Newspaper article THE JOURNAL RECORD
80s Turbulent for Commercial Real Estate
The early '80s saw a time of fantastic growth and total optimism. For the entrepreneur who wanted an alterntive to oil and gas, commercial real estate was the logical choice.
There was a great demand for all types of properties and funding for the projects was readily available. As the lenders competed for the right to make loans, it was not unusual to be able to get 100 percent financing on very speculative projects.
The mid-80s was a time when these local entrepreneurs were doing everything they could to salvage their ownership position in their projects. As the income stream plummeted, it was not unusual for the revenues generated from the property to not even be sufficient to handle operating expenses, let alone service debt.
By 1987, many projects had gone back to the lenders. After the lender gained title to the property, they felt the property was worth approximately what they lent against it - only to price the property on current income within 18 months when they realized that this was not the case.
In 1989, we saw numerous sales of all types of commercial properties, in many cases to local investors, for much less than replacement costs. …