All GLG News Analyses Filed Under: Commercial Market Trends
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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Howard LiggettPresident and CEODistressed Real Estate Consulting Services, Inc.
South Florida's Real Estate Armageddon Presents Huge Acquisition Opportunities
January 15, 2009
Nonresidential Construction Seen Falling 11% in 2009 | www.cnbc.com
South Florida's commercial and residential real estate markets suffered in 2008, and the New Year doesn't figure to offer much relief. Continued foreclosures and the weak economy will continue having an impact on prices and number of properties available with only aggressive sellers disposing of properties. Although home sales started picking up this past summer, the beleaguered housing market has been hammered by foreclosures and falling prices. Meanwhile, the sputtering economy has local businesses retrenching and cutting jobs, dealing a blow to the retail, office and industrial sectors. All this carnage creates an opportunity for those positioned to take advantage of the adjustment in prices, and higher expected returns.
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Joseph GabbaianSenior Vice PresidentGRUBB & ELLIS COMPANY
Real Estate Downturn Finally Arrives in West Los Angeles
January 13, 2009
As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com
- The West Los Angeles commercial real estate market, once considered bullet-proof due to its strong fundamentals, is hit hard by the recession. - The Westside market experiences its first negative absorption in five years, and rental rates, which had gone up in the face of declining absorption, drop for the third consecutive quarter. - The declining market forces lenders to take back a $1.5 billion portfolio of office buildings in West Los Angeles and surrounding areas.
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Glut of Office Space In Dublin Amplifies Banking Crisis
January 9, 2009
As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com
Dublin office building reached a new peak in 2008. As in previous peaks, this oversupplied the market, and vacancy rates are now rising while rents are falling sharply. This has put added pressure on developers and investors, and it will cause further distress to funding institutions. In addition, a construction hiatus will inevitably occur over the next two years as demand is left to catch up with supply. Dublin office completions will fall by 48% in 2009 and a further 14% in 2010. Given the reliance of Ireland on its construction industry, this will deduct approximately 0.6% from GNP by 2010, not including second round effects.
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Cheap Money Will Trigger German Real Estate Market
January 8, 2009
German real estate industry suffers from financial crisis | www.propertyfundsworld.com
The economic crisis has hit even the German real estate market - no doubt about that. But as money is getting cheaper and the clouds of the crisis dissolve the investors will see which branches and companies are hit hardest and who are still relatively strong. As the German leases are normally 5-10+ years and inflation protected there will be interesting investment opportunities in the very near future. The German market in general has not seen a bubble like in Spain, Ireland or UK. We expect although that the prices will fall resulting in interesting initial yields. The German Goverment is on the way to provide the economy with economic initiatives which will partly cushion the consequences of the crisis. In our opinion it is going to be the right time for the thoughtful investor.
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January 8, 2009
Office building in Dublin has traditionally been highly cyclical, with supply always overshooting demand at construction peaks This results from developers basing their construction decisions on over-simplistic market signals of rental growth and 'take-up' We are currently at a peak in Dublin office construction. As is usual at these peaks, the market is oversupplied. Consequently, vacancy rates are rising and rents are falling sharply This will cause distress for many developers and investors, and will put pressure on funding institutions There will inevitably be a sharp fall in office construction over the next two years as demand will have to be allowed catch up with supply The article's regression model predicts that office construction will fall by 48% in 2009 and by a further 14% in 2010. All else equal this will deduct 0.5%-0.6% directly from GNP and will lead to the loss of approximately 7,500 construction jobs.
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Gavin CampbellManaging PrincipalSteelbridge Capital LLC
January 7, 2009
As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com
The article correctly forecasts increases in vacancy and decreases in operating cash flow for office space across the country, and the resulting increases in loan defaults that will occur because of it. But, the scenario is even worse than the current numbers show because of the large amount of sublease space that is not captured in the numbers. The essential question, however, is how lenders will react to this problem, or, in the case of CBMS, whether there is even somebody "home" to talk to. As active participants in the real estate equity and debt markets, we are encouraged by the creativity we are seeing from lenders in dealing with this problem.
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Jack KernManaging DirectorKern Investment Research
Vacant Office Space Creates Vacant Stares from Lenders
January 7, 2009
As Vacant Office Space Grows, So Does Lenders’ Crisis | www.nytimes.com
It is, without a doubt, well known that all of the real estate sectors are suffering some decline. Office occupancy is, not surprisingly continuing to deteriorate and the impacts will largely be felt in core cities and central business districts. Lenders and financial partners are rightfully concerned, but the future may not be as bleak as it seems.
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January 2, 2009
KB Pulling Out of Atlanta | www.bigbuilderonline.com
KB Home's decision to pull out of the Atlanta market is a sound business judgment and, although painful for the short term, will allow them to concentrate their operations within less competitive and more profitable markets.
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Fundamentals Ignored During Boom Times
December 29, 2008
KB Pulling Out of Atlanta | www.bigbuilderonline.com
Demographics, traditional underwriting processes and sound project planning ignored during acceleration. Inventory reduction will take time to play out.
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Re-Constructing the Economy of realestate
December 28, 2008
KB Pulling Out of Atlanta | www.bigbuilderonline.com
Let's face it the construction / real-estate industry has plummeted and companies like KB Homes has taken major set backs. The key factors in this situation are the financial statements as well as the recession being felt around the world. The numbers don’t lie “It is what it is”.
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