The second coming of subprime

FINANCE AND ECONOMICS: "Property in America: Commercial break; Disaster looms in yet another asset class," The Economist, 25 April 2009.

Starting to see this all over Indy, which is doing relatively well: empty storefronts.

Basic dynamic (true story I know of): father loses job, so four kids taking singing and music lessons at local "arts exchange" (where three of my kids go) pull out. Time comes to renew three-year lease and instructors decide to pack it in. Store front soon to be empty.

Simply put, leases are coming up for renewal and businesses are reconsidering. Everybody is trying to re-up at lower prices, driving down overall rents, creating more emptiness.

Few things more depressing for a local economy.

Comments

[Randy]

yes, our lease was up in April, we told them that we were going to work from home unless they dropped the rent in half ( we would have went for 3/4) and make it a month to month with a 30 day notice, they went for half with a month to month. Works great for us but they could also give us a 30day notice if a larger company wanted to downsize and take the whole bulding we are in. they have a 60% occupancy so we fell safe for now.

[Louis Heberlein]

But what about all those old business news articles that said these were good investments because the labor and assets would be domestic, without foreign competition?

[Tom Kelley]

There is still time to avoid this.

As mentioned previously, let's put the wishlist on hold for a bit and focus efforts on mitigating the uncertainty perceived by the business community.