To Fill Vacancies, Mall Owners Test Experimental Waters - NYTimes.com

To Fill Vacancies, Mall Owners Test Experimental Waters - NYTimes.com: "Greg Maloney, president and chief executive of the retail group at Jones Lang LaSalle, a real estate brokerage firm, said that to fill empty anchor spaces, landlords were getting creative and were considering bringing in grocery stores, medical facilities, dance studios and even community or technical colleges.

“I think you’re going to see a lot more of that,” Mr. Maloney said.

Several schools — like New River Community College in Virginia and Hagerstown Community College’s Center for Continuing Education in Maryland — have been holding classes in malls for years. But industry professionals say the trend is likely to accelerate.

With Americans buying less, many chains are asking mall owners for rent reductions, and are sometimes receiving them. That adds to the malls’ financial woes.

One of the nation’s largest mall owners, General Growth Properties, is laden with more than $25 billion of debt, has missed payment deadlines on its bonds, and is trying to avoid filing for bankruptcy protection.

Landlords are willing to lower rents for their best retailers — but only those that can prove financial distress. The landlords may not be able to play hardball for long, though. More major chains are expected to file for bankruptcy"

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1.3 M Homes Too Many

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Economy Strains Under Weight of Unsold Items - washingtonpost.com:

"Harvard economist Edward Glaeser estimates that from 2002 to 2007, the country's housing stock increased by 8.65 million units, outpacing the number of new households, which increased only by 6.7 million over the same period. Taking into account a rise in the number of vacation homes, Glaeser estimates an overhang of about 1.3 million vacant units. Absorbing that excess, he said, could take an additional two years."

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PIMCO - IO Feb 2009 Gross Beep Beep

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PIMCO - IO Feb 2009 Gross Beep Beep: "Example: CMBS or commercial real estate mortgage-backed securities are now priced to yield over 12% vs. 5% in recent years. As real estate financing comes due and rolls over in the next few years, it is imperative these yields return to mid-single digits if shopping centers, retail malls, and office buildings are to remain viable. How best to bring those yields down is debatable: another CPFF-like structure with self-insurance and contributed fees as its equity backstop? A generous portion of remaining TARP billions providing a reserve cushion for Federal Reserve funding? A good bank, bad (aggregator) bank structure? All three are being debated by policymakers and we should have clarity within a week’s time. But one thing is certain: an economic recovery is dependent upon commercial real estate prices stabilizing and most retail stores staying open for business in the months and years ahead."

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PIMCO - IO Feb 2009 Gross Beep Beep

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PIMCO - IO Feb 2009 Gross Beep Beep: "PIMCO’s advice to policymakers is as follows: you can’t bail out everyone, yet economic recovery is not possible unless certain critical asset sectors are not only reliquefied, but rejuvenated in price. The prior Administration’s focus on the banks has been critical but unidimensional. The shadow banking system with its leverage and financial innovation, powered a near 25-year global economic expansion, but it is the delevering of those hidden quasi-banks that is now threatening its petrification. Policymakers should not focus entirely on one-off bailouts of large real estate developers, municipalities, or even credit card issuers like they have with Citi, BofA, and AIG. Rather, they should recognize that supporting critical asset prices such as municipal bonds, CMBS, and even investment grade corporate bonds is a necessary step towards eventual economic revival. Capitalism at its philosophical and practical center depends on credit, and while new loans can be and are being advanced via the banking system, it’s a much more difficult task to force shadow banks to lend. That lending depends on securitization which in turn depends on stable and eventually higher asset prices than currently exist. The original focus of the TARP was on asset prices, but the prior Administration quickly lost its way or perhaps its"

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Interactive Investor

ar companies rally after FT report on GM:

Shares of car companies rallied on Friday after the Financial Times reported that General Motors asked real estate agent Jones Lang LaSalle for help in raising up to $257 million from the sale and leaseback from some of its European offices and property assets.

Shares of GM, a Dow component, were up 10 percent to $5.30 while Ford Motor shares surged 25 percent to $2.68. The Dow Jones U.S. Automobile Index surged 12 percent to 48.45."

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Insider's Perspective on the Credit Crisis

Amid a deepening international credit crisis and a rapidly decelerating global economy, global real estate markets are feeling the real-time effects of a tightly interlinked world that remains increasingly vulnerable. The markets have shifted from a virtuous cycle to a vicious cycle. The dramatically changing environment began with the U.S. subprime mortgage meltdown 18 months ago and then spread rapidly through the global financial system and now into all aspects of the economy.

Jones Lang LaSalle's capital markets experts share their insights and predictions on the current state of the global economy. Click here for a full report.

For additional information contact

Jack Minter Investment Sales jack.minter@am.jll.com
Kenneth Rudy Corporate Capital Markets kenneth.rudy@am.jll.com
Bart Steinfeld RE Investment Banking bart.steinfeld@am.jll.com

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