Monday, May 21, 2007

It might be, it could be...a little slowing down?

I was meeting with a client yesterday, performing one of my regular legal check-up sessions for them and making sure all their needs were being met. We were speaking about the real estate market, and I was warned of two distressing signs. The first is a big decline in retail traffic locally, especially in local restaurants. (I don't think much is attributable to simply having more choices.) The other is a rumor that some local builders are pulling up their stakes down here and calling it quits: That's right. Not just slowing down construction or cutting hours at the sales center. We're talking shutting down and selling the models. Again, there's no confirmation of this yet.

I knew there was a housing slowdown, but a pullout is entirely another thing. It basically says: "failure." Eventually someone will have to build there. Heck, there's no place left to go when people are commuting as far as they are these days.

On top of that, you have retailers finally slowing down in new construction efforts. Crain's, as usual, is right on top of things with this report today coming from Mid-America. Case in point: Mid-America and The Daly Group are developing a strip center down the road from me anchored by Kohl's and, eventually, Super Wal-Mart. Other than tenants cannibalized from the mall or existing strips in town, there are no new tenants -- just the retreads that leave other space empty. Note: Buffalo Wild Wings has started construction on a pad, and the developer is optimistic about signing other national tenants to leases and pad sales. So all is not lost; it is just slowing down somewhat.

Does this mean a complete stoppage? Nope, thank goodness. Hot markets will stay hot, such as those in the city. And the report does indicate a continued growth interest in groceries, fast food and the like. And residential and commercial real estate are two different ballgames altogether, which is why I do not do house closings. (Call me if you need a referral, or get a hold of fellow blogger Peter Olson.) But others may be less likely to have the feeding frenzy there was. And maybe we can start slowing down a little and doing deals with a little more diligence and care.