The economic slowdown and the credit crunch are beginning to cause significant damage to the commercial real estate business, the National Association of Realtors (NAR) said in a report Wednesday.
Until recently, the commercial side of the business had been steady in contrast to the housing collapse. Now, "tight credit availability has significantly slowed the volume of commercial real estate transactions," said Patricia Nooney of the Realtors Commercial Alliance Committee.
Investment in commercial real estate has fallen dramatically to $48.2 billion in the first four months of 2008, down 69.5 percent from the $157.8 billion during the same period in 2007 when credit was easily available.
Also, vacancy rates are rising and rent gains are slowing according to the report.
NAR chief economist Lawrence Yun said: "Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors."
One bright spot in the picture is that because of the decline of the dollar, there has been growing interest among foreign investors in US properties.
It is days like this that I like to take a look at the holdings of IYR to cheer myself up. Just pick a name and look for the pain.
Today's random sample is AMB and their press release from last week. I like how they are timing this market.
SAN FRANCISCO, June 10 /PRNewswire-FirstCall/ -- AMB Property Corporation(R) (NYSE: AMB), a leading global developer and owner of industrial real estate, today announced it has entered California's Central Valley with a build-to-suit development totaling approximately 658,000 square feet. The facility, named AMB Pescadero Distribution Center, is located in the city of Tracy, California, and will serve as the regional distribution center for a major retailer.
"AMB is meeting the distribution requirements of a major retailer by securing a strategically located land site and developing a build-to-suit facility specific to their needs. Retailers are taking space, even in this current economic climate, in order to reconfigure their supply chain and gain increasingly-important operational efficiencies," said Mark Saturno, managing director, AMB's West Central Region. "California's Central Valley is rapidly gaining momentum as a preferred distribution location from which customers can, in one day, reach the major population centers of the Western U.S."
AMB Pescadero Distribution Center provides rapid access to nearby Interstate 5, the main north-south highway on the West Coast running from Seattle to San Diego, and Interstate 580, which connects the Central Valley and the San Francisco Bay Area. The development is designed to meet LEED(TM) standards set forth by the U.S. Green Building Council.
AMB's San Francisco Bay Area market portfolio now totals approximately 11.6 million square feet of operating and under development properties.
Hmmmms. Bragging about your California properties under development in June of 2008? I'm gonna say that could come back to haunt you.
Note: 12th Percentile is heavily invested in SRS which shorts IYR which holds many many fine companies like AMB.
"an approximate nine to twelve month lag time between architecture billings and construction spending"
I would think its even longer now with different design phases and the length of permitting ever increasing.
As for foreigners buying US assets; the ones that didn't learn from the Japanese in the 1980s will learn quickly this go around. I wouldn't count on them for providing a floor in building prices and there not really interested in 99% of the properties in the US (total guess that 99% of the office space is not in downtown LA or NYC)
CR is this data available? I cant find it on the website but it looks like you might have? There is a lot of noise in the data so I thought a moving average might be good, of course that would dampen the current plunge but still help to eliminate the movement...
on a side note:
I was working for a subcontractor right after Sept 11th. For the 8 months after that there was not much to bid and the prices subs were quoting had zero profit on them. Subs were just trying to keep their key employees employed. That was pretty ugly albeit brief. This could be way more painful for the trades people if there is a continued contraction!
The International Development Association (IDA), the World Bank's multi-lateral arm for providing interest-free loans, grants and debt relief to the world's poorest countries, is the most effective way for the United States to invest in fighting global poverty, a Treasury official said Wednesday.
In testimony before the House Committee on Financial Services, Treasury Assistant Secretary for International Affairs Clay Lowery called on Congress to authorize $3.705 billion in funding over three years for the fifteenth replenishment of the IDA. That represents a 30% increase over funding provided by the U.S. for the IDA's fourteenth replenishment, which expires at the end of the fiscal year 2008.
Anyone want to take bets to see if Fifth Third makes it to Friday?
.................................
