Tuesday, February 10th, 2009...11:38 pm
The unprecedented recession in the world economy
The unprecedented recession in the world economy today seems to have hit every nation badly, though the percentage or the extent of damage may vary in each case. First it was believed that only the stocks were falling and the repercussions thereof would be redressed soon. But, as a wider panorama unfolded itself, it was discovered that not just finance companies but others too would face the cascading effect of the meltdown. Then followed housing loans and mortgages fiasco, credit card disillusionments, mortgage foreclosures in order to meet rising insecurities in the employment arena, so on and so forth.
Now, the bigger picture of the global meltdown is emerging. Mammoth commercial complexes that once housed hundreds of commercial establishments and looked unshakeable, are slowly losing their clients who are moving to more affordable areas as cost cutting measures. Holding on to the prestigious address and location sheen seems to wearing off in the face of stark realities like layoffs and absence of contingency plans.
Landlords who once ruled the estate market are now pondering and are offering newer and attractive rebates to retain existing tenants. Vornado Realty Trust who apparently offered 10 months’ free stay to a tenant threatening to move out of One Penn Plaza at Manhattan is a case in point.
Another heart rending tale is that of 60-storeyed John Hancock Tower at Boston, the tallest building in New England, which has suffered heavy loss on account of severe fall in real estate price. The fact that it is being auctioned soon poses a very grim picture of the sad reality. The steep fall in its price from $1.3 billion to $700-900 million according to Associated Press, is shocking, to say the least.
According to Mark Goldman of San Diego State University, “a storm is brewing” in the commercial real estate industry and it is not just a storm in the tea cup as the adage goes.
No doubt, every company would want to carry a posh address on its card, but the sooner the harsh economic realities are confronted with , the better it would be for the survival to lend some semblance of balance to the current picture.
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