Bass Ackwards reliance on "apartment market leads commercial real estate recovery" - apartment values are high-this is true - but because people have been foreclosed on due to loss of jobs, loose financing standards and very low consumer confidence. More tenants in the market does not a recovery make - commercial real estate in almost every other segment is hurting and not recovering - retail tenants are not taking space, office users are not taking space, hotels are very soft - these segments do not tie in with the robust apartment market. And the apartment market is only hot in core areas - not in the vast open spaces where new home developers over built homes and now a 5 year old single family home rents for near what a class A apartment building does in the same area.
We want good news in commercial real estate - but let's look at reality and make better decisions based on that.
2 comments:
Nice post. How do you explain the 2M+ SF of leasing activity in Mountain View and Sunnyvale alone?
I consider myself extremely blessed to be in Cupertino - next to Sunnyvale and Mountain View. What we experience in Silicon Valley is not what the rest of California or the county experiences.
Facebook just leased (with an option to buy) 1,000,000 square feet - they also arguably started revolutions in the Middle East and Africa.
Twitter is cutting office deals in San Francisco or perhaps in Brisbane if they don't get their payroll tax concessions - actually it is about taxing huge gains from stock options.
Google - very healthy and growing.
Apple - ditto - in fact Cupertino is an orchard with Apple signs outside of my window in every direction.
and there are many, many other very healthy companies that are taking space these days in the Valley.
Los Angeles is also hopping in the office market. And NYC is doing well too. Those 3 are the leaders in the recovery - the recovery which in commercial real estate segments across the country will take years to start humming along.
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