Southern California Office Real Estate Blog

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

 by Jodi Summers

Just as you might expect, property-investment sales are way down. The numbers are in for all of 2008 and sales fell 68% from the previous year’s volume. The decline was particularly steep in Q4.

The $54.5 billion of commercial property-transactions that closed or went under contract last year were down from $170.4 billion in 2007, while the number of transactions dropped 54% to 846, according to the Commercial Real Estate Direct Property Sales Database, which tracks individual property sales of at least $10 million.

The $7.28 billion worth of deals in the fourth quarter was down 70% from the $29.42 billion of deals during the same period in 2007. This year’s fourth-quarter volume also was down 46% from the previous quarter, which was down just 16% from the $16.3 billion in the second quarter.

Full-year sales volumes were down from 2007 in every property type, with sector declines ranging from a high of 83% for hotels - $3.8 billion - to a low of 60% for multifamily - $8.38 billion - which was helped largely by the availability of debt financing from Fannie Mae and Freddie Mac.

Pundits predict that 2009 sales volume will increase 15% due largely to offerings from distressed sellers, particularly those who used floating-rate debt for acquisitions in early 2007 and 2006.

A continued stalled economy that is expected to cut tenant demand across all property types. Robert Bach, Grubb + Ellis’ chief economist, has predicted that the U.S. economy will lose another 2 million jobs in 2009, about the same amount lost in 2008, and will “dampen demand for all product types, resulting in negative absorption and increased vacancy.”

Info courtesy of

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=5720&sourcecode=1lntd009

LOS ANGELES IS A BETTER PLACE THAN PARIS TO BUY INVESTMENT REAL ESTATE

LOS ANGELES IS A BETTER PLACE THAN PARIS TO BUY INVESTMENT REAL ESTATE

Sacre bleu! Los Angeles is a better real estate…according to Forbes.com. In a recent top 10 article called World’s Best Places For Real Estate Buys, Ten cities investors will target in 2009 our beloved Los Angeles was #7 – after San Francisco and before Paris.

Washington D.C. topped the list this year, thanks to the proposed $1 trillion swell of government spending. As Forbes notes, “At present, D.C. has the lowest unemployment rate in the country–4.1%, compared to the 7.2% national average. With President Obama’s stimulus package recommending $1 trillion in new spending, it’s unlikely government jobs–and those they support–will be leaving the District anytime soon.”

Not many investors were looking at L.A. in 2008, as we were hammered by the subprime crisis and a massive volume of foreclosures. As we all know, our perceived property poverty curtailed spending and our whole local economy limped along. We were 19^th on the 2008 Forbes World’s Best Places For Real Estate Buys, so this 12-point rise is a huge boost for real estate morale.

“It’s all about perception,” notes a local investor. “If people perceive Los Angeles is a good value, then it becomes a good value, and prices grow strong.”

Good news for local property owners - sales surged 102%in the residential sector, according to Radar Logic, a derivatives firm, and Forbes notes that this wave “has that market hinting at a bottom.”

The 2009 Top 10 Best Places For Real Estate Buys

1. Washington, D.C.

2. London, U.K.

3. New York, N.Y.

4. Tokyo, Japan

5. Shanghai, China

6. San Francisco, Calif.

7. Los Angeles, Calif.

8. Paris, France

9. Houston, Texas

10. Singapore

Please note Forbes’ rankings come from the Association of Foreign Investors in Real Estate, a research association that tracks where member investors are finding the best opportunities around the world.

Get the whole story @ http.//www.forbes.com/2009/01/21/investment-obama-realestate-forbeslife-cx_mw_0121realestate.html?partner=alerts

http://mightyminnow.files.wordpress.com/2007/11/washington-dc.jpg

http://www.pointernet.pds.hu/touristinfo/free_wallpapers_2/France_Paris_Night.jpeg

LOS ANGELES HAS MORE PEOPLE THAN MICHIGAN

State Population Estimates

The Economic Data Global Express offers statistics from the California Department of Finance (DoF) report on 2008 population for the state and its counties and the U.S. Census Bureau estimates as of July 1, 2008 for the states. Comparisons of the two are interesting.

The DoF reported that California added 435,905 residents between 2007 and 2008, pushing the July 1 population count to 38,148,493 persons. The Census Bureau estimated that the state added 379,132 residents over that time frame and placed the July 1, 2008 count at 36,756,666 persons.

