I just finished reading the just released print edition of Bakersfield Life (a monthly magazine from the Bakersfield Californian); I wanted to make a note of some predictions for 2008. There are a couple of predictions for Commercial Real Estate (CRE) that are not on the above website, they are only in the print edition.
These same individuals (one in particular) were predicting, in the summer of 2005, that residential real estate would boom for 5-7 more years. As we all know now, that prediction was 100% dead wrong!
Before we look at their sales pitch, I mean predictions, please read the CRE posts by Calculated Risk and Mish's Blog. These are two excellent blogs that have been predicting that CRE would be the next shoe to drop in 2008.
I believe this will happen locally as the amount of commercial retail space that has been built far exceeds the realistic demand. In the next year several hundred thousand square feet of additional space will come onto the market and depress prices and rents. The weak hands will fold and we will see many players lose their properties to foreclosure. Those properties built in the last few years, on inflated land, will be the most vulnerable. The sales pitches made below will turn out to be false, as were the ones made about residential real estate during the boom time! What amazes me about these predictions, is the total lack of foresight into the CRE bubble. They all acknowledge residential real estate bubble bursting and yet make no connection to CRE, which usually adjusts 1-2 years later.
Duane Keathley, CB Richard Ellis:
"Looking forward to 2008, the sharp downturn in our residential market will undoubtedly have a cooling effect on the retail sector. Many retailers are anticipating a decline in sales volumes due to pressure on disposable income levels and consumer confidence. Fortunately for Bakersfield, we are not overbuilt as it relates to retail space."
Bruce Freeman, Castle & Cooke:
"2008 will be an extremely difficult year for residential real estate. Fortunately, at Castle & Cooke, we forecast 2008 to be a very strong year for commercial development..."
Kym Moore, Raboank:
"I see 2008 as a continuance of 2007 in the residential real estate market. I don't think the single family housing market has reached bottom...On the bright side, commercial real estate development acvitivity has increased in this area."