Fifth Third Falls on Plan to Raise $2 Billion, Cut Dividend
By Linda Shen
June 18 (Bloomberg) -- Fifth Third Bancorp., Ohio's second- largest lender, will cut its dividend and raise $2 billion in capital after nine quarters of lower profit. The lender fell as much as 16 percent.
Earnings may be as little as 1 cent to 5 cents a share in the second quarter excluding additional charges, the Cincinnati- based bank said in a regulatory filing today. Analysts surveyed by Bloomberg had predicted an average of more than 40 cents. The lender will sell subsidiaries and preferred convertible stock, the company said.
FormerlyknownasJS, I've noted a few positives myself - with a mostly grim outlook for housing.
I think this is reasonable:
``This is the very dim flicker of the light at the end of the tunnel,'' Ratcliff said in an interview.
Yes, sales have picked up a little in some areas - but the inventory overhang is still huge, and there is a large and growing number of distressed homes.
Here is my favorite bottom call of the day. A classic.
Signs of cracks in Manhattan's property market could mean the rest of the country is on the road to recovery, since New York tends to feel the effects of a slowing economy later than the nation does
Yeah, somebody doesn't understand how lagging stuff works. Lagging indicators aren't really leading indicators.
FKAJS,
The UCLA economist interviewed about the Anderson report called the good news about housing "ambiguous". His point was that by the time unambiguous evidence is available, the recover is well underway, so we are stuck looking for ambiguous signals.
CR,
You noticed the inquiries index is in worse shape than the billings index, I'm sure. Inquiries lead billings, which lead construction, so the trail of bad news is pretty lengthy.
this data must be analised better than we tend to do it.
If I understand correctly the indices rationale - the longer the index stays under 50 the more it contracts, so that even if it goes up from 40 to 46 there is still contraction compared to previous month, even if contraction speed slowed.
What is relevant is the "integral area" over a period of time to the 50 neutral value and this is getting bigger and bigger
Warning: Don't let architects do your yard work. The three of them that came over today didn't do a very good job. They were more interested in telling me how I could "pop the top" and make a fabulous expansion to my house. Thankfully, though, they didn't take off their shirts, but seeing them in shorts was scary enough. I think I'll go back to hiring vagrants.
My sister is an associate in a medium firm (100) in Norfolk, VA. They are busy with housing and dinning contracts at a few universities. The rush is on to fund in house upgrades to high end on campus eating. Living and dinning experiences are growth areas for uiversity's in their quest for students in a soon to be declining market.
"One bright spot in the picture is that because of the decline of the dollar, there has been growing interest among foreign investors in US properties.
At that point it's not really US property anymore is it?
At some point down the line, though, I think it would be wise if China sold all their treasuries and used the proceeds to buy the state of California."
ac |
I've heard this silliness in Manhattan, too. Absentee landlordism didn't work out too well for the British. If you don't live in your overseas investment property it's not easy to realize gains, and you may not like living there if the infrastructure crumbles.
Yes, Manhattan price drops usually lag the rest of the country. Except that the last time prices dropped significantly, in 1987, it took 10 years to break even. And the recent bull run was a greater deviation from the median income curve.
build something, anything
The economic slowdown and the credit crunch are beginning to cause significant damage to the commercial real estate business, the National Association of Realtors (NAR) said in a report Wednesday.
Until recently, the commercial side of the business had been steady in contrast to the housing collapse. Now, "tight credit availability has significantly slowed the volume of commercial real estate transactions," said Patricia Nooney of the Realtors Commercial Alliance Committee.
Investment in commercial real estate has fallen dramatically to $48.2 billion in the first four months of 2008, down 69.5 percent from the $157.8 billion during the same period in 2007 when credit was easily available.
Also, vacancy rates are rising and rent gains are slowing according to the report.
NAR chief economist Lawrence Yun said: "Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors."
One bright spot in the picture is that because of the decline of the dollar, there has been growing interest among foreign investors in US properties.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Always ahead of the curve.
build something, anything
I think you're on to something:
buy something, anything...
borrow something, anything...
just keep doing something no matter how brain-dead so our congressmen can keep funding their pet projects and expanding their little fiefdoms.
