The commercial real estate markets are like one of the last carsin a chain reaction highway pile-up. We hear the noise up ahead,the red lights in front start shining in drawn out succession, weput on the brakes too, but we are too close and traveling too fastto avoid the crack up. Right now we are at that point of suspendedanimation where time seems to stretch out before the inevitablecrack up.

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Remember a year ago when it was just the housing markets thatfaced trouble -- that was the first collision, followed by thesubprime mess, which took out several cars including the mortgagebanks, followed by writedowns at the major investment banks, theBear Stearns collapse, Lehman's troubles, various CEO ousters, andnow more writedowns. Wall Street inexorably axes lots of execs andall the banks downsize -- its hard to get a fix on how many jobs,but the number of resumes flying around gets thick like tickertape. The first real estate casualties were the dealmakers, whobought at frothy highs last spring, and the lenders who blindlybankrolled them. Hotels and malls start to feel the pinch of theeconomic downturn. Cap rates have edged up, as predicted, and nowit's about time we see net operating incomes start to shrink asvacancies increase and tenant demand diminishes.

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Today, the commercial property transaction markets resemblehousing circa late 2006 when sellers thought they could still gettop dollar and buyers were waiting for prices to fall. There's atransactional bid/ask disconnect and deals aren't happening. Buyersnow get more certain that a fall is coming, and some sellers getmore motivated. Once sellers capitulate, market values will startto track down and the correction will take hold. Then we'll startto see defaults and foreclosures bump up too.

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If anyone thinks values and returns aren't headed down, let'shear about it. If you're a buyer and have cash, hold on. Good timeslie ahead. Just fasten your seat belts in the meantime.

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.