Southern California Office Real Estate Blog

3 BUSINESSES MOVING TO EL SEGUNDO

3 BUSINESSES MOVING TO EL SEGUNDO

The El Segundo office recently scored three office transaction deals totaling $37 million.
Ignited Minds media company signed for 55,000 sf of space at 2221 Park Place in a 10-year, $17-million deal.  The new-media advertising agency and a TV technology firm were originally located in Marina del Rey.
The freestanding, single-story, office/flex building is located across from the Rosecrans Corridor, an area of restaurants, offices, retail shops, entertainment and theaters. The 2221 Park Place building was built in 1966 and renovated in 2000.
In a $12.3-million building sale, a private investor acquired a 46,940-sf, two-story office/flex building at 2335 Alaska Ave. that is 100% occupied by a single tenant. The 2335 Alaska property was built in 1988.
The third deal was Tandenberg Television’s 10-year, $8-million lease of a new 24,500-sf West Coast headquarters on the 16th floor in the Pacific Corporate campus at 100 N. Sepulveda Blvd. in a move from 18,000 sf at 12190 Culver Blvd.

Aerial View of El Segundo

MALIBU OFFICE BUILDING SELLS FOR $17.5M

MALIBU OFFICE BUILDING SELLS FOR $17.5M
The Malibu Vista office building, a two-story, 100% occupied property on Pacific Coast Highway, has sold
for $17.5 million. Kenmore Group LLC, based in Santa Monica, purchased the 30,742-sf building at 22761 Pacific Coast Highway from Malibu Vista Partners. Sperry Van Ness brokered the deal.
Impressively, 22761 boasts  230 feet of frontage on PCH on a 1.47 acre parcel. Construction was in 1980.
Parties involved say the buyer was attracted to the deal by the “scarcity of office space in Malibu, the high barriers to entry for new developments and the overall upside in the deal.”

The building offers 180-degree ocean and beach views, and is within walking distance of the Malibu Pier and the Malibu Beach Inn. New retail and restaurant development development is taking place throughout the neighborhood

Info courtesy of  Bob Howard of GlobeSt.com

Business Week offers 5 Real Estate Investments You Can Still Love

Business Week offers 5 Real Estate Investments You Can Still Love

Some investors are becoming cautious of real estate because of the recent turns in the marketplace.  Regardless, Business Week magazine’s analysts continue to say that real estate is a key component of investment portfolios.  In a recent issue, they identify five ways that investors can currently benefit from real estate.

1. International Real Estate Investment Trusts. U.S. REITs are going through a bad patch, says Jay Hutchins, president of Comprehensive Planning Associates in Lebanon, N.H. Instead, he advises clients to buy foreign REITs or mutual funds that are focused on global real estate.

2. Cash investments in commercial space. Office buildings, retail properties, and apartment houses provide stable cash flows, says Michael Kuziw, vice president of asset management at Lenox Advisors in New York City. But such investments require a portfolio of at least $1 million.

3. Invest an IRA in real estate for the long haul. Entrust Northeast, in Verona, N.J., which administers self-directed retirement accounts, allows for a wide range of investments, including first and second mortgages.

4. Consider buying a vacation homes outside of the U.S. For example, consider a country like Panama or Costa Rica where the political situation is stable and prices are affordable.

5. Fractional homeownership. This is gaining popularity and is within the reach of people with moderate incomes. For instance, Private Quarters Club in Fernandina Beach, Fla., and Lake Geneva, Wis., sell access to a three-bedroom luxury villa for 21 days a year for $79,000, plus an annual fee of $4,000.

Source: BusinessWeek Online, David Bogoslaw (07/26/07)

SOCAL 2Q OFFICE AND INDUSTRIAL VACANCY RATES LOW

SOCAL 2Q OFFICE AND INDUSTRIAL VACANCY RATES LOW
2nd quarter 2007 office and industrial vacancy rates for Southern California are mostly sunny, according to a recently reelased Grubb & Ellis report.
 

 In Los Angeles County, the office vacancy rate is holding at 9.5%, with just 2.3 million square feet of space under construction.  The industrial vacancy rate was 1.8% (on a base of just over one billion square feet), with only 3.7 million square feet under construction.  In “Central Los Angeles,” the rate was an ultra- tight 1.0%.
 

