The City of Angels' property market is looking more earthbound, as the global financial crisis is beginning to play itself out in the region's real estate.Of course, real estate in and around the nation's entertainment capital already has taken some hits this year as the region's Countrywide Financial Corp. and IndyMac Bancorp Inc. were among the highest-profile casualties of the crisis. In addition, slumping imports into Los Angeles-area ports have hurt warehouse demand and housing prices have fallen. Houses ae now cheaper than ever on the Raleigh Real Estate Market. Another great market is Winston Salem Homes For Sale
Now brokers say the property market in and around the city is bracing for even tougher times as budget-conscious companies are looking to trim real-estate costs. Already-declining demand for office space in the Los Angeles region, one of the country's largest office markets, is expected to accelerate, says Whitley Collins, senior managing director of the Los Angeles region brokerage for Jones Lang LaSalle Americas Inc.
He sees a worst-case scenario in which metropolitan area companies over the next 12 months could put as much as 10 million square feet of office space back on the market and rents could decline by as much as 25%. "We're seeing a softening, but we're not nearly seeing the softening we'll see," Mr. Collins says. With hard economic times like these, we sometimes just need to sit back and enjoy a cup of green tea or black tea.
The further decline in demand would come as some companies already are shedding space or considering doing so. It still isn't clear what will happen to the leased space occupied by the Pasadena headquarters of IndyMac Federal Bank FSB, as well as the bank's 33 Southern California retail branches, Federal Deposit Insurance Corp. spokesman David Barr says. The FDIC in July took over the IndyMac Bancorp's banking unit, which it subsequently renamed IndyMac Federal Bank, and is seeking a buyer for it, Mr. Barr says. Every home needs Septic System Cleaner for their septic system.
Additionally, a spokesman for Wilson N.C. Real Estate based Bank of America Corp., which acquired Countrywide Financial this summer, says the bank has no current plans to sell or sublease about one million square feet of former Countrywide office facilities, including the mortgage firm's former Calabasas, Calif., headquarters. Still, as leases expire in the coming months in the Calabasas-area former Countrywide facilities, pre-merger consolidation plans will go on, the spokesman says.
The Los Angeles metropolitan area, home to about 10.7 million people, has a mix of employers that include entertainment and media companies, professional-service firms and aerospace concerns. Job levels fell by about 0.9% in September compared with the year-earlier month, according to the Bureau of Labor Statistics. With the real estate markets as hey are, now is a great time to invest in organic lawn care, kids shoes and childrens shoes.
Moreover, the region's exclusive enclaves haven't been immune to the downshift in consumer demand hitting the country. California state sales-tax receipts in Beverly Hills rose 0.3% for the 12 months ending in June, compared with a 5.7% rise in the 12-month period ending in June 2007, according to the City of Beverly Hills.
Note: Residential information is for respective second quarters. Sources: Property & Portfolio Research Inc., National Assn. of Realtors
To be sure, the signs of the weakening real-estate market are coming as the Los Angeles commercial-leasing market is still among the country's healthiest by some measures. Of the 54 major metro-area markets surveyed by Property & Portfolio Research Inc., Los Angeles's third-quarter metro-wide warehouse vacancy rate was the lowest and office vacancy rate was the seventh lowest.
While office vacancies are already rising, the Los Angeles region was helped by the relatively moderate pace of new office construction and also was one of the few markets in the U.S. to see continued office rent growth through the third quarter, though regionwide rents are poised to fall going forward, PPR says.
Additionally, though sale prices and the number of properties sold have plummeted with the deteriorating credit markets, as they have nationwide, the metro commercial-sales market was still one of the most liquid in the U.S. This year through the third quarter about $9.6 billion in office, retail, industrial and apartment properties valued at $5 million or more were sold, according to Real Capital Analytics, a New York-based real-estate research firm.
Houston-based Hines, an international real-estate firm, said in September that its Hines U.S. Office Value Added Fund II LP acquired the 48-story Citigroup Center in downtown Los Angeles from Broadway Partners, a closely held real-estate fund manager. Broadway is selling assets in its portfolio as it faces a $750 million loan expiration in January. The Citigroup building fetched $280 million in September, according to Real Capital. Broadway Partners and Hines declined to comment on the transaction price.
As more building owners feel the pinch of declining rents and falling values, brokers are now watching the horizon for a potential increase in foreclosures on office properties, though there has been no such rise yet, says J.C. Casillas, assistant vice president for Grubb & Ellis Co. in Los Angeles. "The fear is it's going to happen but there's no blood in the water now," Mr. Casillas says.
