Posts Tagged ‘brokerage’
Tuesday, July 27th, 2010
Locally based Voit Real Estate Services’ CEO Robert Voit exclusively tells GlobeSt.com that the company is augmenting its leadership structure to better serve its clients “during these challenging, but opportunistic times.”
Voit points out that “the early success the company has achieved with its asset services wins on the two 12-asset distressed portfolios,” which GlobeSt.com exclusively reported on at the time, “has given Voit a bit of momentum in the distressed arena,” he says. The first of the two was “given to us by a national bank in the greater Sacramento area; and the second given by the Lehman subsidiary LAMCO LLC, which spans five western states; has given Voit a bit of momentum in the distressed arena,” he adds.
And although brokerage volume at the company is up 30% over last year, Voit points out that although those are encouraging numbers, “we’re just getting started.” In order to “enhance that growth momentum,” Voit is reorganizing its leadership team. Robert Voit and his partner, Brian Malliet, are turning over the day-to-day operations to Jeff Doan, and a new member of the team, Bob Freund.
Freund joins Voit as its COO, leading asset services and brokerage services. Freund served with Colliers MacCaulay Nicolls for more than eight years, most recently as vice president of business integration for North America where he led acquisition integration and initiated strategic alliances and partnerships. Prior to that, he was with Ernst & Young.
Jeff Doan, who joined Voit in 2009 as director of operations has been promoted to chief administration officer and CFO. In this role, he will handle the day-to-day operations of the property management, accounting and administrative side of Voit’s business operations.
“With this change, we believe we can offer accelerated decision-making and expanded support for our people and their clients,” Voit says.
As a part of this leadership strengthening, Malliet who in addition to being Mr. Voit’s partner had previously served in the COO position, will be elevated to the role of chief investment officer. In this role, he will focus on strategic relationships with special servers and receivers, brokerage teams and client business development where his skills are most needed, according to Voit. Both Voit and Malliet will continue to work on “strategic alliances, key new broker hiring, and addressing revenue-generation opportunities and acquisitions.” Voit adds: “As we push for more efficiency and faster execution, we are also determined to succeed and grow.”
Source: www.globest.com
Tags: brokerage, business, growth, manage, office, property, rate, Real, Real Estate, Report, services, strategic, time, voit
Posted in Real Estate News | 2 Comments »
Thursday, May 20th, 2010
The end of first quarter brought a sense of optimism in the high-rise office market.
The end of first quarter brought a sense of optimism in the high-rise office market.
By most accounts, tenants’ attitudes are more positive than in 2009, yet still reserved. Larger tenants are adapting to the economy by evaluating space they already have, while smaller tenants are looking to expand or lock in lower lease rates.
By no means are we back on track, but the feeling of many high-rise office tenants is that the worst is behind them.
So how can this renewed sense of optimism be true when most first quarter office market reports from the major brokerage houses are reporting negative absorption, lower asking rates and higher unemployment?
It is accurate to say rates are still depressed and tenants are shrinking. The average asking lease rate for high-rise office space decreased to $2.37 per square foot from $2.48 and absorption was negative 399,876 square feet during the first quarter.
Unemployment increased slightly to 9.7% from 9.6% in the first quarter.
On the Hunt
The still shaky economy is pushing companies to look at their office space as a place to save money—which means that some are on the hunt for new space.
When evaluating office space needs, large national organizations with multiple offices typically look to consolidate into surplus space within their leased or owned portfolio. This recently happened in Anaheim with Hewlett-Packard Co. relocating to office space in Cerritos that was not fully used.
If consolidation is not an option, larger tenants typically will downsize. When this occurs, it is often easier for the tenant to relocate to a building that has been modified to fit its needs than to live through construction. This forces the tenant to enter the market and give other landlords the opportunity to compete for its business. Although the reduction in size contributes to negative absorption, the tenant’s relocation leads to increased activity and opportunity in the market.
On the other end of the spectrum, Orange County is filled with entrepreneurial businesses. These tenants have endured turbulent times, but they now are seeing more stability.
