Quarterly and year-end surveys from Cushman & Wakefield Inc., CB Richard Ellis Inc.
and Studley Inc. all show the same general
trends here, all citing the recession and related problems as reasons for the weaker
performance of the office market.
C&W shows notes that landlords are offering increased lease concessions in light
of countywide direct vacancy of 14.1% that
up from 11.8% at year-end 2007. Studley
tracks the vacancy at 15.7% and CBRE pegs
the rate at 17.8%, commenting that, “After
two straight quarters in which the counties direct vacancy rate rose more than a
full percentage point, the fourth quarter
registered an increase from 17.1% at the
end of the third quarter 2008 to 17.8% at
the end of the year.”
Studley’s report points out that the
tech sector, which it describes as “a critical component of the San Diego region’s
economy,” has started to lose revenues
and cut jobs. The report cites Midway
Games, which recently revealed that it
would let go 180 employees, while firms
such as Agilysys Inc. have been cutting
payrolls since the summer.
The brokerage firms generally forecast
more of the same for 2009. C & W comments, “While the near-term 2009 outlook
for the San Diego County office market is
cautious, the long-term prognosis reflects
opportunity.” It says that the region is well-positioned to recover quickly at the next
economic upturn, thanks to a diverse tenant base and high quality of life.
Studley cautions that, “The serious
deterioration in the national economy
could delay a regional recovery,” pointing out that, “Many industries that were
holding up quite well earlier in 2008
were struggling as the year ended.”
—Bob Howard, GlobeSt.com
INLAND EMPIRE
Vacancy Rises, Demand Still Remains
In past years, the Inland Empire was viewed
as a viable alternative for distributors seeking first generation space at competitive
rental rates, within reasonable proximity to
Southern California’s port system. Now, vacancy rates are on the rise in the industrial
sector with a year-over-year increase of five
percentage points, according to a report by
Jones Lang LaSalle Inc.
Leasing activity has not been able to
keep up with new construction deliveries.
And although only about half of the space
delivered in Q4 ’08 was leased, large leases
are still getting done.
Recent sizable leases came from tenants
like Kenco Logistics Services, who signed
a five-year 517,346-square foot-lease in
Redlands; and Smuckers, which signed
a five-year lease for 598,741 square-foot
in San Bernadino. Other leases included
signing from Luxe Cabinetry, M. Block
and Sons, Fender Guitars, Home Depot
and Exel Toto.
These leases indicate that there is still
some demand driving activity, and with
new construction volumes declining, tenants will turn towards existing space for
relocation alternatives, according to JLL.
The only foreseeable trend that may have
a negative impact on vacancy heading into
2009 would be the increasing amount of
available sublease space as a result of the
troubled economy. —Natalie Dolce
How High is the Sky/ How Low Will it Go?
A West L.A. View on Commercial Real Estate Leasing & Finance
Presented by the Law & Business Council of the Century City Chamber of Commerce
Supporting Sponsors
Contributing Sponsors
RSVP Today!
Key discussion topics will include:
Westside commercial leasing outlook
When is it best to start lease negotiations?
Who is lending and on what terms?
What are the problem loans and how are lenders responding
Who Should Attend:
Developers, Owners, Management Companies, Tenants,
Investors, Lenders, Brokers, Attorneys and Consultants involved
with Westside commercial real estate
When: Wednesday, April 22, 2009 8:00 - 10:45 a.m.
Where: Century Plaza Towers
2029 Century Park East, Conference Center, Concourse Level
Speakers include leading executive from:
USC Lusk Center for Real Estate, Madison Partners,
Tishman-Speyer, CB Richard Ellis, US Bank, Johnson Capital,
Travers Realty
Register Online at: www.centurycitycc.com
or call 310-553-2222
