Thursday, April 07, 2011

Mall Vacancies At Dot-Com Crash Levels

Check out just how badly commercial real estate is faring in this so-called recovery:

Mall vacancies hit their highest level in at least 11 years in the first quarter, new figures from real-estate research company Reis Inc. showed. In the top 80 U.S. markets, the average vacancy rate was 9.1%, up from 8.7%.

I guess all of those job seekers who've left the workforce (according to the government's figures citing an "improving" job picture) shouldn't waste time sending resumes to mini-mall owners.  The U.S. hasn't seen vacancy rates like those since the dot-com recession of 2000-2002 or so.  Developers built too many mini-malls in unsustainable exurban areas that will someday be farmland again. 

This kind of market is terrific for investors seeking bargain properties but horrible for mortgage note investors.  Note holders will be left holding the bag if mall owners default.  PIMCO doesn't agree and intends to launch a REIT focused on CMBS.  That may be the wrong move in this environment.  Instead of throwing my money at PIMCO, I'd rather watch the foreclosure listings in my area to see if any desirable properties are coming up for auction. 

Nota bene:  No positions in real estate or PIMCO products at this time.