In the past two years, tenants were choosing flexibility with shorter leases instead of locking in low lease rates. The result was an increase in shorter lease terms. Today, as those short-term leases expire, tenants are more willing to make longer commitments in the form of three-to five-year leases. And landlords are eager to accommodate them with creative concessions.
As the economy continues to strengthen, tenants will continue to make office space plans that are tailored less toward survival and geared more toward growth. Landlords will try to secure tenants and structure lease terms that will stagger lease expirations and position themselves for tenant growth.
OC’s office tenant base is adaptive and showing signs of confidence. Only after absorption and growth occur will the market report reflect positive results…Click HERE to view the full article.
Source: www.ocbj.com
Tags: brokerage, lease, office, office space, orange county, rate, Real Estate, save, Tenant
Posted in Real Estate News | 1 Comment »
Friday, May 7th, 2010
When developers started work on nearly 2 million square feet of high-rise office space in Irvine about four years ago, the thinking was they would need to charge top dollar rents to cover big construction costs.
Now, office space in some of Irvine’s newest buildings can be had for about half as much as real estate watchers had expected and landlords had hoped for.
Perhaps most notably, at Irvine Company’s 20 and 40 Pacifica Irvine Spectrum towers, asking monthly rates as low as $2.05 per square foot are being advertised on the Newport Beach-based company’s Web site.
Some upgraded space at the Pacifica towers is being offered at a higher $2.75 per square foot rate. But a majority of the available space runs in the $2.15 to $2.40 per square foot range.
That’s in line with the rest of the Irvine Spectrum, where the average office rent—excluding flex-tech space—is about $2.35 per square foot, according to data from Voit Real Estate Services.
When the two towers were being built along the San Diego (I-405) Freeway, Irvine Co. advertised monthly lease rates of more than $4 per square foot for much of the buildings.
Most of the Irvine buildings put up in recent years were expected to see rents of $3.50 to $4 a square foot, making them among the most expensive in the county.
Now the newest office space can be had for rates roughly on par with other buildings in town.
The new owners of Irvine’s 2050 Main Street tower, a partnership including Newport Beach-based Greenlaw Partners, are asking for monthly rents of about $2.67 per square foot, according to data from real estate market tracker CoStar Group Inc.
That’s nearly a dollar per square foot below what the building’s prior owners, developer Opus West Corp. of Phoenix, had been asking about a year ago for space at the 314,000-square-foot building before filing for bankruptcy.
Houston-based Hines Interests LP’s nearby 2211 Michelson tower is nearly full. But tenants interested in subleasing space at the 12-story building can do so for a discounted $2.25 per square foot or so, according to CoStar.
Average office rents in OC were about $2.10 per square foot at the end of the first quarter, down 7 cents from the prior quarter and off by 28 cents, or nearly 12%, from a year earlier, according to brokerage UGL Equis.
Around John Wayne Airport, the best office space—totaling about 24 million square feet—had an average monthly asking rent of about $2.38 per square foot.
Across the county, asking office rents are off nearly 25% from their 2007 high of $2.79 per square foot, according to UGL Equis.
Even with signs of economic improvement, the brokerage predicts rents to fall through 2010.
“When the current recession began, rising vacancy preceded declining rents by at least six months,” Michael Gold, a UGL Equis senior research analyst, said. “Similarly, as the economy improves and space is absorbed, rental rate growth will again lag a tightening space.”
The rates on most signed leases are still much lower than landlords’ asking rents, said Royce Sharf, executive vice president for the Irvine office of brokerage Studley Inc.
In the case of Irvine Co., its advertised rates at the Pacifica buildings might be a reflection that OC’s dominant landlord is serious about making deals at reasonable prices, he said.
“It wouldn’t surprise me if Irvine Co., to their credit, decided to narrow the gap between the bid and ask prices,” Sharf said. “They don’t make any decisions without thinking hard about it.”
Part of the declining rents at the newer towers is due to changing ownership. Two high-rises have changed owners in the past year, while Hines’ 2211 Michelson is up for sale with initial bids due this month.
