Third-quarter data from commercial real estate brokers show that renting O.C. office space has gotten suddenly easier. Why? New buildings and shuttered mortgage makers add to supply. As a result, the countywide vacancy rate, as tracked by an index of three indexes (CB Richard Ellis, Grubb & Ellis and Voit) compiled by this blog, rose to 10.9% in the last quarter vs. an average of 7.1% a year ago. Here’s a wrap of the vacancy rates:
| Estimate | 3Q ‘07 | 3Q ‘06 |
|---|---|---|
| CBRE | 10.8% | 6.9% |
| Grubb | 11.5% | 6.9% |
| Voit | 10.5% | 7.5% |
| Index Index | 10.9% | 7.1% |
And some analysis:
• CBRE’s Barry A. Katz: “We believe the high negative absorption registered in the third quarter indicates that the worst of the sub-prime occupancy fallout is now behind us, although we will likely continue to see some space come back online through the balance of the year on a much smaller scale. The other issue at play in the market is the large amount of new construction coming online in the balance of the year and into 2008. These combined factors are causing landlords to get more creative in their deal structuring, while at the same time resulting in some tenant hesitation as they ponder the cost/benefit of postponing deals. Overall however, the core fundamentals of the market suggest that Orange County is well positioned to weather this period.”
• Grubb’s Anthony Tran: “There are thousands of new small businesses being formed every month, and they will be the engine that powers Orange County through its current plateau and into new growth of the local economy. With the fallout from subprime mortgage companies, and all the new construction, vacancy levels will increase from 9% to 14% by the end of the year.”
• Voit’s Jerry Holdner: “Concessions may begin to increase in the short run in the forms of limited free rent, reduced parking fees, relocation funds and tenant improvement allowances, as new inventory becomes available.”
speaking of office vacancies didnt nick the fireman/ real
estate investor buy an office to rent out gee hope his isnt one of those growing vacancies speakin of nick wonder wheres hes been must be busy adding to his real estate portfolio that guys a regular donald trump
Business at all levels in Orange County are struggling for survival in 2008. If you notice on your way home, there are many emptied buildings with less cars in parking lots. It is getting worse and landlords trying to keep rent high like a good old days.
I am really tired of having to come in to this venue and reiterate bad news.
Our problems are much deeper than the “subprime mortgage meltdown”. It’s called net-outflow migration.
Now some medicine for the permabulls.
Per DataQuick, Single Family Median Home Price for the 22 business days ending:
6/26 = $735,000
6/30 = $734,000
7/12 = $725,000
7/17 = $725,000
7/25 = $720,000
7/31 = $718,000
8/07 = $719,000
8/15 = $712,750
8/22 = $710,000
8/30 = $710,000
9/11 = $700,000
9/14 = $689,000
Sweet Music!
A 6 % in drop in 3 months (24% on an annual basis) seems like a good start toward the great correction of 2008. Do you think that home sellers and real estate agents still think that this is a short term problem and that home prices will rebound shortly?
My recommendation: if you want to sell a home in the next 90 days you will need to price it at least 30 % below comps of 2006. Of course you can wait out the storm and hold onto the property for 10 to 15 years and it will be worth what it is today………your choice home sellers.
It is too late to sell by dropping prices. Most important of all, Demand is little, very little.
Banks, Lenders, Builders, and Investors are forcing to unload their inventory at a very aggressive price. They need to write off for 2007. There is no way you can compete with them.
Housing in OC has hundred of Entries but very few Exits. Foreclosure is the only best option.
Impac Mortgage is looking for tenants for its new 200,000 square feet seven story headquarters building in Irvine. They are willing to make a sublease offers and you working directly with your landlord. No middle men.
Nano,
We had a discussion about you today!
“It is too late to sell by dropping prices.”
Carlos,
I think your camp would disagree with you!
lee in irvine Says:
October 3rd, 2007 at 3:45 pm
“I am really tired of having to come in to this venue and reiterate bad news.”
Your comments may be genuine. If so, they are camouflaged by your repeated sign off of “Sweet Music!” below the “medicine” you are providing for the permabulls.
I asked you a question regarding a similar post you provided yesterday, but was ignored; but I’ll ask again. Haven’t you consistently decried the use of the median price as an inaccurate means of measuring changes in real estate prices? Are you now in favor of the use of the median because it supports your views on values?
Lee, I know you and a whole wave of renters would like to purchase the home of their dreams at substantially reduced values from the ridiculous prices that we have experienced lately. I had similar motivations back in the mid-1990s when I purchased my current residence and will likely take advantage of the declining prices to purchase additional income properties. I’ve even considered dusting off my real estate license and returning to the world of REO again. Regardless, I have little doubt that my family is well positioned to ride through this real estate storm.
But I don’t necessarily consider it “sweet music” when I see people losing their homes, even if I stand to experience some financial gain. I’ve had enough life experiences to see that what goes around often does come around. Not all of these people were speculators or investors or purchasing with “liar loans” or even being irresponsible for that matter. Unexpected events happen in everyone’s lives. I represented banks in the sale of their REOs during the 1990s and had a front row view of people losing their homes because of job loss, medical emergencies with astronomical costs, and a variety of other legitimate and unforeseen reasons. One of my responsibilities was to determine if a reverted property was occupied and knock on the door and ask the “former owner” when the bank could expect them to vacate the bank’s newly acquired property. The worst one I ever did was on December 23rd and the homeowner was an older couple in complete denial, assuring me that they were going to “catch up” on their loan although the sale had occurred and their loan no longer existed. Sure, I ran across a lot of scam artists, too, and I learned to have little compassion for them. But a lot of innocent people were wiped out during the 1990s and what we are experiencing could potentially dwarf that whole disaster.
