In my Emerging Trends presentation I have a line aboutthe choice facing developers in 2009: "They can head out to thegolf course or go into the fetal position." The black humor seemsalways to get good laugh, but the reality is anything but funny toan audience of cringing entrepreneurs.
Construction loans are about as easy to find today as an IvoryBill Woodpecker. Even if you have a bullet proof build-to-suit dealwhat lender will consider giving you a hearing about financing?Bankers all uncomfortably must focus their attention on what theymay have unwisely financed in recent years--underway or justcompleted projects that have no way to meet pro formas in thecratering economy and have dwindling prospects for takeouts. Inevery major market, work has shut down on half built towers,testament to looming troubles.
For projects opening in the near-term, anemic to moribund demandsignals major heartache. Ironically, developers and constructionlenders had been relatively restrained except for overdevelopingcondominium towers in many places. But the wholesale tenant retreatcoupled with the evident protracted economic downturn translatesinto a heap of bad timing for builders and their bankers. This timeround lack of demand trumps reasonable supply.
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