Rising vacancies and falling rents are bringing havoc to the commercial property sector.
Ben Bernanke, chairman of the Federal Reserve, this week called commercial property a 'looming crisis' – but for Shawn O’Brien, a commercial broker in Lansing, Michigan, the crisis has already arrived.
'The tenant is very fragile right now,' said Mr O’Brien, vice-president of brokerage services at CB Richard Ellis.
Fragile tenants mean anxious owners. For instance, the liquidation of Circuit City, the big electronics retailer, has left gaping holes in the anchor spaces of many malls.
According to O’Brien, a prime anchor space that was rented for $530,000 a month in one mall now could only be filled for $300,000 a month after a major retailer closed down and broke its lease, costing the owner about $3m a year.