Sometimes, when you look into a thing you discover a pattern that you suspected would be there, or you discover a pattern that takes you by surprise and sends your thinking in a new direction. Sometimes, however, you find no pattern at all, which in itself can be informative.
Recently, I placed all of the distressed commercial properties we track in our database onto a map of Southern Nevada to see if there was a pattern I should be aware of. The answer was that there was no pattern at all. Distressed commercial real estate assets are not concentrated in any particular area of town, but rather follow the overall pattern of commercial real estate development.
This suggests that while over-building (i.e. too much supply, always a tricky thing to predict) may not have helped the commercial real estate market in Southern Nevada, it certainly was not at the root of our problems. Demand for product is hampered by the Great Contraction – our unsustainable debt to ourselves – and this contraction has struck everywhere without prejudice.
As the current distressed problem slowly works itself out, we may see the shrinking islands of distressed properties centered on older areas of town, but for now, properties both old and new are suffering.