So far, America's real-estate agony has been confined largely to the vast residential sector. Commercial (office buildings) and retail (malls, strip malls, big boxes) real estate have held up rather well, even though those markets were propelled by the same factors that sent housing into orbit: easy credit, an abiding faith in perpetually rising asset values, and misplaced optimism about economic expansion.
But when the economy slows and threatens to go into recession, it's usually bad for all classes of real estate. And when the slowing economy is led by pooped-out consumers, it's usually disastrous for the tenants of malls and strip malls—and for their owners and lenders. All of which suggests: Get ready for the ghost mall!
Thursday, January 10, 2008
Thanks to a colleague for sending along this interesting article from Slate: