Sunday, Dec. 27, 2009 | 2 a.m.
What's Your Vision?
We’re definitely going to see more bankruptcies in the next year or two and then it will taper off. I don’t think we have finished the bad news when it comes to commercial property. You’re going to have a lot fewer people standing at the end of this cycle.
I’m very confident Las Vegas will rebound and regrow in all areas of the economy as a haven for businesses of all kinds. I think in general we’re seeing a lot of businesses now that are innovative and tightly structured. They haven’t expanded on a hope and a dream but have made good strategic decisions. Those are the businesses that may be retracting a bit from expansion plans today, but are good solid businesses poised to come out on top when we get past this economic recession.
The companies that survive are going to be stronger in 2020 for having gone through this. But it’s likely that many people will forget the lessons we’ve learned in this cycle. In my 25-year career as a bankruptcy attorney I’ve seen two economic cycles similar to this and after they ended a lot of people forgot what happened and how. They were looking at the horizon and turned out to be walking on thin ice they couldn’t even see.
Lenders today and in the immediate future have to deal with the economic realities of the business environment, but also balance that with regulatory pressures and shareholder pressures. That’s fairly unprecedented. We’ve had a number of bank failures this year that put a whole different spin on the relationship between lender and borrower.
We do have banks with money to loan, but not many businesses need new loans right now. Businesses aren’t expanding. At some point I think there will be a turning on of the spigot where that capital finds its use. But I know lenders are going to continue to be very gun shy and continue to face a lot of scrutiny in regard to their lending actions. By 2020 I hope that won’t be as much of an issue as it will be in the first half of the decade. As a community and country we’ll have come through this.
I don’t know if in 2020 we’ll be growing at the rate we had been before the recession. I think it’s unlikely. There’s certainly going to be a significant absorption period for what we’ve already constructed, the projects under construction now and those that were under construction that have been halted. In the residential housing industry we need to absorb the existing inventory and build up demand again. I don’t think that will happen next year, but it won’t be too many years into the future. The companies that have land and maintain some of the infrastructure to build new homes will be best positioned in the recovery. In a lot of ways it’s a matter of holding on.
Hopefully by 2020 gaming will have rebounded I’m hopeful that the industry will return to giving people the good value Las Vegas has been known for. We really had gotten to be a high-end expensive hotel room, expensive meal destination and I think the businesses that have focused on the core values of being a wonderful destination for a good value will see us through this dark spot in our city’s history.
With casinos and hotel rooms, recovery is a much tougher issue because we have so much inventory coming online, in the pipeline and halted projects such as Fontainebleau. It’s difficult to say if there is going to be the need to expand inventory in that area of our economy for many, many years. In the next few years and over the next decade, I’m really worried about the older hotels and how they’re going to be able to compete against all the new rooms in the new casinos.
Candace Carlyon is a prominent corporate bankruptcy attorney.