In Memoriam: The Golden Age of Commercial Real Estate
November 2008 - March 2022
It is with heavy hearts that we bid a final farewell to an era of unparalleled prosperity—the Golden Age of Commercial Real Estate—which, at the age of 14, met its untimely demise due to complications arising from excessive consumption.
Its story, like the pages of a riveting novel, unfolded with the rise and fall of market forces, leaving an indelible mark on balance sheets all over the world.
The Golden Age emerged during the darkest hours of economic uncertainty. As the Federal Reserve battled the forces of financial collapse with bond purchases and a zero-interest-rate policy, a new era was born. Low interest rates became the cornerstone of this period, fostering growth, innovation, and unbridled ambition within the world of commercial real estate.
The earliest signs of the Golden Age’s addictive personality emerged at around five years old when the Fed first attempted to curtail bond-buying. But, like a spoiled child throwing a tantrum in an expensive restaurant, the Golden Age insisted on continued support. Fearful of the consequences, the Fed continued to print money, ushering in an era of unprecedented wealth creation.
Under the golden glow of these financial conditions, opportunities multiplied, investments flourished, and dreams soared to new heights. Ambitious projects, much like the skyscrapers they envisioned, and floating rate loan proceeds seemed limitless. It was a time when the phrase "the sky's the limit" felt more like a daily mantra than mere words.
But, like all good things, the Golden Age of Commercial Real Estate came to an end. The consequences of excessive consumption and unsustainable growth became evident. Rising interest rates cast a shadow on the landscape, and the echoes of past excesses gave way to a more sobering reality.
As we remember this remarkable era, let us not forget the lesson it imparted: Sometimes it is truly better to be lucky than good. Though it has left us, its legacy remains—a testament to the triumphs and tribulations of an age defined by low interest rates and the pursuit of prosperity.
In this farewell to the Golden Age, we express gratitude for the prosperity it brought and acknowledge the challenges it has left in its wake. As we move forward, may we draw upon the lessons learned from this remarkable era, knowing that patience and dedication may yet again lead us to treasures unseen.
May the memory of this age inspire us to face the future with courage, adaptability, loan modifications, and the enduring borrower spirit that usually rises to the occasion.
Rest in peace, Golden Age of Commercial Real Estate, and may your legacy outlive inflation.
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