With credit to John McEnroe (“You can’t be serious!”), was it hard to believe that American Express, Goldman Sachs and other financial institutions morphed into bank holding companies to save their own skin during the onset of the Grecession (the Great Recession)?! This conversion, courtesy the Federal Reserve but at taxpayer expense, has brought near-overnight success and billions in profits to these newly formed banks by allowing instantaneous pocketing of ~2.5% on every dollar which passes through their hands. Enough with that! We’re going to file to become a bank! Our firm has no debt, so our application will look at least as attractive as American Express’. Arbitrage, here we come. Please let us know if you’d like to join in.
Our bank will trade in derivatives, of course. In 2009, we wrote an article launching our new concept of ‘Office Space Derivatives’. Hopefully the new financial reform bill won’t exclude this instrument from the exposure it deserves.
Moody’s, S+P and Fitch will likely give us an AAA-rating. With a little luck, Warren Buffet (Moody’s largest investor, who knows not where Moody’s is located) could be our anchor investor.
Where is the economy heading and how long will it take before “recovery” appears? As an advocate for commercial tenants, it has always been my job to study the economy and aggressively negotiate concessions for our clients in leasing transactions. The better one understands market dynamics and supply/demand economic factors, the more effectively and successfully one can argue with landlords.
I recently went to the Commonwealth Club to hear the answers from former Labor Secretary Robert Reich, now Cal Professor of Public Policy. I took copious notes and am sharing his views on how the country arrived at this financial crossroad and where we’re heading.
I’ve been advising commercial tenants for 26 years…and hope that you and your organization take our advice to heart. Please call us to discuss your questions and explore how we may work together.
These are extremely difficult, confusing and opportunistic times for commercial office tenants. As the economy has turned virtually every industry upside down, the office leasing markets have followed…and will continue to trend downward for the foreseeable future. Office tenants suffering from exposure to now-unaffordable office lease payments must act soon…and in a carefully planned, methodical way. Whether considering subleasing or assigning your lease; or worse, filing for bankruptcy…surround yourselves with the appropriate experts to address your situation. Following are two essential articles addressing these critical issues from sage real estate counsel, Helen Sedwick, Esq.:
First the rent comes in a day late and a dollar short. Then come the frantic calls from the CFO or CEO asking to talk. Then rent payments stop altogether. Undoubtedly a wave, if not a tsunami, of tenant defaults and bankruptcies is heading our way. Since both the Federal bankruptcy code and case law have evolved since the tenant defaults of 2001–2003, I wanted to lay out a brief bankruptcy law refresher for landlords and tenants. Plus, this article will suggest strategies for negotiating a lease workout or termination without a bankruptcy filing. A negotiated settlement is often a simpler and more efficient course. Why is today different from the last downturn? Read on…
The sudden collapse of prestigious firms such as Heller Ehrman and Lehman Brothers, plus the disappearance of financial giants such as Merrill Lynch, Wachovia and Washington Mutual, will flood the office market with hundreds of thousands of square feet of subleasing space. If your firm is considering entering into the subleasing market whether as a Sublandlord or as a Subtenant, then consider the following: Read on…
In many respects, we’ve been here before. Seriously, I’ve been representing tenants in the City for 26 years—all but a few of which have been great years for tenants. With the “tsunami” effect on the global economy (articulated last week by Alan Greenspan), office tenants should find some comfort knowing that we’re entering a period of 7-10 YEARS during which tenants will have the upper hand in negotiations with landlords.
So what should you do about it? Read our latest article, Advice to Tenants: How to Survive the Big Ugly, to learn how we create strategies and negotiate for our clients’ office leases.
Then let us help your organization thrive through your next lease term.
I look forward to your feedback about our advice.
Bill Gross, Managing Director and one of the founders of PIMCO (the world’s largest bond fund), sits at the epicenter of the world of credit. His October Editorial, which is available on our website as a PDF, offers an explanation of the credit crisis along with his recommendations—spot on and easy to understand for those who don’t work on Wall Street.
Bill Gross is under consideration to assist the U.S. Government in managing the $700 billion Troubled Asset Relief Fund (TARP) fund.
Hopefully you’ll find some clarity and comfort in Mr. Gross’ commentary.