Property Grunt

Monday, April 28, 2008

Roll Call: The John Woo edition

Do not f**k with rice in front of the Chinese.

One of the things that fascinates me about real estate is that how seemingly unrelated incidents have an affect on the real estate market. For instance, it appears that we are now facing a food crisis particularly with certain staples like rice. So what does this have to do with new york real estate? Actually a lot.

There are a variety of restaurants that have rice as part of their menu, these include Mexican, Chinese, Thai, Korean, Italian, Spanish, Indian and Japanese. You only need to read Anthony Bourdain’s Kitchen Confidential to know how expensive and stressful it is operating a restaurant particularly one in New York City.

If the costs for these commodities start to shoot up, which they will, then restaurants are going to pass the costs onto their customers. Which is business as usual in New York city. However, that action may yield nothing, considering that we are now in a recession and everyone is making an effort to tighten their belts so they are not likely go out for meals.

Resulting in less profit for restaurants which adds to higher operating costs. I predict that we will see more commercial vacancies as those restaurants that are unable to compete break their leases.

Of course this weak dollar is not helping at all.

Luke Mullins over at the US. News and World Report emailed his article on how
Ohio is dealing with their foreclosure crisis. Basically the state of Ohio is undertaking a massive campaign to implement loan workouts between lenders and owners in order to avoid foreclosures. The state is also going as far as legally challenging these foreclosures.

On the flip side Master Appraiser Jonathan Miller presents a sobering perspective on the loan workout front and has come to the conclusion that it is not really working out.