2009SeptemberNewsletter

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In This Issue

Welcome to the Business Owners Real Estate quarterly newsletter. Delivered quarterly from TJG Commercial's top brokers, we keep you, the business owner, in sync with the latest local trends in your local commercial market. Our Brokers experience the local real estate environment daily. This is their opportunity to stay connected with you!

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An Insider's View of Chicago's Commercial Real Estate

2009 Market Overview: Observations & Analysis

Seller's bottom line:
According to Jones Lang Lasalle, since the peak of commercial real estate sale in 2007, the capital markets have significantly slowed down in the first half of 2009. Commercial real estate has started and will continue to decrease in value. Owners that need to refinance are finding credit hard to come by. Landlords find their tenants are in trouble and paying rent late or not at all. The banks are over-collateralized and not lending the tenant or landlord the credit they need to bridge the gap.

Buyer's bottom line:
Commercial Real Estate (CRE) conditions are weak in 2010 and banks with short falls will begin to divest troubled assets. Defaults equals foreclosures and distressed sales. Small Business Administration (SBA) lending is increasing given the stimulus package. User-buyers are at an advantage, as banks that specialize in SBA loans continue to lend. However, money is running out and Congress has yet to clarify a solution for the small business owner's credit line.

Investors bottom line:
Cash is king, credit is non-existent. There are two camps businesses seem to fall into. The first includes large corporate companies that are cash rich or have the government bailing them out. The second includes small businesses with slow sales and no credit to bridge the gap. Investing strictly in commercial real estate such as office, retail or warehousing may be difficult unless the owner can hold the property for a minimum of 5 years. However, mixed-use developments look good to investors. As the residential apartment rental market continues to increase any mixed-use development that has a favorable ratio of residential apartments to commercial space seems to be catching the investors fancy.

Tenant's bottom line:
Landlords still have a mortgage to pay. Rents are decreasing and Tenant Improvements (construction, free rent) are increasing. Leveraging the commercial real estate your business utilizes can bring in savings and increase the bottom line.

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SBA 504 Update: Changes allow businesses to refinance existing debt!

source: Millie Nuno, Director of Business Development, Union National Bank, 847-888-7500, rnuno@unbelgin.com
The government is doing its best to help the small business owner through the American Recovery and Reinvestment Act of 2009. The changes will allow small businesses to restructure eligible debt to help improve cash flow. The 504 loan program can be used to purchase business real estate or fixed assests, such as heavy equipment or machinery, and expand current projects under construction. [Read More]

Since 1984, TJG Commercial has provided business owners with real estate services that align with their corporate goals. Our niche services encompass the business owner's need for brokerage, property management, construction and asset acquisition and sales. With over 24 years of experience and in-depth market knowledge, we provide our clients with the necessary information in order to make the appropriate real estate decision.

Sincerely,
Vilija Garbonkus
Executive Vice President, Business Development

TJG Commercial, Corporate Real Estate Consultants