2211 Michelson would join Maguire Property Inc.’s 3161 Michelson and 2050 Main Street as newly built towers that have traded hands during the downturn…Click HERE to view the full article.
Source: www.ocbj.com
Tags: available, brokerage, irvine, lease, newport beach, office, office space, orange county, rate, Real Estate, real estate market, rent, San Diego, search, services, Tenant, voit
Posted in Real Estate News | 3 Comments »
Tuesday, March 9th, 2010
Office Leases Pick Up as Owners Get Aggressive on Rents
San Francisco-based Shorenstein Pro-perties LLC completed the largest office acquisition in Orange County for 2008 when it paid nearly $211 million for Irvine’s Main Plaza complex near John Wayne Airport—more than twice the price paid for any other local office complex that year.
Now the owner of the twin 12-story, Main Street building—a national investor that’s shown no signs of being in financial distress—is making news again in OC, with one of the more hard-hitting leases seen for a high-end office in Irvine.
SullivanCurtisMonroe Insurance Ser-vices LLC recently moved its headquarters to Shorenstein’s 1920 Main St. building, leasing 25,237 square feet of space. The insurance brokerage, which relocated from an older building down the street, also got its name on top of the building.
The seven-year lease is for $4.4 million, which puts monthly rents at a bargain-basement price of about $2.08 per square foot.
The lease is one of the most aggressive transactions to take place in the airport area in the past 18 months, according to Jake Stickel, a broker with the Newport Beach office of CB Richard Ellis Group Inc.
For similar higher-end offices around John Wayne airport, monthly asking rents have been running about $2.50 per square foot. Near the peak of the market, those rents were more than $3 per square foot.
“The rental rate the tenant was able to lock in at this class A property is comparable to the rent they were paying under their previous lease in a class B building,” said Stickel, who represented the insurance com-pany along with CB Richard Ellis Group Inc.’ Carol Trapani and Tasha Monroe.
Trend
Expect to see more eye-opening leases as existing and new property owners in OC look to weather the ongoing slow office market, tenant brokers said.
Local owners with strong balance sheets, including Newport Beach’s Irvine Company—and presumably Shorenstein—would rather fill up their buildings now at below-market rates than continue seeing their buildings remain empty during what’s expected to be a slow recovery for the local market.
Meanwhile, owners that bought distressed properties in the last year at steep discounts are hoping to leverage their cash positions to make deals that other financially-strapped landlords can’t afford.
“It’s a tenants’ market, as everyone knows,” said John Tumminello, principal for Newport Beach-based investor Greenlaw Partners.
Late last year, the company partnered with San Francisco-based Westbrook Partners and Chicago’s Walton Street Capital LLC to buy Irvine’s 2050 Main St. office tower.
Source: www.ocbj.com
Tags: brokerage, building, buy, class a, class b, deals, irvine, landlord, lease, market, newport beach, news, orange county, orange county office, owner, property, rate, rent, space, Tenant, transaction
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Wednesday, February 17th, 2010
Kurt Strasmann, Managing Director of Brokerage Services at Voit Real Estate Services, is speaking on the Orange County Industrial Real Estate Market at the IREM (Institute of Real Estate Managers) Conference today.
Here is an overview of what he will be discussing:
1. Vacancy is at 6% currently and we expect vacancy to move up to around 6.75 to 7% by year’s end. Starting in 2011 we expect the vacancy to slowly start moving down again. To give you a perspective the low in vacancy was in the 3rd quarter of 2007 at 3%. Right now the average down time for a vacant building is approx. 12.2 months
2. Availability rate – includes direct vacancy and all sublease availability and is a good indicator of where vacancy is headed. Right now it is at 10.85%. We expect it to hold steady, maybe inch up to 11% and slowly come down by year’s end. Again the low was in 3rd quarter of 2006 at 4.35%
3. Net Absorption: 2009 was an extremely difficult year with approx. 5 million sqft of negative absorption. We see a negative absorption in 2010 by approx. another 1 million sqft. To give you a perspective from 2005- 08 we had an average of 1.25 million sqft. of positive absorption. The high was in 2004 with over 5.5 million.