One bright spot in the picture is that because of the decline of the dollar, there has been growing interest among foreign investors in US properties.
At that point it's not really US property anymore is it?
At some point down the line, though, I think it would be wise if China sold all their treasuries and used the proceeds to buy the state of California.
our Future in Four minutes
oil inventories
The U.S. Energy Department and the American Petroleum Institute will release separate reports on petroleum inventories at 10:35 a.m. EDT
ok
another 4 minutes
It is days like this that I like to take a look at the holdings of IYR to cheer myself up. Just pick a name and look for the pain.
Today's random sample is AMB and their press release from last week. I like how they are timing this market.
SAN FRANCISCO, June 10 /PRNewswire-FirstCall/ -- AMB Property Corporation(R) (NYSE: AMB), a leading global developer and owner of industrial real estate, today announced it has entered California's Central Valley with a build-to-suit development totaling approximately 658,000 square feet. The facility, named AMB Pescadero Distribution Center, is located in the city of Tracy, California, and will serve as the regional distribution center for a major retailer.
"AMB is meeting the distribution requirements of a major retailer by securing a strategically located land site and developing a build-to-suit facility specific to their needs. Retailers are taking space, even in this current economic climate, in order to reconfigure their supply chain and gain increasingly-important operational efficiencies," said Mark Saturno, managing director, AMB's West Central Region. "California's Central Valley is rapidly gaining momentum as a preferred distribution location from which customers can, in one day, reach the major population centers of the Western U.S."
AMB Pescadero Distribution Center provides rapid access to nearby Interstate 5, the main north-south highway on the West Coast running from Seattle to San Diego, and Interstate 580, which connects the Central Valley and the San Francisco Bay Area. The development is designed to meet LEED(TM) standards set forth by the U.S. Green Building Council.
AMB's San Francisco Bay Area market portfolio now totals approximately 11.6 million square feet of operating and under development properties.
Hmmmms. Bragging about your California properties under development in June of 2008? I'm gonna say that could come back to haunt you.
Note: 12th Percentile is heavily invested in SRS which shorts IYR which holds many many fine companies like AMB.
U.S. crude supply down 1.2 mln brls...
Yesssssssssssss, burn it... baby burn it......
More butter please..........
"an approximate nine to twelve month lag time between architecture billings and construction spending"
I would think its even longer now with different design phases and the length of permitting ever increasing.
As for foreigners buying US assets; the ones that didn't learn from the Japanese in the 1980s will learn quickly this go around. I wouldn't count on them for providing a floor in building prices and there not really interested in 99% of the properties in the US (total guess that 99% of the office space is not in downtown LA or NYC)
CR is this data available? I cant find it on the website but it looks like you might have? There is a lot of noise in the data so I thought a moving average might be good, of course that would dampen the current plunge but still help to eliminate the movement...
on a side note:
I was working for a subcontractor right after Sept 11th. For the 8 months after that there was not much to bid and the prices subs were quoting had zero profit on them. Subs were just trying to keep their key employees employed. That was pretty ugly albeit brief. This could be way more painful for the trades people if there is a continued contraction!
The International Development Association (IDA), the World Bank's multi-lateral arm for providing interest-free loans, grants and debt relief to the world's poorest countries, is the most effective way for the United States to invest in fighting global poverty, a Treasury official said Wednesday.
In testimony before the House Committee on Financial Services, Treasury Assistant Secretary for International Affairs Clay Lowery called on Congress to authorize $3.705 billion in funding over three years for the fifteenth replenishment of the IDA. That represents a 30% increase over funding provided by the U.S. for the IDA's fourteenth replenishment, which expires at the end of the fiscal year 2008.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Short Bucky!
Anyone want to take bets to see if Fifth Third makes it to Friday?
.................................