If it were a separate state, Los Angeles County (July 1, 2008 estimate of 10,347,437 according to DoF) would rank 8th in the nation, ahead of Michigan (July 1, 2008 population 10,003,422). (Jack Kyser)

PR: http://www.census.gov/

http://laedc.org/eedge/index.html#2

ORANGE COUNTY OFFICE LEASING OUTLOOK IS NOT SUNNY

ORANGE COUNTY OFFICE LEASING OUTLOOK IS NOT SUNNY

The average asking rate for office space in Orange County sank to $2.47 per square foot in the fourth quarter after peaking at $2.77 in 2007 as Orange County posted its second straight year of negative net absorption. The drop in the asking rate reflects a continuing downturn in the fortunes of the county’s office market, which began to weaken when subprime mortgage companies vacated huge blocks of space in early 2007. Like office markets throughout the country, it has since had to battle the US recession and the financial industry meltdown.

Year-end figures from Voit Commercial Brokerage show that the vacancy rate finished the year at 15.18%, an increase over last year’s fourth-quarter rate of 12.27%. Jerry Holdner, vice president of market research for Voit, notes that the 15.18% vacancy rate today is noticeably less than the 17.2% vacancy rate in the first quarter of 2002, which was the last time a large amount of new construction was added to the market.

The total amount of space available in the county’s roughly 108-million-square-foot office market, including direct and sublease space, is at 21.83% compared with last year’s 17.07%. The increase in direct and available space is a result of the weakening market combined with new construction totaling more than seven million square feet that developers have added over the past three years.

Pundits expect that lease rates to remain at current levels for the short run, with concessions increasing in the forms of free rent, reduced parking fees, relocation funds and tenant improvement allowances. In addition to these concessions, some landlords are offering the furniture left behind by failed financial services companies that have vacated their spaces.

Go to http://www.globest.com/news/1321_1321/orangecounty/176149-1.html for the whole story.

Pix:

http://images.google.com/imgres?imgurl=http://farm3.static.flickr.com/2029/1578659759_5b7c458373.jpg%3Fv%3D1192723084&imgrefurl=http://flickr.com/photos/37167805%40N00/1578659759&usg=__2wl2QqbWMAVru8FaD-DOkEV9_aY=&h=333&w=500&sz=145&hl=en&start=42&um=1&tbnid=GHq6zNrPo-3ahM:&tbnh=87&tbnw=130&prev=/images%3Fq%3DORANGE%2BCOUNTY%2Bcalifornia%2BOFFICE%2Bbuilding%26start%3D36%26ndsp%3D18%26um%3D1%26hl%3Den%26rls%3Dcom.microsoft:*:IE-SearchBox%26rlz%3D1I7GFRD%26sa%3DN

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

Now that we’re living in a green age, we know that buildings are responsible for 40% of emissions - and the upside of this statistics is that it presents an enormous opportunity for builders. Even though the construction sector continues to struggle, sustainable building is growing at a 30% annual rate, hands down the fastest-growing sector in the building industry, noted David Gottfried, CEO of Berkeley, CA-based Regenerative Ventures and a founder of the U.S. Green Building Council. “The growth in this world right now is green.”

The latest reports confirm this trend, as California total nonresidential construction activity continued to slide in October with permit values declining by -35.5% to $1.3 billion (year-over-year), according to the Construction Industry Research Board. During the ten-month period of 2008, nonresidential permit values totaled $16.9 billion – a decline of -10.2% from the comparable period in 2007.

While commercial sectors such as industrial and office are greening to cut costs and attract hipper clients, retailers have an added benefit. Retailers are strongly adopting green commercial, because it results in net profits, observed Joseph Feldman, managing director and senior research analyst Telsey Advisory Group, noting that the pioneering ‘green’ Wal-Mart in Lawrence, KS, posted higher-than-average sales for the chain. Target has started placing motion sensors in their stores that will dim lights in unoccupied aisles. The Gap and the Limited also are making efforts at energy efficiency, with the latter replacing roofs at three distribution centers to make them more energy efficient.

Even comparatively small efforts, such as Lowes’ decision to replace all of the lights in its stores with energy-efficient models, add up over time. “It’s relatively easy to become green,” Feldman said, noting that “green” retailers “mostly are the leaders in their spaces.” But the extra interest could be a double-edged sword.

That is supported by the growth of the USGBC, and the soaring interest in LEED certification or equivalents worldwide, Gottfried said. LEED is now developing a specific designation for retail; currently retail stores and shopping center developers can apply under the new construction or existing building standards. The standard will be up for member ballot this month, with a market launch expected in spring 2009.

The interest in standards also is expanding worldwide, with 13 countries–including India, Mexico, Brazil, Japan and Australia–now having green building councils. Another 50 nations are creating councils.