4. User asking lease rates: Currently the average asking lease rate is $.59 NNN down from the high of $.80 NNN in Jan of 2008- 2 years ago. We see another 5 to 10% maximum downward pressure on rents through the end of the year. Keep in mind these are asking rents, thus effective lease rates are approx. 10-15% off these numbers.
5. User asking sale prices: Currently the average asking sales price is $101 per sqft down from $150 per sqft in Jan of 2008. About 33% decline. We expect to see another 10% decrease in sale prices unless an onslaught of distressed assets hit the market where we potentially another 20% reductions. Again these are asking prices. Sales have been few and far between and generally are far below the average asking price.
6. Investment Market: For stabilized in place market rents on quality assets we see cap rates at 7.5%. For Class B and C product we see cap rates in the 9-10% range. By comparison in 2006 and early 2007 cap rates got down to the 5.5 % range.
7. Future Activity: Activity has increased and it is becoming steady. Private companies and larger corporations are finally making decisions and get deals done vs. last year at this time when nothing was being done. We see this trend slowly increasing as people get used to conducting business in this environment. We are still at least a year away from having any pressure for price appreciation. –Simple too much supply.
8. Distressed Assets: On the industrial side, not much to look at this point. We do see this picking up in the second half of the year. Interesting to note when quality assets are priced aggressively there is no shortage of buyers. Multiple buyers emerge at the right price.
9. Best Opportunities:
a. Users looking to buy or lease product. We are near the bottom and 2010 should be near the low point. If a quality asset comes up that is priced to the market, there is great financing and with no new construction in place – very limited downside. Need to hold 5-7 years
b. Leasing – great time to move up in quality of product and lock in great lease rates for 5 years.
c. Investors- if you can buy at market rents- terrific long term opportunities. We just have not seen much available for sale. Watch out for the class B and C product because vacancy will be very tough.
d. Note Sales- we have seen a few opportunities here and hope note sales will emerge more on the industrial side. The problem is finding a lender that has written off the asset and has priced the note for a market sale.
10. Key indicators to watch:
a. Job Growth: 2009 was negative in OC of 49k 2010 is predicted to have 1,500 positive job growth 2011 should start to see better numbers.
b. Consumer confidence: slowly moving up from the lows of Jan 2009.
c. Retail Sales: low was in Nov 2008 and it has slowly moved up.
d. Port Traffic: LB/LA numbers are still off by 30% but they have increased since the lows of Jan 2009.
Forecast: 2010 will be better than 2009 for everyone. Slow and steady recovery – kind of an L shape recovery. All Four indicators are moving in the right direction, but at very slow pace.
Tags: brokerage, building, business, buy, class b, deals, estate, forecast, Industrial, industrial real estate, manage, market, orange county, prices, rate, Real, Real Estate, real estate market, recovery, rent, sale, services, sublease, time, vacancy, voit
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Friday, January 29th, 2010
One of the most overlooked but valuable business activities is strategic planning.
That may sound counter-intuitive since most would agree that careful planning of any complicated activity would yield better results than a reactive, haphazard course of action.
Why is it then, that so many of us approach our daily business activities as a never-ending reaction to our customers and our market conditions as they exist in the moment? There is no one answer, but rather a long list of reasons that usually revolve around time.
In difficult times like these, most of us tend to think short term. Many businesses are in survival mode and their thinking is geared toward just staying in business. The idea of thinking strategically about five years or even one year from now just doesn’t seem important, even though at some level, we all know that it is.
So, what is the value of developing a one, three and five year strategic plan when we are currently in the midst of an economic downturn?
Answer: paradoxically, it may be the one thing that will ensure survival because it makes us stop and think about how we do business, how our competitors do business and whether or not our actions support defined goals and objectives that increase our chance for success.
When we think strategically the creative and competitive juices begin to flow again. We begin to look at our businesses once again as paths to success rather than means of survival. We go back on offense and find ourselves with new ideas, new energy and new ways to make money.
