Southern California Office Real Estate Blog

THE HISTORY OF THE FINANCIAL BUBBLE

November 20, 2008 on 12:37 am | In Fascinating Information, Funny...Money, Historic Properties, Money, Statistics, Uncategorized |

THE HISTORY OF THE FINANCIAL BUBBLE

Allegedly, the first recorded speculative financial bubble occurred in the Netherlands in the 1630s when, according to Wikipedia, tulip contracts sold for 20 times the annual income of a skilled craftsman. When tulip prices came crashing down so did the economy, according to reports that have not been sufficiently documented for historians to conclude exactly what occurred.

sources:

http://www.flickr.com/photos/jimg944/2229214461/

http://www.inman.com/news/2008/10/23/dutch-toughen-downturn

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If I were a bank CEO or board member, I would today take off my toga, put down my grapes and goblet, and scramble on chubby legs to make loans.

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Boston Office Market Fundamentals Weaken

Vacancy rates are rising and asking rents are dropping in the Boston office market, according to Richards Barry Joyce & Partners, LLC. The vacancy rate in the greater Boston area has increased 30 basis points to 13.4% in Q4, while the average asking rent for Class-A space has dropped 4% to $39.34/sf, according to a report by the brokerage firm. Also, the amount of space that became available is exceeding the amount leased this quarter, which would mark the first time the market has had so-called negative absorption since 2005.

Comment by CRE News — January 5, 2009 #
Roughly $2.7 billion worth of commercial properties traded hands in February, up from about $800 million in January, according to the New York research firm, which monitors transactions of at least $5 million. Meanwhile, the ratio of new offerings to closed sales increased to about 5-to-1 in February from 4-to-1 in January, and slightly more than 2-to-1 in December.

The increased supply of offerings, as evidenced by the greater offerings-to-closed sales ratio, is exerting downward pressure on prices as the Moody’s/Real Commercial Property Price Indices, which are based on Real Capital data, registered a 5.5 percent decline in January, their largest monthly decline since 2000.

That downward pressure on prices “is likely to only worsen over the near term,” according to Real Capital.

It noted that an increasing number of sellers could be viewed as distressed because of their inability to get financing for properties that have maturing debt.

Real Capital said that $11 billion of the properties being offered are in or near trouble because of an upcoming mortgage maturity, default, foreclosure or bankruptcy by their ownership groups.

Comment by CRE News — April 1, 2009 #