Traders Cooperative

[See Shasta]

I don't think commerical real estate will see the drop off that the residential side is experiencing. And I would expect the drop off to be slower in coming than one might expect. With the REITS one would really have to pay attention to where and what the underlying real estate is.

I'm told the institutional side of the business is still ok. The smaller transactions that non-institutional investors are typical of have slowed down as they wait to see what happens. I remember being surprised that a lot of these guys were cash buyers. Although with interest rates going up, cap rates will have to rise and therefore values should go down. Rent rates will generally increase depending on the lease and vacancy will depend on the quality of the tenants in place and location.

I read a rah rah piece on David Simon from Simon Property Group (shopping malls) and one thing that stuck in my brain was that the stronger retailers had tried concepts that didn't work and that these stores were closing down (eg Talbots Kids). However, the shopping mall owner would be paid to cancel the lease. Hence a short term bump in revenue.