There’s another paradox in the mix as well. I train commercial real estate professionals for a living. Now, most of us know that selling and leasing commercial property today is a difficult thing to do. Demand has lagged supply to the point of record vacancies and the value of commercial real estate has dropped accordingly, and in no small way. Hitting the streets to find new deals every day can be quite difficult, as you might imagine. Those I coach come to me a bit beat up at times, and my advice to them is to think to the future.
Don’t measure success by what “opportunities” you found today, but by what relationships and opportunities you build for tomorrow.
With year end fast approaching, now is the time to start business planning for 2010 and beyond and taking a strategic look at the strengths, weaknesses, opportunities and threats that impact your business. This will enable you to formulate a powerful business plan for success in 2010 as the economy climbs out of recession and give you the best shot of emerging ahead of the competition.
There are many facets to successful business planning, real estate being a very significant yet far too often overlooked one. With real estate being a business’s second largest overhead after payroll, the importance of strategic real estate planning can’t be overlooked. This is particularly the case considering the current commercial real estate climate and the multitude of opportunities that exist for companies to realign their corporate real estate with their business plan on the most cost-effective terms we’ve seen for years.
Unfortunately, most executives ignore their real estate until they are forced to address it. This, of course, is too late and usually results in rushed decision making that creates risk and unnecessary costs for a business, an inefficient use of company time and missed opportunities to actually leverage your real estate to springboard corporate growth rather than drag it down.
Stefan Rogers of Voit’s Commercial Tenant Solutions team recently wrote a great article on the importance of strategic real estate planning. You can read it HERE and contact him at 949.263.5362 for advice on how to create an effective real estate strategy for your business.
Russ Johnson of RJ Consulting, Inc, is a training and marketing consultant to Voit Real Estate Services. He began his commercial real estate career in 1977. For 26 years he managed commercial real estate brokerage operations and has been involved in thousands of lease and sale transactions through all phases of the real estate cycle.
Tags: brokerage, business, commercial, corporate, cost, deals, economic, economy, estate, growth, lease, manage, market, money, overhead, planning, professional, property, Real, Real Estate, recession, rent, risk, rogers, russ johnson, sale, sell, services, solutions, strategic, Tenant, time, transaction, value, voit
Posted in Corporate Real Estate Strategies | 1 Comment »
Thursday, January 14th, 2010
“The recession is over, and things aren’t great yet,” said Joseph Harbert, COO at Cushman & Wakefield, summing up the US and local economic picture and commercial real estate fundamentals at a media briefing Tuesday. Yet reports from both C&W and CB Richard Ellis, the latter–released Wednesday–said that in New York as well as nationwide, the market is turning a corner toward a gradual recovery.
“It won’t be a V-shaped recovery; it’ll be more like an inverted salad bowl,” Harbert quipped. Similarly, Matt Van Buren, executive managing director for CBRE’s New York tri-state region, said at his company’s Wednesday morning forecast breakfast, “We don’t think there will be an extreme turnaround in 2010, but it will look more like the better, second half of 2009 than the first half.” He noted that as “a canary in the employment coalmine,” temporary jobs grew in the second half of the year after declining in the first six months.
Wednesday’s report from CBRE Econometric Advisors says the office vacancy rate nationally increased by 20 basis points to 16.3% at the end of ’09. It marked the ninth consecutive quarterly rise, but CBRE-EA says the trend of severe increases “appears to be abating,” adding that some markets have approached their cyclical peaks. In Manhattan, Q4 vacancy ticked downward to 11.1% in December, marking the second consecutive monthly decline, according to C&W.
Harbert said the vacancy rate could still go back up, but won’t rise beyond the 12.5% reached during the 2001-2002 recession. “The wholesale dumping of space is over, and at some point we’re going back to realizing we live in a space-constrained city,” he said.
Van Buren, who noted that there was actually more negative absorption of office space in the previous recession, predicted that the availability rate would peak at 14% to 15% this time around. He said that even as asking rents continue to inch downward, initial taking rents as a percentage of asking rates have started to climb again to 83% after bottoming out in July at 76%.
