From TOM ANDERSON
Letter to the Editor
Ukiah Daily Journal
July 26, 2009 Ukiah Valley, Mendocino, North California
Developers Diversified Realty didn’t show much savvy when it failed to change the Masonite site’s zoning before it closed escrow. Seasoned commercial developers would have done that; DDR did not.
Now it is stuck for the purchase price and thrashing around to fix things.
Its timing was not the best either.
“The commercial real estate bomb is ticking,” said Rep. Carolyn Mahoney (D-N.Y.), who chairs Congress’ Joint Economic Committee, in opening remarks to her panel on July 5.
Testimony to the panel was that today’s roughly $6.7-trillion commercial real estate market is crippled with about $3.5 trillion of debt. Money to pay the debt is evaporating as mall vacancy rates rise to 10 percent, the highest since 1992.
DDR’s vacancy rate this May was about 9.5 percent. (That’s why it has applied for a federal bailout.)
With many commercial properties worth one-half their peak 2006 value, banks have turned off the tap for commercial real estate refinancing.
The crisis is far from over.
Commercial real estate is “decaying and getting worse,” said Victor Canalog, a director of research for Reis, Inc., the nation’s leading commercial real estate analysis firm. Canalog said he did not “foresee a recovery in the retail sector until late 2012 at the earliest.”
“Given the depth and magnitude of the recession,” he added, “you can argue that we are facing a storm of epic proportions and we’re only at the beginning.”
Those are the mega-problems now dogging DDR’s Mendocino mega-fiasco.
The mall simply cannot and will not happen as promised.
If Proposition A passes, expect a vacant lot at the Masonite site for many years to come.
And the last thing we need is an abandoned project in our county seat and largest city.