Fifth Third Falls on Plan to Raise $2 Billion, Cut Dividend
By Linda Shen
June 18 (Bloomberg) -- Fifth Third Bancorp., Ohio's second- largest lender, will cut its dividend and raise $2 billion in capital after nine quarters of lower profit. The lender fell as much as 16 percent.
Earnings may be as little as 1 cent to 5 cents a share in the second quarter excluding additional charges, the Cincinnati- based bank said in a regulatory filing today. Analysts surveyed by Bloomberg had predicted an average of more than 40 cents. The lender will sell subsidiaries and preferred convertible stock, the company said.
Fifth Third Falls on Plan to Raise $2 Billion, Cut Dividend - Bloomberg.com
CR,
What do you make of the UCLA Anderson Forecast? Bloomberg is basically spinning it as Anderson calling a bottom for California.
California Home Market Shows First Signs of Recovery (Update3) - Bloomberg.com
Exactly how many architects do we need anyway? It looks like they build the same damn thing over and over, identical building from Maine to Hawaii.
FormerlyknownasJS, I've noted a few positives myself - with a mostly grim outlook for housing.
I think this is reasonable:
``This is the very dim flicker of the light at the end of the tunnel,'' Ratcliff said in an interview.
Yes, sales have picked up a little in some areas - but the inventory overhang is still huge, and there is a large and growing number of distressed homes.
I don't read the Anderson report as a "bottom".
Best Wishes.
I think I'll go out and hire an architect to move my lawn and pull the weeds.
mow
o bottom call, CR?
ok...scratch #2376
i'm sure we can find other bottom call sources today.
onward and upward
Here is my favorite bottom call
of the day. A classic.
Signs of cracks in Manhattan's property market could mean the rest of the country is on the road to recovery, since New York tends to feel the effects of a slowing economy later than the nation does
BTW, I called and have 3 architects coming over to do yard work at flat fee of $50 for the afternoon. Hopefully, they won't take off their shirts.
12th,
Yeah, somebody doesn't understand how lagging stuff works. Lagging indicators aren't really leading indicators.
FKAJS,
The UCLA economist interviewed about the Anderson report called the good news about housing "ambiguous". His point was that by the time unambiguous evidence is available, the recover is well underway, so we are stuck looking for ambiguous signals.
CR,
You noticed the inquiries index is in worse shape than the billings index, I'm sure. Inquiries lead billings, which lead construction, so the trail of bad news is pretty lengthy.
this data must be analised better than we tend to do it.
If I understand correctly the indices rationale - the longer the index stays under 50 the more it contracts, so that even if it goes up from 40 to 46 there is still contraction compared to previous month, even if contraction speed slowed.
What is relevant is the "integral area" over a period of time to the 50 neutral value and this is getting bigger and bigger
Warning: Don't let architects do your yard work. The three of them that came over today didn't do a very good job. They were more interested in telling me how I could "pop the top" and make a fabulous expansion to my house. Thankfully, though, they didn't take off their shirts, but seeing them in shorts was scary enough. I think I'll go back to hiring vagrants.
My sister is an associate in a medium firm (100) in Norfolk, VA. They are busy with housing and dinning contracts at a few universities. The rush is on to fund in house upgrades to high end on campus eating. Living and dinning experiences are growth areas for uiversity's in their quest for students in a soon to be declining market.
"One bright spot in the picture is that because of the decline of the dollar, there has been growing interest among foreign investors in US properties.
At that point it's not really US property anymore is it?
At some point down the line, though, I think it would be wise if China sold all their treasuries and used the proceeds to buy the state of California."
ac |
I've heard this silliness in Manhattan, too. Absentee landlordism didn't work out too well for the British. If you don't live in your overseas investment property it's not easy to realize gains, and you may not like living there if the infrastructure crumbles.
Yes, Manhattan price drops usually lag the rest of the country. Except that the last time prices dropped significantly, in 1987, it took 10 years to break even. And the recent bull run was a greater deviation from the median income curve.
Yogi,
Cindy was over here tonight. BooBoo watched, and, now, Cindy doesn't want anymore of your pic-i-nic baskets. Sorry. You can always chase Lassie.