2010 - Year of the "Zombie" Building

Posted by Expert Gadget Reviewer on Monday, 14 December 2009

How will the impending crash in commercial real estate play out in the field..." Knowledgeable sources in the industry are talking about 2010 as the year of the "Zombie" building... A Zombie building is an office building where the ownership no longer has the resources (capital and/or access to capital), to fund needed leasing requirements (such as Tenant Improvements and/or Commercial Broker commissions).

Word is that an unofficial "blacklist" of current or potential "zombie" buildings is already shaping up. The blacklist contains buildings that are "excluded" from being shown to potential tenants. Much like the "counter-party" risk in the stock market that hastened the demise of Bear Stearns and Lehman Brothers (where other firms stopped lending because they were afraid they would not get paid back), ending up on the "blacklist" will most likely choke off the stream of needed tenants, and speed up the death spiral of the "zombies..."