“It’s a United Nations of councils,” Gottfried said. Even the Chinese government is trying to impose more green regulations on its manufacturers, Feldman reported.

Info courtesy of

http://www.globest.com/news/1296_1296/insider/175575-1.html

http://laedc.org/eedge/index.html#4

WAYS THE OBAMA ADMINISTRATION WILL BUILD A GREEN ECONOMIC SECTOR

WAYS THE OBAMA ADMINISTRATION WILL BUILD A GREEN ECONOMIC SECTOR

Allow us to share with you a collection of green initiatives proposed by President-elect Barack Obama. The quotes come from the President-elect’s website @

www.barackobama.com and information has yet to be offered as to how these initiatives will be implemented and funded. Nonetheless, we like to concept.

BUILDING EFFICIENCY

* Weatherize 1 million homes annually. “Obama will make a national commitment to weatherize at least one million low-income homes each year for the next decade, which can reduce energy usage across the economy and help moderate energy prices for all.”

* Set building efficiency goals. “Obama will establish a goal of making all new buildings carbon neutral, or produce zero emissions, by 2030. He’ll also establish a national goal of improving new building efficiency by 50 percent and existing building efficiency by 25 percent over the next decade to help us meet the 2030 goal.”

* Establish a grant program for early adopters. “Obama will create a competitive grant program to award those states and localities that take the first steps in implementing new building codes that prioritize energy efficiency, and provide a federal match for those states with leading-edge public benefits funds that support energy efficiency retrofits of existing buildings.”

* Expand federal efficiency grants. “Obama will also expand federal grant programs to help states and localities build more efficient public buildings, including libraries, schools, and police stations that adopt aggressive green building provisions like those provided by the Leadership in Energy and Environmental Design (LEED) program of the U.S. Green Buildings Council.”

UTILITIES AND ELECTRIC GRID

* Flip incentives to energy utilities. “An Obama administration will ‘flip’ incentives to utility companies by requiring states to conduct proceedings to implement incentive changes and offering them targeted technical assistance. These measures will benefit utilities for improving energy efficiency, rather than just from supporting higher energy consumption. This ‘regulatory equity’ starts with the decoupling of profits from increased energy usage, which will incentivize utilities to partner with consumers and the federal and state governments to reduce monthly energy bills for families and businesses.”

APPLIANCE/PRODUCT EFFICIENCY

* Overhaul federal efficiency standards. “The current Department of Energy has missed 34 deadlines for setting updated appliance efficiency standards, which has cost American consumers millions of dollars in unrealized energy savings. Obama will overhaul this process for appliances and provide more resources to his Department of Energy so it implements regular updates for efficiency standards. He will also work with Congress to ensure that it continues to play a key role in improving our national efficiency codes.”

* Phase out incandescents. “Obama supports the effort led by Senate Energy and Natural Resources Chairman Jeff Bingaman (D-NM) to update federal lighting efficiency standards to ensure that new lighting technologies are phased into the marketplace. As president, Obama will implement legislation that phases out traditional incandescent light bulbs by 2014.”

RENEWABLE ENERGY

* Increase share of government electricity from renewable sources. “As president, Obama will ensure that at least 30 percent of the federal government’s electricity comes from renewable sources by 2020.”

* Require 25% of electricity to come from renewable sources by 2025. “Obama will establish a 25 percent federal Renewable Portfolio Standard (RPS) to require that 25 percent of electricity consumed in the U.S. is derived from clean, sustainable energy sources, like solar, wind, and geothermal by 2025.”

COMMUNITY DEVELOPMENT

* Build neighborhoods around alternative transportation. “Obama believes that we must devote substantial resources to repairing our roads and bridges. He also believes that we must devote significantly more attention to investments that will make it easier for us to walk, bicycle, and access other transportation alternatives. Obama is committed to reforming the federal transportation funding and leveling employer incentives for driving and public transit.”

CARBON EMISSIONS

* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80% by 2050. “Obama’s cap-and-trade policy will require all pollution credits to be auctioned, and proceeds will go to investments in a clean energy future, habitat protections, and rebates and other transition relief for families.”

GREEN JOBS

* Invest in clean energy. “The Obama-Biden comprehensive New Energy for America plan will help create 5 million new jobs by strategically investing $150 billion over the next 10 years to catalyze private efforts to build a clean energy future.”

Info courtesy of

http://www.barackobama.com

http://www.ecohomemagazine.com/news/obama-wins-green-movement-wins.aspx