The only good news is that temporary retail space is booming. Let's say you want to sell Halloween stuff. You can rent an empty, broom-clean store for cheap for a month or two or three. Move out when Halloween is over or the landlord rents the space to a permanent tenant.

Example: a friend is a landlord. He has vacant retail space. He's just rented it for three months for what I call "an event retailer." The space used to rent for $700,000 a year. He rented it now for three months at the equivalent of $240,000 a year -- a two-thirds reduction. Ouch.

This weekend's Economist had a piece it called "The collapse in commercial property."

Towers of debt
Concerns are switching from the residential to the commercial sector

FROM a distance Potsdamer Platz looks a bit like its old self. Once the central hub of Berlin, before it was turned into a rubble-strewn no-man’s-land divided by the Wall, it is now surrounded by shiny new towers. Get a little closer, however, and it becomes clear that many buildings are just façades painted onto giant hoardings that rise ten stories high between actual office blocks.

This subterfuge makes for a far more pleasant view than that provided by vacant lots. It also points to an unusual degree of restraint among developers in Europe’s second-largest property market (by transactions). The commercial-property market in most other parts of the developed world is in deep trouble.

Unlike other property busts, this downturn has not been driven by speculative overbuilding but by investors’ overenthusiasm. Commercial property was a popular asset class for much of this decade. Institutional investors who lost a lot of money when the dotcom bubble burst were persuaded that switching from the stockmarket into property would diversify their portfolios and reduce their risk. Cheap finance was plentiful. Investors could indulge in a version of the “carry trade”—borrowing at a low interest rate to buy buildings and counting on the rental yield and capital growth to more than cover their financing costs.

That strategy looked smart when rents and capital values were rising and vacancy rates were low. But as cheap financing has dried up and economies have tumbled into recession, investors have become badly exposed. According to Marcus & Millichap, an estate agent, the office-vacancy rate in Manhattan climbed by more than three percentage points in the first half of the year, to 11.2%. As tenants have disappeared, rents have fallen too—by 16% over the past year, Marcus & Millichap reckons.

Property prices have also been badly hit. Moody’s, a rating agency, estimates that American commercial-property prices dropped by 7.6% in May alone, leaving them almost 35% below their peak in October 2007. Prices would have gone down even further had not transactions dried to a trickle (see chart). Owners are loth to sell into a falling market, although some distressed sales are occurring.

All this sounds like a replay of the downturn in the residential-property market, where easy borrowing terms allowed homebuyers to push prices to extreme levels. To add to the sense of déjà vu, property loans have also been bundled into complex financial instruments, known as commercial mortgage-backed securities (CMBSs). The riskiest of these, mainly those issued between 2005 and 2007, are now running into trouble.

Realpoint, a credit-rating agency, says that nearly $29 billion of CMBSs, around 3.5% of the total, have become delinquent (ie, borrowers have not kept up interest payments) in the past 12 months. It thinks the delinquency rate could reach 6% by the end of the year. Richard Parkus of Deutsche Bank reckons the default rate could eventually reach 12%. Together with bad construction loans, that could push the losses of American banks on commercial property to $200 billion-230 billion. Many small banks will go under as a result.

European banks are exposed to property, too. The good news is that the two biggest euro-zone economies, France and Germany, have seen only modest declines in rents and prices. But one of Italy’s biggest property companies, Risanamento, is fighting to stave off its creditors. And pain is being felt all around the periphery of the euro area. In Spain (see article) and Ireland vacancies are surging, property prices are plummeting and cranes are standing idle.

Prices are plunging across central and eastern Europe, too, although the volume of transactions remains slim. Yields in many of these markets were driven down by hopes that they would, in time, converge with those in mature European markets. Vacancy rates in cities such as Budapest have surged to about 15% while those in Prague have almost doubled (to roughly 10%) over the past year. Some of the biggest falls in rents are taking place in Russia. Rents in Moscow have fallen by 63% in the 12 months to the end of June although they are still the third-highest in Europe (after the West End in London, and Paris). With almost one-fifth of office space empty, further falls in rents and prices seem likely.

Asia has not been spared either. The worst-affected property markets in the region have been financial centres such as Singapore and Hong Kong. Shrivelling bank balance-sheets have meant shrinking demand for office space, as armies of bankers have lost their jobs. Singapore’s swankiest business district led the retreat in office rents across the region, shedding more than half between June 2008 and June 2009, according to Cushman & Wakefield, a consultancy. Hong Kong was not far behind with a 43% drop in the same period. Mumbai (down by 40%) and Shanghai (32%) were the next hardest hit.

