Southern California Office Real Estate Blog

LOS ANGELES OFFICE PROPERTY SNAPSHOT – NOVEMBER 2009

November 4, 2009 on 12:39 am | In Fascinating Office Real Estate Information, Office Fodder, Statistics, Trends, Uncategorized, all |

LOS ANGELES OFFICE PROPERTY SNAPSHOT – NOVEMBER 2009

By Jodi Summers

Each quarter the UCLA Anderson Forecast reports the state of the economy and the state of real estate with clarity and accuracy. If what the Anderson School sages is correct, economic growth will soon begin again.

According to Anderson School Senior Economist David Shulman, “We forecast that real GDP will increase at 2.1% in the current quarter and 2.3% in the fourth quarter. For all of 2010, we forecast quarterly growth to average 2% with noticeable improvement at the end of the year.”

The downside for office is that the unemployment rate will be above 10% well into next year…that’s nationally. California is lagging behind the country, but will be buoyed by increased consumer confidence and ”an increased demand for California produced goods.”

This reflects in Los Angeles office space, where prices are down 77% from October 2007. Not only that, but the volume of office properties for sale in Los Angeles is up 45%, while the number of properties that have sold has halved.

Statewide, employment is forecast to contract -3.7% in 2009 and will barely grow at a 0.2% rate in 2010. The unemployment rate will grow to a high of 12.2% for 4th quarter 2009 and will average 11.6% for the year. Though the state economy will be growing by 2011, it will not produce enough jobs to get the unemployment rate below double digits until the end of that year.

Looking for some specific details? Would you like to be our client – we’ll take good care of you. Contact the SoCal Investment Group through Jodi Summers, Jodi@jodisummers.com.

http://www.clarusresource.com/

http://www.uclaforecast.com/contents/archive/2009/media_91609_1.asp

http://www.dqnews.com/Articles/2009/News/California/Southern-CA/RRSCA091013.aspx

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Property Values Rise, Bid-Ask Gap Narrows in 3Q

The value of commercial properties owned by institutional investors rose 4.4 percent in the third quarter, its first increase in more than a year, according to an index managed by the Massachusetts Institute of Technology Center for Real Estate.

The index is based on the value of property transactions in the NCREIF index, which is managed by the National Council of Real Estate Investment Fiduciaries. It also uses appraisal information for roughly 6,000 properties acquired on behalf of pension funds.

The pricing index is still 36.5 percent below its peak, reached in mid-2007 before credit markets went into turmoil. But David Geltner, director of research at MIT’s real estate center, said the recent results are “reflecting the first increase in market sentiment” since the peak.

MIT’s index also found a distinct narrowing in the gap between what sellers are asking and what prospective buyers are offering for properties. Prices that buyers were willing to pay in the third quarter rose 12 percent, after declining for eight consecutive quarters, while the prices owners were willing to accept dropped 2.5 percent, and were 30 percent below the peak reached in mid-2007.

The index further found that sales volume increased during the third quarter, its second consecutive quarterly jump.

“One quarter does not a trend make, and we are still well below normal trading volume,” Geltner said. “Nevertheless, this is the strongest sign of a bottom that we’ve had in two years.”

Comment by MIT — November 7, 2009 #
The Moody’s/Real Commercial Property Price Indices. In August, the CPPI posted a 3 percent drop and was down 40.6 percent from its peak reached in October 2007.

Comment by Moody's — November 7, 2009 #
Thanks for the great real estate blog. this is a very interesting topic

Comment by Homes listings — March 3, 2010 #