Sound of Sirens

The Commercial Real Estate Tsunami: A Survival Guide for Lenders, Owners, Buyers, and Brokers by Tony Wood.  2010.  John Wiley & Sons, Inc.,  Hoboken.  215 pp.

More than half of the $6 trillion of commercial property value in the U.S. is leveraged with debt.  Too big to fail, right?

Author Tony Wood spells out the consequences of commercial mortgages maturing through year 2013.  Wood, a commercial real estate broker and consultant with over 30 years experience, frames the dire news by unveiling numbers from the pivotal 2009 report by Foresight Analytics, “Commercial Mortgage Outlook: Growing Pains in Mortgage Maturities.”  Citing the report, Wood highlights $814 billion in commercial and multifamily mortgages maturing between 2009 and 2011—a gloomy prospect given the paltry flow of credit for refinancing.

Early on, the author shares his conclusions as to how and why deflated commercial property values were inextricably tied to the collapsing economy.  Supported with major metropolitan market data from CoStar Realty Information, Inc., Wood demonstrates the warning trends and the widening gulf between rental rates and vacancy rates. 

Wood dispenses caffeinated doses of advice to four parties—lenders, commercial real estate brokers, buyers, and existing owners—all taken by surprise with the stagnant commercial sector.  He deploys contributors throughout the book, strategically untangling the crisis, forecasting its impacts, and listing substantive guidance amidst a bell-toll of paradigm shifts in commercial markets, “where the rules are not clear and some have yet to be written.” 

During a time some call a jobless recovery, when small businesses are concerned about generating sales let alone landing credit, Wood’s 2010 book is of equal or greater value.  Are we attuned to commercial real estate's troubles?  It was The Atlantic tapping a collective shoulder last year, when Daniel Indiviglio wrote about stakeholders conveniently forgetting the commercial real estate problem in 2010; and how an economic recovery must substantially strengthen if there is to be an improvement in the performance of distressed loans.  Next, a refurbished analogy emerged as to the condition of commercial real estate from an expert panel moderated by Wood, a condition deemed the "slow bleed."  Whether it's an unforeseen destructive wave or a hemorrhaging wound, thanks to Wood’s steady hand on the magnifying glass in The Commercial Real Estate Tsunami, the warning did not go unnoticed. 

- August 2011