“Business cycles come and go,” said Stephen Siegel, CBRE’s chairman of global brokerage, who also presented at Wednesday’s New York breakfast. “This one had one of the most precipitous drops,” but accordingly will go back up “like a shooting star.” When the recovery does begin, he added, it will be from a higher starting point than the troughs reached in the early 1990s.
Nationally, CBRE-EA said the industrial availability rate increased 40 bps to 13.9% in Q4, marking the ninth consecutive quarter of rising availability. While 43 of 60 markets measured by CBRE-EA showed rising availability during the quarter, that was “considerably fewer” than in Q3, when 56 markets reported higher availabilities…Click HERE to view the full article.
Source: www.GlobeSt.com
Tags: brokerage, business, commercial, economic, employment, estate, executive, forecast, fundamentals, Industrial, jobs, lease, market, office, office space, quarterly, rate, Real, Real Estate, recession, recovery, rent, Report, sale, space, time, vacancy
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Thursday, November 19th, 2009
Lower Cargo Shipments Changing Demand for Warehouse Space Across the Southland
Shipments at the ports of Long Beach and Los Angeles—by far the busiest ports in the U.S.—are down nearly 20% from a year ago.
Since cargo from those ports feeds much of the demand for industrial space across Southern California, there has been a mirrored drop in many Southland warehouses.
While Los Angeles and Inland Empire industrial buildings are directly connected to the ports, Orange County’s industrial space—while also seeing a drop—may not be quite as interlinked.
Monthly rents at OC’s industrial buildings are down roughly 20% in the past year, with vacancies rising at an even higher rate to 6%.
In comparison, lease rates in the Inland Empire are off about 29% from a year ago, and vacancy rates have inched up about 3% in the past year to 15%, according to Colliers International data.
And Los Angeles’ industrial vacancy rate has nearly doubled in the past year, although its vacancy rate still is less than OC’s.
Nearly half of OC’s industrial space—which makes up about 250 million square feet of space—consists of smaller buildings less than 40,000 square feet.
Those buildings in general aren’t suited for handling high levels of cargo from the ports, according to local brokerage officials.
“Our (industrial) buildings are generally not great distribution buildings,” said Clyde Stauff, senior vice president for the Irvine office of Colliers.
In addition to being smaller, OC industrial buildings tend to be older, and they often are hybrids of industrial and office space. That stands in contrast to the mega-size buildings that dominate the landscape of the Inland Empire and also are prevalent in parts of Los Angeles County, said Stauff.
Nearly a third of the Inland Empire’s industrial space, which totals about 450 million square feet, consists of buildings 350,000 square feet or larger.
OC, in contrast, only counts a total of 54 industrial buildings that are larger than 300,000 square feet. As a result, the area is often an afterthought for big warehouse and distribution users.
“I don’t think we’ve seen that much impact” from the slowdown at the ports, said Stauff, who’s been involved in some of OC’s largest industrial deals in the past year…Click HERE to view the full article.
Source: Orange County Business Journal
Tags: brokerage, building, business, deals, Industrial, industrial space, industry, inland empire, lease, office, office space, orange county, rate, rent, space, vacancy
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Monday, October 19th, 2009
Third quarter saw rising vacancy, falling rents
Orange County’s office market probably hasn’t hit rock bottom yet, but industry officials think that day could be getting closer.
The county’s office market, which totals about 100 million square feet of space, ended the third quarter in much the same way nearly every quarter here has ended in the past two years—with declining rents and rising levels of empty space.
Vacancy rates here are now close to 17%, up a little less than 1% in the past three months, based on a polling of local brokerage data.
Similarly, monthly lease rates fell another 8 cents in the past quarter, or about 3.5%, according to brokers. Landlord’s asking rents are down about 17% from a year ago.
Deals being made now are at terms close to what was seen five or more years ago, according to brokers.
The good news for landlords is that the downward slide is getting less steep, particularly in terms of vacancy rates, said Kurt Strasmann, managing director for Voit Real Estate Services’ Anaheim Metro office.
