Panelists advised brokers to explore
the current market in depth. As Dieter
put it, “This is a time to step back from
the day-to-day business and ask, ‘where
are the opportunities?’”
Some specific opportunities came up
in the panel discussion. Howard Ecker
+ Co.’s Howard Ecker noted that clients
related to green activity expect to benefit from the Obama administration’s
$787-billion stimulus package. Kimball
pointed out another sector that’s likely to
see heavy demand: infrastructure.
Above all, panelists predicted that
commercial brokerage will evolve into a
smarter—and leaner—industry.
During the sovereign wealth funds webinar, moderated by Forum’s editor Sule Aygo-ren Carranza, experts spoke about investing
in prime property in gateway cities and
boasting their own countries’ economies
with strategic at home plays. There is a lot
of investment potential at play with more
than $4 trillion in the hands of sovereign
wealth funds, which invest between 7% and
10% in commercial real estate transactions.
Even with this amount of capital, Sovereign
Wealth Funds aren’t above the economic
downturn gripping most of the world.
“Everybody has been impacted by investment performance in the last 12 months including sovereign wealth funds,” said Guy
Langford principal at Deloitte. Sovereign
wealth funds are also revisiting the weighting and the balancing in their respective
portfolios, he added.
When sovereign wealth funds invest, it is
most likely to be in 24-7 gateway cities. Plus
the properties are those considered the
area’s prime facilities, the class A spaces.
—Katie Hinderer and Paul Bubny
ORANGE COUNTY
North County Leasing Market
Expected to Remain Flat in 2009
The North County office market vacancy
rate increased to 15% in the fourth quarter of 2008, and sources say the market will
take more than one year to show signs of a
meaningful and lasting turnaround.
Brian Fournier, a senior vice president
in the Irvine office of Jones Lang LaSalle
Inc., says that the North Orange County office leasing market will remain flat in 2009
10-Year Quick Poll Results
Over the years, lawmakers have given us a lot to
beware of—and laugh about, so in honor of Real
Estate Southern California’s 10th anniversary,
RESOCAL polled readers about their choice
for top dumbest, or worst, pieces of legislation in
the past 10 years that had to do with commercial
real estate.
Here are the results:
*78% of respondents said
their choice was when Congress, in 2007, allowed the American Jobs creation Act to expire, allowing the IRS to increase
the depreciation recover period for tenant improvements from 15 years to 39 years.
*11% chose AB 32, which establishes a regulatory and market mechanisms to achieve reductions of greenhouse gases.
as it continues to search for the bottom in
terms of vacancy and rents. In fact, he says,
several landlords, such as Maguire Properties, recently revealed a rent decrease on its
properties in North Orange County.
Others are expected to follow suit in
2009. “Companies that are located in the
region have a reason to
be there, typically the
employee or customer
base,” says Fournier.
“North Orange County
is ideally located for
commuters from the
Inland Empire, South-
Fournier east Los Angeles as
well as other areas of
Orange County.”
For the next several months, competition for new tenants will grow fiercer, with
landlords continuing to offer free rent
and move allowances to entice tenants to
move, Fournier says. “Concessions will also
be key in retaining tenants and keeping
them from jumping to another building
in the area.”
Lower lease rates create opportunities for
tenants, according to Voit Commercial Brokerage. The abundance of available office
product in Orange County has caused landlords to offer large concessions in order to
fill their properties and created some fantastic long-term lease opportunities for tenants, according to a company report.
While vacancy rates have continued to
increase, forcing lease rates down, Jerry
Holdner, vice president of market research for Voit, predicts that in the second
half of 2009, Orange County could see an
increase in activity from pent up demand,
once financial markets correct themselves
and if consumer confidence increases. The
final outcome, though, hinges on how bad
the recession gets and how quickly credit
eases up.
“Orange County’s strong local economy
and high quality of life continue to make
the region a desirable location for business,” explains Holdner. “The growing
influence of new industries such as high
technology, biotechnology and healthcare
should further diversify the local economy
and help to rejuvenate the office market.”
—Natalie Dolce
Ethics Play Key Role in Recession,
Lead to Future Opportunities
The value of building a solid foundation—
one based on knowledge, sound leadership,
strong character and solid business principles—is key to creating opportunities for
the future. So said speakers at Buchanan
Street Partners’ 8th Annual Real Estate
Summit, held recently in Newport Beach.
This year’s event was titled, Rock Solid:
Foundation for the Future, and speakers
Stuart Varney, an economist and business/
financial journalist for FOX News, and
Michael Josephson, an ethics consultant,
echoed that title’s philosophy.
“In tough times, does character really
count? Can you afford not to be ethical
when economic survival is at stake?” was
the question Josephson posed to the audience of more than 700 real estate industry
professionals. He explained that the only
assets that cannot be diminished when
the worse case scenario happens in our
economy are imagination, intelligence
and integrity. Integrity, he said, is the most
valuable asset, and is the most threatened
in these tough times.
“I look at this period of time as involuntary character boot camp,” Josephson said.
“But when the sun comes out, how solid
are we?” He continued that although the
vast majority of people are fundamentally
decent people, “if we don’t start modeling
that ethics is a necessity and not a luxury,
the kind of problems we are witnessing