Homes have reverted to lenders in increasing numbers and will likely continue to do so. I have no problem with people taking advantage of opportunities; as I stated, I will likely do so myself. But after having experienced the horror and complete loss of dignity of losing a home through the eyes of hundreds of homeowners, I just don’t have it in me to dance on their graves. Maybe I’m getting a bit softer in my old age. I’m too much of a capitalist to ever become a bleeding heart liberal, but I am a bit more compassionate than I used to be.
Native,
Lee has a long history of this type of behavior. He’s not fooling anyone.
His kind will not accept even medical issues as an excuse.
“How dare they….blah, blah, blah”.
I know, I’ve made this case many times.
ROC,
Was it about housing or nanotechnology?
“Haven’t you consistently decried the use of the median price as an inaccurate means of measuring changes in real estate prices?”
Do I believe that home prices in Orange County have dropped more than the reported 4 percent that DataQuick claims? Yes. I also do not believe there’s a conspiracy, but rather an anomaly.
“Are you now in favor of the use of the median because it supports your views on values?”
Do I believe DataQuick’s figures are an accurate reading of Orange County home prices? No. I believe this newspaper should also publish the current cost per square foot, and place a disclaimer describing how both methods are flawed.
“But I don’t necessarily consider it “sweet music” when I see people losing their homes, even if I stand to experience some financial gain.”
Either do I.
Regarding “sweet music” — I don’t correlate that with “people losing their homes”. People are losing their homes not because prices are declining, but rather because they are way over their heads. I don’t enjoy reading the personal stories. I know that some people lose their homes for reasons outside of financial suicide, and I do have sympathy for those people. I don’t think I could ever contribute to kicking some old couple out of their house two days before Christmas. If it were me, I would have probably loaned them the money to get caught up, secretly expecting to never being paid back.
“I just don’t have it in me to dance on their graves”
I totally agree with you. Though I’m in favor of prices being slashed, I’m not in favor of people losing their homes. Even the dumb buyers who contributed to this ponzi scheme.
Despite what you may think of me, I am not like some of the other bears who want to see people thrown out of their own homes. Though I have told some permabulls in this venue to keep my grass watered before they mail my keys to the bank, it was all in a joking manner. I guess I was attacking them, because they’ve attacked me. All in all, I don’t want anyone to lose their home as a result of this ponzi scheme.
Thanks for sharing yo
Yep, even though the people now losing their houses were the ones winning bidding wars against me in 2004, I do not have any ill will towards them.
Many people just believed the hype, “better buy now or rent forever”, and all that stuff about “priced out renters”, etc.
It’s sad, but mostly they just followed the herd. In an economic sense, it was the rational thing to do in 2004-2005 to buy a house with no money down and an IO loan.
Now, not so much. But there are starting to be some great deals coming up again…
Thanks for sharing your story.
Well Lee, I guess I misjudged you. Glad to hear you defend yourself.
Lee:
Even if I had desired to play Santa Claus with this couple, there’s no catching up on a loan that no longer existed after having been wiped out at the Trustee’s Sale.
The degree of increase or decrease in property values is far more complex than most people realize; kind of like those home improvement projects that always seem so easy until you really get into them. The limitations of the use of the median price have been widely debated on this blog. The use of price per square foot, sometimes referred to as value ratios, is apparently gaining momentum as the new measure of choice. I posted some comments regarding the use of value ratios lately. I’ve been involved in various aspects of real estate valuation for many years. Yet, I’ve scratched my head and thought about its use as a measure many times. I still have trouble seeing its benefits. Create a graph of a neighborhood with the price per square foot on one axis and the unit size on the other. Rare is the neighborhood that doesn’t have a wide variance of value ratios, with the smaller units typically having significantly higher value ratios than the larger units. There will always be variations from the norm based upon various premiums or deductions for a specific home, but the trend is generally a downward sloping curve, far from a constant. Taking a constant value ratio and trying to apply it to a variety of unit sizes in a specific area rarely produces even remotely accurately valuations.
By the way, I’m all for humor–otherwise life is way too serious. I have to admit, even Rants’ often caustic remarks crack me up.
I don’t know if we will ever hear from Nick again, but we might get a fake Nick.
Ken,
Could you please do a fake Nick post for some laughs?
What I want to know is where/who is Perrik?
No where is Johnson? Did he get his razorblades?
The crash was so bad the blog lost its Johnson!
I know this is late in the thread so it probably won’t be read.
But Lee — you’ve been on this blog long enough, you should know better than to make such a simpleton mistake.
Look back through history. Month-to-Month comparisons are lame. In ‘06 SFR Homes peaked in the summer at around 725 and retreated to mid 600’s in the winter. WHY IS THAT? Because Real Estate is SEASONAL. That’s why Year-Over-Year comparisons are more accurate. representation of market trends.
You have claimed to work tangentially in the RE industry. You should know this. Shame on you.
Man — Its hard explaining the simple things to simple people.
“Man — Its hard explaining the simple things to simple people.”
Man — You’re absolutely correct, that’s why I won’t waste my time with you.
just as I predicted in jan 07- the clueless bulls like
johnson ezmoney troy tyler nick etc would disappear
from this blog they just left sooner than I thought they
would even KEN is now posting using an alias- by 08
there wont be any bulls left maybe they all went
out to the salton sea with ezbabbler lloolll @ribsplitter