic.

In commercial real estate, the rise in Libor is bound to have a chilling effect, because many developers borrow heavily using floating-rate debt linked to Libor. Until recently, declining rates had benefited borrowers, but some lenders were growing wary. Banks have started to include a floor in Libor-linked loans, said Peter Fitzgerald, chief financial officer at Radco Cos., an Atlanta developer. That means borrowers' savings would be limited if Libor continued to sink, but borrowers can be hit by the latest rise.

"If Libor were at 4% instead of under 3%, there would be a disaster that would take years to unwind," he said.

If you have a big rate hike then I'd be worried because that could make a real mess out of some deals, as increased borrowing costs screw up your pro formas and blow your returns on deals. And should the markets consider going back to the old days of Treasuries if there is real concern about the integrity of the Libor system? Maybe. (As an aside, I also see opportunity for mezzanine lenders here.)

So much to say, but....

Jordan Crouch has two great posts today on lending; one on brokers and the other on rates. Just go to his blog and look at them.

I saw an ad in the paper today mourning the loss of Kimco founder Martin Kimmel. David Bodamer has more.

Edward Roski has his latest proposal for bringing the No Fun League back to Los Angeles, this time with a 75,000 seat stadium in the City of Industry. Good luck. Apparently they only have to file a supplemental EIR, but even if someone wants to move a team to LA does anyone care anymore? With so much else to do (including USC and ucla football), I'm not so sure.

Why am I being so short? It is noon. I have largely finished my work for the day, and I am eager to go play at least nine holes. But there's a storm front coming soon, so I'd better hop to it!

Have a great weekend.

Hey, hey -- some good, balanced journalism!

Robert Manor is now covering the commercial real estate beat for the Tribune. So far I have liked was he's been writing, but today's column might be his best yet. Why? Objectivity! Instead of gloom and dooming, he lays out the facts in a story with this very cool hed: Good enough equals great in real estate.

Sometimes average isn't so bad, especially amid economic uncertainty.

Several commercial real estate industry observers have issued reports in recent days, examining how the Chicago market is faring. What they found in general: Chicago real estate markets may not be outperforming, but neither are they in distress.

Bravo. We're not doing great, but stop the talk of everything tanking for now. That does not mean things may get worse or conditions will change, but the balanced nature of the story really caught my eye.

Welcome, Mr. Manor; I look forward to reading your work.

Remember, there are some optimists out there

I tend to be fairly optimistic about the market improving this year. But then I represent people who don't eat if they don't deal. You keep reading about people poised to jump into the market when the time is right, but those deals are still holding.

Then you have Jeff Brown, who sees a lot of his people in the world applying Murphy's Law and O'Toole's Corollary. Jeff hits yet another home run. As I am sure I have said before, I also think sometimes people who write about these things tend to want to push the negative for many reasons, follow a herd mentality and tell people what they want or expect to hear. It is also easier to make negative predictions than positive ones; usually if you are wrong no one cares but if you are wrong when you are bullish, well, you are a pariah for sending people over the cliff.

I make no pretensions about knowing where the market is going, but I do know that many people in the business have made a ton by selling when the herd is buying, and vice versa. Think about it....

Loan floors and portfolios

This is something I have not seen in a long while. Jordan Crouch reports that most lenders are putting a "floor" on loans in the 6-6.25% range. So, no matter how low 10-year T-Bills (or, presumably, LIBOR, which is what I am usually seeing quoted these days) go, rates will not follow. Jordan does not see any sign of a bottom yet.

What pickup I am seeing is on smaller deals. Portfolios? Not much at all, although there was this story about a 22-property industrial deal that closed the other day in town. I've dealt with the buyer, TA Associates, before. They are very good investors and leave no stone unturned when doing a deal. And they bought at a cap rate of 6.5%, which is right around market.

Sometimes portfolio deals bother me just because of the risks involved. That being said, I've done my share as a lawyer and the complexity of it all can be a lot of fun and good for your billings!

New blog shoutout - Laine Wagenseller and SoCal Real Estate Law

I was doing a little browsing this evening and noticed that my law school classmate, Laine Wagenseller, has started a real estate blog aptly named SoCal Real Estate Law.

I haven't spoken to or seen Laine since law school, but I remember him as a very bright and good guy. It is therefore easy for me to recommend that you check out his blog, and, in particular, this post on what I also think is a very real problem: the decline of accountability when people make bad or stupid business decisions.

Bravo, Laine! And welcome to the fray. Glad to see you are doing well in the world.

All I can say is "Wow"

If you could see this now....

I know this property is in Bucktown. I know Bucktown is hotter than hot for development. I know prices can be high there.

But $767 per square foot? I repeat: wow. If the national retailers can come in with high rents, and with parking available on this site that makes it a premium location, on top of a great corner, this could be a good deal. But boy, that's going to be an interesting pro forma. And you still have to get it through the alderman and zoning and into a PUD.

Multiple bottoms in the market? Financial Terrorism? Interesting analysis

Some analysts are saying that the real estate market is at its worst since the 1980s (ah, the RTC days) and are predicting there may be "multiple bottoms" over the next 12-36 months.

Why?

Just when things start to look better, another financial bomb explodes on Wall Street. The shock waves might keep real estate managers and investors reeling for years to come, experts say.

“It's like terrorism,” said Jack Foster, managing director and head of Franklin Templeton Real Estate Advisors, a real estate fund of funds firm in New York.

I'm no analyst, but I don't buy that. First, I'm not sure this is the worst we've seen in 20 years, and back then of course commercial property was way overbuilt. Now? Not so much, with some exceptions.

And while most institutional investors are cutting back on buying at the moment, the article states that money is being raised to buy raw land for development or for opportunistic investing. Smart calls.

And FWIW, my friends in the legal biz who have been very slow lately are starting to see a little more work come in. Remember, there is often lag from deal people to lawyers while initial tire kicking is going on.

From Pensions and Investments, via