ORLANDO-It's been about 90 days since the subprime lendingmarket collapsed and the subsequent credit squeeze. Now, commercialpractitioners are anxiously awaiting the trickle down. The goodnews is that most experts at the RealShare Central Floridaconference, held at the Gaylord Palms in Orlando, agree that thecommercial market in Central Florida will see some dampening, butnowhere near the doom and gloom that some may have feared.

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According to conference speakers, the subprime collapse hascaused decisionmakers to pause, but “the sky is not fallingcompletely,” said Keith Tickell, executive vicepresident-development for Flagler Development Co. “There are somecracks, underwriting is more difficult now and companies arere-evaluating some of their building starts, but the slowdown isjust temporary,” said Tickell.

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“It's much tougher to close deals that were under contractbefore the credit crunch,” adds Larry Richey, senior managingdirector of Cushman & Wakefield, Tampa and Orlando.

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Others agree. “When you wipe out the condo market, which was amajor source of capital for our market, you're going to see someinfluence [on the rest of the commercial market],” says J. PatrickDuffy, MCR, president of Colliers Arnold, Central Florida. “We'reseeing questions being asked about what tenants do for a living.They're not just looking at the leases but at how secure thetenants will be as well.”

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The subprime problems are threefold–a lax approach to credit,inadequate underwriting and bad pricing. However, most commercialpractitioners are seeing that banks will still loan the money aslong as the buyer has proven that they're experienced in whatthey're doing and they've got an experienced team.

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“I think we were all a bit surprised by the subprime mortgageripple into the CNBS market, and it's shrunk the low-cost capitalmindset,” said Bill Moss, senior managing director of CB RichardEllis in Orlando. “But, the money is still there–you'll just seehigher cap rates through the end of the year before it returns tonormal–normal with stricter underwriting.”

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One shining star in the Central Florida commercial sector is theindustrial market. With vacancy rates as low as 6.5% in Orlando and5.8% in Tampa, Central Florida is poised for growth. “We've got allthe fundamentals in place,” explained David J. Murphy, senior vicepresident of brokerage services and industrial properties for CBRichard Ellis Inc. in Orlando.

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“It's great to be in Florida,” said Bob Krueger, regionaldirector, Central Florida, First Industrial Realty Trust. “Rentshave escalated, but that will probably slow. Vacancies are stilllow and there are plenty of buyers. We're seeing that thedecisionmaking is taking a long time. People have choices, andthey're wondering about the economy, so they're taking more time toweigh their options. But, anything in the I-4 corridor will dowell.”

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In addition, the area is seeing a lot of growth in the trademarkets as it relates to consumer goods to support populationgrowth.

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One concern in the industrial market is retrading, changing thecontract terms and price based on what the client terms an “adversemarket,” although the RealShare experts agree that it's mainlyaffecting class B and C properties. “You're seeing a retradementality but only with B-class properties,” said Murphy. “Ifsomeone wants to retrade on a class A space, we'll put it back onthe market.”Most agree that the media's portrayal of the marketlargely fuels the retrading mentality. “There's no justification inthe market for retrading,” says Murphy. “Buyers are being retradedon their deals, so when they come back around, they want to retradeyou–it's the power of getting a lower price.”More than 300commercial practitioners attended the RealShare Central Floridaconference is produced by Real Estate Media, publisher ofGlobeSt.com, Real Estate Forum and Real EstateFlorida.

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