While we have been fighting the battle in the residential real estate market for a couple of years now, the guys on the commercial side have kept on building, buying, and selling. Well, that has stopped in 2008 and most likely will not start up again until 2010.
CB Richard Ellis, the largest property manager and commercial real estate sales leader, is facing tough times. As the President of the company, Brett White said, “
“Market conditions of unprecedented strength are roiling the world’s financial markets. The global economy is either in, or close to, recession and 2009 is not likely to be a year of great recovery.”
The company is getting help with special deals from the federal government, it helps out have a chairman who is married to Dianne Fienstein, Senator from California. The FDIC has given them the job of marketing distressed properties, both commercial and residential.
But even with this help, the company is still swimming upstream.
My guess, as the recession kicks in, commercial will take a bit of a beating as it is overbuilt and retail companies will be closing stores after the holiday season. Residential real estate will be the leader of the real estate recovery.
Faced with a contracting real estate market and falling profit, the company has scrambled to cut costs and eke out new revenue sources while acknowledging that times are hard and likely to stay that way for a while.
The company said it had cut $190 million in fixed costs this year, in part through eliminating about 1,100 budgeted positions from a workforce of 29,000, mostly through layoffs and attrition. It reduced other expenses such as travel and marketing. CB also ended its deferred compensation program for managers and sales professionals and will get a $100-million tax deduction in 2009 by stopping the program. via The Los Angeles Times.
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{ 3 comments… read them below or add one }
I'm sure that the commercial Real Estate guys had to see this coming … right?
This is the situation for not only CB Richard Ellis but all commercial firms that are in the business of leasing, which a number of them. We have a very high unemployement rate, leading to business closing and high vacancy rates! Most companies that I know are downsizing so to keep their rent down and looking for smaller spaces!
I don't see a stabilization in the vacancies until the second half of next year!
Prabhjit Singh
I hope that they saw it coming too.