In Orange County, the 2nd quarter 2007 office vacancy rate was 9.0%.  However, it has been moving higher since the 3rd quarter of 2006.  With 2.6 million square feet of space under construction, people are a little nervous in the County.  The industrial vacancy rate was 3.7%, with nearly 0.7 million square feet of space under construction.
 

In the Riverside-San Bernardino area, the office vacancy rate rose to 9.3% during the second quarter 2007, after a run in the low 7% range.  Just over 4 million square feet of space is under construction, watch this market.  The area’s industrial vacancy rate was 4.8%, with 24.2 million square feet of space under construction.  There is still fairly good demand for space in the area.
 

 In San Diego County, the 2nd quarter office vacancy rate was 10.9%, and has been moving up since the 4th quarter of 2005 when it was 8.0%.  Even so, 3.1 million square feet of space was under construction.  The news on the industrial front was a little more reassuring, with a rate of 7.2%, although it has also been moving higher since the 3rd quarter of 2006.  Just over 2.0 million square feet is under construction in the County.
 

Info courtesy of Jack Kyser
Produced by the Los Angeles County Economic Development Corporation as a public service to the global community.
G&E reports: http://www.grubb-ellis.com/research/reports.aspx
 

Foreclosures Nip Commercial Lending

Foreclosures Nip Commercial Lending

 The commercial lending sector has become volatile because of the rise in residential foreclosures. FYI, residential mortgage foreclosures rose 55% during the first six months of this year. The foreclosure figures appeared in a recently issued report by RealtyTrac, and the impact of the subprime industry woes on the commercial lending markets appeared in a commentary from Jones Lang LaSalle.
RealtyTrac reported 925,986 foreclosure filings in the US during the first half of this year, up more than 55% from the first six months of 2006. Rick Sharga, RealtyTrac’s vice president of marketing told  GlobeSt.com that the residential foreclosure picture “will get worse before it gets better,” primarily because a large number of risky adjustable loans are coming due this fall.
“With underwriting standards getting higher, people who might have wanted to refinance their way out of those loans won’t be able to do that,” Sharga noted. “What we’re looking at right now is a pretty weak residential market, compared to what seems to be a relatively healthy commercial market,” Sharga tells GlobeSt.com. “The only connection I can see, which is a little bit of a stretch, is that there are pockets of Southern California where the foreclosure issues have wiped out [mortgage-related] businesses, and with those kinds of companies going under, it might put some pressure on the office space market.”
The Jones Lang LaSalle outlook reports that the “unrelenting flow of negative news” regarding the US housing market and subprime mortgages “has taken its toll on the US commercial mortgage market” in the form of rising spreads. “In contrast to the relative stability of AAA CMBS bond spreads over the last few months, AAA bonds have widened approximately 15 to 20 basis points this week,” Jones Lang LaSalle points out.
Some experts predict that spreads will widen further before volatility settles down. The JLL outlook explains that the cause of the volatility in the CMBS bond market is the “continuing fallout from the subprime residential mortgage market.”
Other factors connected with the subprime mortgage debacle include a weakening of demand from CDO buyers who represent an important segment of CMBS bond buyers. In addition, the CMBS market is still digesting “a backlog of aggressively underwritten loans originated prior to lenders’ tightening of credit underwriting standards,” JLL notes.
Citing the solid fundamentals in the commercial real estate markets, JLL emphasizes that “the underlying dynamic in spread widening and volatility in the CMBS market is the spillover of credit concern from the residential subprime mortgage market.” According to Sharga, the subprime market will continue to work out its problems for most of the remainder of this year, with the prospect of a return to more stability and a lower foreclosure rate possible some time next year.
“The whole lending industry is undergoing a fairly rigorous tightening of underwriting standards and a retrenchment of the subprime category, so you will see a weakness for a while,” Sharga says. “But once you get the risk profile normalized again, it will be a good market again.”
The 925,986 foreclosure filings that RealtyTrac reported included default notices, auction sale notices and bank repossessions on 573,397 properties nationwide. Nevada, Colorado and California posted the top foreclosure rates, with Nevada recording one foreclosure filing for every 40 households during the first half of 2007.
Colorado’s rate was one foreclosure filing for every 60 households and California’s was one for every 69 households. Other states with foreclosure rates among the top 10 included Michigan, Florida, Ohio, Georgia, Arizona, Connecticut and Indiana.
Info courtesy of Bob Howard
GlobeSt.com Commercial Real Estate News and Property Resource