Cathedrals From The Old Economy
My building that I work in is approximately 6-7 years old. It’s very nice, and a very attractive part of town. The building is about half full with entire floors empty. There are two sister buildings next door that are in worse shape. And, like I said this is one of the nicer places to work in the area.
In cities all over the country stand commercial office buildings with way too few tenants and probably too much debt to go along with them. This excess capacity for businesses will take years maybe decades to fill.
These buildings show us how far the previous economic bubble and property bubbles went. The excess build-up of office space was pure insanity. Funded by debt and created for future businesses because a slowdown in the economy was completely absurd to consider.
Think about these office buildings and what it means for the economy:
- First, most of the owners of these buildings either went under or walked away from these properties which means many are owned by banks. These buildings on the banks’ balance sheets is not a good thing for the economy.
- Second, the empty spaces show just how much we need business creation and real growth in our economy
- Third, think of all the people that used to work in building construction and all the related industries that supported the buildup of these properties (banking, inspectors, suppliers, etc.) and truly most if not all of these jobs aren’t coming back. Why would they? There’s nothing to build! We have too much built as is!
One of the floors in my building was a single company, a timeshare company. The company doesn’t even exist anymore. There are whole industries that either vanished or shrunk by 90% or more. It’s really amazing. Most of the vacancies in this building and its sister buildings were mortgage companies, home builders and timeshare. All three of these industries are a disaster right now.
I just had a suit fitted at a Jos A Bank store. The guy who helped me out told me his story briefly. He was working as a sales executive for a big company making well over six figures. He lost his job and now he’s essentially too qualified for most jobs. So, he’s working part time selling suits at Jos A Bank making under $30,000 a year. Quite a difference from previous income levels. How does that impact that economy when you extrapolate that situation across millions of people?
Nevermind. I don’t know what I’m talking about. We were told this week that the recession is officially over. Listen to them, not me.