“We don’t see it getting much worse in 2010. It should be a stabilization year,” Strasmann said.
But there’s still some more opportunity for cost-conscious tenants to save on lease deals. Voit’s projecting rents here to fall another 10% to 15% by early next year.
Even though some economists predict that the recession may have technically ended, the office market here won’t see any effects from that in the near term.
The commercial real estate market’s a lagging indicator for the economy, typically running about nine months behind the economy as a whole, notes Jeff Osborn, managing director for the Anaheim office of CB Richard Ellis Group Inc. and head of the company’s office division in Southern California.
“There are signs of overall economic improvement, but we don’t see that the fundamentals of real estate are improving yet,” said Jeff Moore, senior managing director of OC operations for CB Richard Ellis.
CB Richard Ellis’ brokers are seeing an increase in activity, although that hasn’t necessarily translated into more deals, Moore said.
“It’s not doom and gloom for brokers. They’re cautiously optimistic,” Moore said. “They feel there’s a better day coming.”..Click HERE to view the full article.
Source: Orange County Business Journal
Tags: brokerage, business, commercial, cost, deals, economic, economy, estate, fundamentals, industry, landlord, lease, market, news, office, opportunity, orange county, orange county office, rate, Real, Real Estate, real estate market, recession, rent, save, services, space, Tenant, vacancy, voit
Posted in Real Estate News | 1 Comment »
Wednesday, October 14th, 2009
San Diego County net office absorption has improved, while industrial/research and development absorption are heading the opposite way, according to a real estate brokerage.
Office
“The office market is facing challenges as the national recession continues,” Voit Real Estate Services reported.
“The primary concerns are as follows: increasing vacancy, tenant delinquencies, scarce financing, economic uncertainty and volatility, and the gap between ‘ask’ and ‘bid’ pricing between buyers and sellers,” the report stated.
Office property sales have been in short supply, but one sale was particularly notable during the quarter.
That was the purchase of a three-building, 164,091-square-foot bioscience complex at 3030 Science Park Road in Torrey Pines for $115.65 million.
The buyer was a partnership of Senior Housing Properties Trust of Newton, Mass.
On the leasing side, a Procopio Cory Hargreaves & Savitch lease of more than 102,000 square feet in the Golden Eagle Plaza building at 525 B St. in August from Hines helped push the countywide net absorption to a positive 346,030 square feet for the third quarter of 2009 and 653,537 square feet of positive absorption for the year.
About 600,000 square feet of office space is still under construction, but this most likely will diminish, as the slow economy impacts new starts.
The Voit report said direct and sublease space combined for an office vacancy of 16.2 percent, up from 14.3 percent in the third quarter of last year.
But that doesn’t tell the whole story.
Direct and sublease space being marketed translated to a 20.27 percent availability — more than one-fifth of office space overall.
Some markets were worse than others at least in terms of percentages.
Downtown San Diego checked in with a 14.14 percent vacancy while Governor Park was 40.4 percent empty as of the end of the third quarter.
Downtown had more actual square footage vacant — 1.79 million square feet versus 347,242 for Governor Park.
The average asking office lease rate countywide in the third quarter was $2.39 — a 12.8 percent decrease over the third quarter of 2008.
The highest rates are in the North City market, where rates are averaging $2.70 — markedly lower than 2.5 years ago when $4 was the going rate for Del Mar Heights.
Some brokers said a rebound in the office market is years away.
Voit suggested the market may be finding its floor, but the recovery won’t be without pain.
“Lease rates are expected to remain soft for the near future, and concessions should continue to increase in the forms of free rent, reduced parking fees, relocation funds and tenant improvement allowances …” the report continued…Click HERE to view the full article.
Source: The Daily Transcript
Tags: brokerage, building, buy, economic, economy, estate, help, Industrial, industrial real estate, market, office, office space, property, purchase, rate, Real, Real Estate, real estate market, recession, recovery, reduce, rent, Report, research, sale, San Diego, sell, services, space, sublease, Tenant, vacancy, voit
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