This morning, as I was getting ready to go to a meeting, I was listening to NPR (89.5 fm here in Carlsbad). One of the lead articles was the pressure on General Growth, the second largest shopping center company in America. The largest is The Simon Company, and, from Australia, we have the Westfield company, which owns the Westfield Mall in Carlsbad. You can hear or read the article at www.npr.org .
The gist of the article was that shopping center developers borrow money just like homeowners do to acquire properties. There’s a big difference, however. A homeowner can usually obtain a 30-year mortgage, but shopping center developers, commercial office and industrial developers, and buyers of that kind of property often find they can only get a five to seven year mortgage, and then they have to refinance. Well, commercial property owners are now going through the same crunch that homeowners are facing. Lenders aren’t willing to lend!
In order to justify commercial building mortgages, landlords have to project income. They want spaces filled. Now is a great time to be negotiating for new space or renegotiating your lease as a tenant. The balance has shifted so that the pressure on landlords now favors commercial tenants!