On August 1, 2006, The Real Estate Journal published my article entitled, “Where are we heading? A negative yield curve = recession, will history repeat itself?”
Since then, the U.S. Treasury has allocated a $700 billion recovery plan known as TARP, a $250 billion bank bailout, and a $100 billion corporate bailout. Now there is the reported “Big Fix” planned by President Obama and Congress for another $1 trillion under the new stimulus package. Where is the money going and how will thegovernment payoff its debts with a declining GDP at a reported 2.5 percent annual growth rate? Reportedly, our national debt is equal to about $6 trillion, or 40% of GDP. Add the bailout, stimulus and other deficits planned over the next two years, our national debt will approximate 60% of our GDP according to a recent Times article resulting in a deficit forecast of $11 trillion - who will pay and how long?
On top of our national debt we still have significant liquidity problems, loss of investor confidence, availability of credit, and a housing market which continues to decline since the last quarter of 2005.
On the consumer side, 5 months of declines; this trend has not occurred since the 1990/91 recession and reportedly accounts for 70% of the US economy. The acceleration of job losses will further exacerbate this trend. Store closures in 2007 totaled 4,603, with 5,770 forecasted for 2008 according to ICSC. According to PPR, retail vacancies will hit levels as experienced in the early 1990s, with one-third of the 54 major markets experiencing economic vacancies reaching an all-time high.
So how does a small business weather the storm – diversify, be visible, think outside the box, and expand your footprint? Strive for customer service, ask the right questions, listen and deliver. Also broaden your referral business and network amongst colleagues in related industries. Now more than ever, visibility is the key in conjunction with the expansion of your client base in related but different industry sectors. Volunteer your time to a worthwhile cause – “give of yourself.”
We at R. D. Geronimo Ltd. are working in unison to accomplish these tasks while soliciting new opportunities. The expansion of our advisory and litigation support services is one key example. Our advisory division is assisting developers and lenders on their various projects, development alternative and mark-to-market valuations.
In the litigation arena, we are called to provide tax certiorari appeals and bankruptcy valuations, along with expert testimony. Both of these opportunities have lead to a broader client base of attorneys and accountants. These two industry sectors provide a vast array of valuation and advisory services under a collective umbrella of expertise.
The current economic downtick also provides a unique opportunity in the estate and trust sectors in regard to estate and gift tax planning. Both business areas have provided an alternative revenue source and new client contacts.
Currently, R. D. Geronimo Ltd. is embarking on a newly formed consulting company with the addition of key executives in real estate, lending and mortgage brokerage. This collective team brings over 100 years of real estate, financing and lending experience. The new company will focus on problem loans, their respective restructuring and/or possible sale, as well as general advisory and consulting services to lending institutions, developers, investors, etc.
Forecasting for 2009, R. D. Geronimo Ltd. will continue to concentrate on our tax cert and litigation support services, each of which will lead to other real estate related opportunities. The formation of the new consulting company is also very exciting and well-suited for our present infrastructure and client base. The increased flow of estate and trust work will offset the downturn in our transaction type business, while providing a more diversified revenue stream.
Lastly, we at R. D. Geronimo Ltd. look forward to another year of growth with a solid team in-place. The formation of the newly formed consulting company, concentrating on this market downturn, also adds another dimension to our established business practice, while contributing to other industry-related opportunities.
Richard DiGeronimo, MAI, CRA, SRPA is president/founder of R. D. Geronimo Ltd., Mineola, N.Y.