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MyspaceOptimism and hope were the watchwords during a recent meeting of the Institute of Real Estate Management’s local chapter. Those involved in commercial real estate attended the meeting to receive an update on the current state of the commercial real estate, particularly what went on in 2009 in the world of South Coast real estate, and what to expect in 2010.
Speaking at the breakfast meeting this past Wednesday, March 3, were representatives from the Radius Groups Commercial Real Estate brokerage firm, including principal and Agent Steve Golis, agent Dan McGregor, and general manager and senior agent Brian Johnson.
“The 2009 leasing market was a year that is probably best left forgotten now that it’s over,” said Johnson. While most of 2009 is, as Johnson asserts, a time to be consigned to the dustbin, it turns out that the end of the year was not as bad as was expected. Despite the large role unemployment played in delaying the economy’s recovery, the fourth quarter showed positive signs of improvement in the South Coast’s business sector.
“We did see good indicators in the last part of year,” said Johnson. “More deals were being put together; landlords were making more concessions and being more reasonable and flexible on deals for getting tenants into buildings.” Quite specifically, he said, Bevmo’s and Reid’s Appliances’ move to downtown Santa Barbara show, firsthand, the beginnings of change in the retail market. In addition, the return of smaller businesses to the market in 2009 was a good sign. Radius Groups predicted that there will be more activity this year in leasing, though the activity will include more ups and downs in the vacancy levels. Despite the start and stops, they claim that there will be more positive indicators towards the end of this year, with a forecast of growth in 2011.
While the market is by no means at its best, the general tone of the meeting was upbeat, as Johnson asserted:. “All the professionals at the meeting are seeing the same sort of signs that we are,” he said. “They are tired of sitting on the sidelines and are reacting with optimism.”
The Institute for Real Estate Management is a membership organization providing education and other resources for professionals in multifamily and other commercial real estate. It teamed up with Radius Group to provide a sustained overview and to forecast the market, because Radius Group is the dominant full-service commercial real estate brokerage firm on California’s Central Coast, to give a sustained overview of the industry and to forecast the market.
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Comments
This article is media spin at its finest. Or horse pocky at its worst. At the risk of getting our feet "dirty" let's take a look between the lines.
Johnson says one of the "good indicators" was that "...landlords were making more concessions and being more reasonable and flexible..." To assert that this is a "positive sign" for the real estate market is pure bull. If the market was healthy, landlords would not be making "concessions" and he knows it. What is unknown is why the author of this puff piece, Megan Lucero, failed to question the spin.
Next, why is the proposed BevMo move to the intersection of Da la Vina and State called "downtown"? The only excuse for this nonsense is that Lucero lives in Solvang.
Next Radius Groups made the absolutely astonishing prediction that there will be "ups and downs" in vacancy levels. No kidding. Would Radius like to predict whether the sun will rise in the east tomorrow?
But let's close with pure stupidity. Johnson says all the real estate leeches are "...tired of sitting on the sidelines and are reacting with optimism." Oh, good. Reacting with optimisn will surely cure the housing and commercial real estate bubble that has been a major contributor to the nation's financial woes.
I guess this is to be expected. The Indy must get a huge chunk of its advertising revenue from the local real estate industry so we should not expect them to cry "Bull flop" when faced with such mendacity from that same industry.
SezMe (anonymous profile)
March 10, 2010 at 1:04 a.m. (Suggest removal)
"Despite the large role unemployment played in delaying the economy’s recovery..." Oh Megan, really!
This is classic. They send a press release about a promotional breakfast, someone goes and listens and writes it up without any investigation of other sources. No news here.
Tired of sitting on the sidelines, are they? And what exactly is it that they do when they are in the game?
Megan? ...crickets...
I'd wager money there has never been a time that real estate interests have not predicted growth "next year."
Nitz (anonymous profile)
March 10, 2010 at 6:38 a.m. (Suggest removal)
Nationwide, commercial loan defaults surged in January. Rents are down. Vacancy is still on the rise. Billions of dollars of commercial loans are coming due this year and owners will not be able to make the balloon payments or refinance. It is going to get worse before it gets better. I don't fault the Radius Group for trying to be positive. What else can they do? Cellebrate the small victories, keep your head down and work hard for the next one. The down side is that short-sighted property management companies will read this story and think they can up their asking rates. Six months from now, when the listing is still vacant, they'll drop it again.
I'd be curious to see how well capitalized many of the commercial building owners in SB are. Generally speaking the transaction volume is so low that you'd think the current owners have a lot of equity, minimal debt service, and they can ride this out.
As for the leasing side, if you are a tenant with a solid business, now is the time to take advantage of these market conditions and lock in at low rates for a long period. Radius would be smart to focus on tenant-rep work right now.
sbmomandpop (anonymous profile)
March 10, 2010 at 10:18 a.m. (Suggest removal)
You know what will really help commercial real estate?
More taxes, bigger government, and lots more regulations.
jukin (anonymous profile)
August 23, 2010 at 10:56 a.m. (Suggest removal)