State of real

Reading a Bloomberg article this morning regarding commercial property landlord debt, coupled with the ongoing environment of shrinking of brick and mortar stores including Walmart, Macy’s and many others. I do not expect commercial real estate to do anything but become devalued. There will be more warehousing needed but less retail space. With the “now” or “just in time” economy and the on demand delivery of consumables, who needs a retail store, market or local walk-in customer service location? Additionally if the Obamacare Tax is repealed the insurance companies and proportionally the hospital’s will have to tighten thier belts and scale back thier campus sizes. I expect that warehousing and personal storage facilities will be growth areas.

With the government leaning towards domestic manufacturing the shipping companies such as Hanjin and Maersk will continue to suffer. Unless they find other markets to and from Asia. This will be a great opportunity for developing nations to negotiate lower prices for goods America will no longer accept. Still thier consumption will not compensate fully for the US market that they will loose.

In conclusion, commercial real estate sucks with the exception of warehousing. Also, though I did not discuss, residential properties will continue to do well because the investors running away from commercial rentals will take thier dollars to the residential market.

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