There are some signs that the speed of the downward adjustment is slowing. In Hong Kong, office rents in the prime central district declined by 20.1% in the first quarter. The fall was much more moderate, but still 10.4%, in the second. Looking ahead, Singapore seems particularly dicey, because 8.3m square feet (770,000 square metres) of new office space will be coming into the market by 2013. According to CLSA, a broking firm, oversupply will also weigh heavily on office property in China. Vacancy rates in Shanghai and Beijing could rise to 35% in 2010 from around 17% and 22% respectively today.

A year ago everyone was worried about losses on residential-property loans. If the latest data are any guide, both American and British house prices may be finding a bottom. Concerns are now switching to the commercial sector. History suggests downturns in that market last for years, rather than months. Almost 20 years have passed since the Japanese property market peaked. Prices still fell by 4.7% last year.

Latest money and time saving tips:

+ Call for a mail order catalog. Sign for one on the web. It will come with zillions of discount coupons.

+ Sign for the retailers' credit card. Get a big discount. Pay off the card. Don't use it again.

+. Don't believe the first quote. The local car dealer wanted $600. The local body shop wanted $130. Shop around. Many businesses are upping their prices, in desperation. Car maintenance places are copying doctors, adding on unnecessary services.

+ Salespeople at high-end, classy stores, like Saks, are authorized to give discounts beyond those already visible. Ask.

+ Always bargain. Always check.

+ Take an unlocked GSM cell phone abroad and buy local prepaid SIM cards. (I'd lend you mind, except Lucas is using it in Brazil.)

+ A Y-up full-fare coach fare can get you an upgrade to first. Check.

+ Microsoft's new Bing.com lets you look for reduced airfares. It will save your searches for seven days.

+ Don't stand in economy lines. Request an upgrade. Go to business class counter "to see if the upgrade went through."

+ Call the hotel directly. Often they have better deals in person than on the Internet.

+ Stay at hotels with free Wi-Fi. Use free ATMs.

+ Hiring a car and driver can be cheaper than a rental in poorer countries.

The last few tips from Travel and Leisure magazine.

The Linksys Wireless Range Extender. A marvelously useful device. This is it hanging on my wall.

What it is: It extends and strengthens your Wi-Fi home or office network. My home network read 30% at the part of the house farthest away from the router. When I plugged this thing in, it went to 95%. I felt the speed increase. You can carry it with you. Plug it outside and sit in your favorite hammock and surf the net.

How it "installs." You plug it in next to your PC. You run the CD it comes with. That takes 30 seconds. It tells the gadget to become one with the network you already have. Then you take it to your hammock. Plug it in. Hold the button on the side in for five seconds. Within 30 seconds the two lights on the front turn to blue. Bingo, you're hot to trot. Works like a charm.

Why I like it: Portable. Easy to install. Cheap. Only $80.

Buy it from Amazon. Sign for their credit card. Save $30, or 62%.

Life's meaning. I figured the true meaning of life. I was packing the umpteenth box of computer stuff, laptops, cables, shoes and other supplies to ship to my son who has moved to Portland, Oregon,

You start in the shipping department, progress up the ladder to be president. Then you progress down the ladder and end up your career in the shipping department.

There is good news in this. First, my packing skills have improved. Second, the quality of the technology – bubblewrap, polystyrene and Scotch packng tape – has improved. Third, there’s genuine satisfaction at squeezing many items into one found box. (You don't want to hear what UPS charges for empty boxes.)

Finally, a happy story from Afghanistan.
A large group of Taliban soldiers are moving down a road when they hear a voice call from behind a sand-dune say, "One Marine is better than ten Taliban."

The Taliban commander quickly sends 10 of his best soldiers over the dune whereupon a gun-battle breaks out and continues for a few minutes, then silence.

The voice then calls out, "One Marine is better than a hundred Taliban soldiers."

Furious, the Taliban commander sends his next best 100 troops over the dune and instantly a huge gun fight commences. After 10 minutes of battle, again silence.

The Marine voice calls out, "One Marine is better than one thousand Taliban."

The enraged Taliban commander musters a thousand fighters and sends them over the dune. Cannon, rocket, and machine gun fire rings out as a huge battle is fought.

Then silence. Finally one wounded Taliban fighter crawls back over the dune and with his dying words tells his commander, "Don't send any more men, it's a trap. There are two of them."

Warning to ignore.
If you receive an email from the US Department of Health telling you not to eat canned pork because of swine flu. .

Ignore it. It's just spam.

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.