The News:
Industrial vacancy is up approximately 1.40% since 3rd Quarter 2009, with a negative net absorption of 206,853 sf in the 4th Quarter.
Warehouse triple net rents are ranging from $0.40 - $1.00/sf/month with the average at $0.52/sf/month.
Vacant availability is at 12% with total availability at 16%.
Average time on market is 13.3 months.
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U.S. CENSUS ANNOUNCES NEW, HIGHER MEDIAN FAMILY INCOME FIGURES FOR MURRIETA
The US Census Bureau has released new estimates in August on Murrieta’s income. According to the Census Bureau, the City of Murrieta’s 2008 Median Family Income is now $90,950. This represents a significant increase in the City’s income and reflects the fact the 46% of Murrieta trade area residents are categorized as Wealthy, Upscale or Upper Middle for income level in accordance with the PRIZM lifestyle segmentation analysis, with high percentages of Upward Bound and Up-and-Comers.
Transaction Highlights
The Almar Group is pleased to present Temecula Corporate Center, a Class "A" office, industrial and flex project located in the hills overlooking Temecula. There are several remaining units offering world-class views of the valley. Units range from ±2,166 to ±11,216 SF. Floorplans are flexible and allow for customization depending upon the user's needs.
Allen Nunez is representing the Magnecomp building, a ±100,600 sf facility located at 26201 Ynez Road, Temecula, for sale or for lease. The property offers excellent freeway frontage at the Winchester Road off-ramp and Interstate 15. Zoned Service Commercial (SC), this use allows for retail intensive commercial uses, including retail stores and auto dealerships, as well as various business park and office uses. The property has been reduced to $9,900,000.
Temecula Corporate Center, located in Westside Business Park, is another premiere property being offered for lease. The project offers both office and flex space for users with outstanding views of the Temecula Valley.
Kevin Nellis,Vice President, recently sold 41785 Elm Street, a ±13,797 leased investment in Murrieta. Stan Nowak represented the Buyer in the transaction. In addition, Kevin also represents 41598 Eastman, a freestanding building with two individual units comprised of ±8,000 sf and ±4,200 sf. The entire building is for sale for $1,464,000 and the ±8,000 sf unit is for lease at $0.70 sf modified gross.
In December, he represented the Seller and closed on 1315 Flint Street, Lake Elsinore, a ±47,500 sf industrial building for $1,200,000.
Stan Nowak closed earlier this year on 297 single family residential lots, totally ±89 acres, in Perris, CA. Working together with Carey Pastor, he also closed on eight condos within the Venture Commerce Center ranging in size from ±2,449 to ±3,379.
Carey Pastor, in conjunction with Stan Nowak, represents Venture Commerce Center, an industrial condominium project offering units divisible to ±2,449 sf for $80/sf. Units in the project are moving quickly at this price, but there are still a few remaining to select from.
Carey continues to dominate the industrial and automotive sectors of the market. With over 60 transactions this past year, he represents over 750,000 sf of industrial and office space, including Venture Commerce Center and Foremost Business Parks. Foremost Business Park I, an office and industrial business park located on Business Park Drive in Temecula, offers both office and flex space for lease. Foremost Business Park II, offers ±1,920 sf of flex space for lease at 43391 Business Park Drive.
Coldwell Banker Commercial Almar Group has great expertise in meeting all of your real estate needs. We offer a wide range of properties, as well as services to assist you in making qualified real estate decisions. Our team can provide you with opportunities whether you are just starting out, looking to expand, adding to your portfolio, or exchanging properties. We can support you in determining how to make your investments work for you.
Real Estate Faces Tough Recovery Slog
Excerpt from the Wall Street Journal
The past year's progress in the housing market has relied on government programs that are scheduled to be phased out. The commercial real-estate market is faced with huge amounts of unoccupied space and a deluge of defaults and foreclosures that are putting new stresses on banks and other financial institutions that already are on life support.
The outlook for 2010 is uncertain, at best.
On the bright side, housing markets stabilized in 2009 as the Federal Reserve's policies drove mortgage rates to 50-year lows for much of the spring and fall. Home prices posted six consecutive months of modest gains through October. The supply of foreclosed homes for sale has declined, in part the result of an ambitious program the Obama administration launched in February designed to keep at-risk borrowers in their homes.
But the underpinnings of the positive trends are fragile. The Fed brought down mortgage rates by committing to purchase up to $1.25 trillion in mortgage-backed securities. That program, already extended once, is set to expire in March.
Rates could rise by a full percentage point after those purchases end, sapping any housing recovery, says Ronald Temple, portfolio manager at Lazard Asset Management. He predicts that prices could fall by 15% to 20% if the program ends as planned in March.
Home sales also have been supported by an $8,000 tax credit for first-time buyers. It, too, was set to expire in 2009 but was extended by Congress through the first half of 2010.
On the foreclosure front, the government's battle is far from won. Loan servicers signed up 728,000 borrowers through November for trial loan modifications under the Obama program. Just 31,000 have received a permanent fix so far, or fewer than 5% of those eligible.
Adding to the problem, the number of struggling homeowners is steadily mounting. One in seven households with mortgages was either in foreclosure or delinquent on payments at the end of September, the most recent data available from the Mortgage Bankers Association. Some owners are defaulting because they have lost their jobs.
Some are giving up their homes because the value has fallen below what they owe. Prices have fallen 29% from their July 2006 peak to October 2009, based on the S&P/Case-Shiller Home Price Index, which tracks home values in 20 cities. Nearly one in four mortgage holders owe more than their homes are worth, according to First American CoreLogic, leaving many potential "move up" buyers trapped in homes they can't sell.
"You don't see the normal food chain working," says Ivy Zelman, chief executive of Zelman & Associates, a housing-research firm.
More foreclosures are expected next year as loan delinquencies climb. "It's really hard to envision a positive scenario of home prices going up when you've got this huge overhang," Lazard's Mr. Temple says.
Meanwhile, the pain is just beginning for commercial-property markets. Deal makers who took out huge loans to buy property during the boom often justified the sky-high prices they paid by assuming that rents and occupancy rates would keep rising. Instead, both have plummeted.
Take Midtown Manhattan, the most expensive office market in the U.S. The amount of available space has increased by 16 million square feet since the beginning of 2008, according to brokerage CB Richard Ellis Group Inc. That is roughly equivalent to 16 empty 40-story office towers. Midtown building owners have dropped their asking rents by more than 30% since November 2008.
As rents and property values fell and the extent to which banks are exposed to commercial-real-estate losses became increasingly clear, the government scrambled to contain the damage. The Federal Deposit Insurance Corp., which has been seizing banks hurt by bad property loans, is offering private investors lucrative financing to buy and work out those loans.
In the biggest such deal, Barry Sternlicht's Starwood Capital Group last fall led a group of investors who paid $2.8 billion for a portfolio of 112 construction loans made by Chicago's Corus Bank with a face value of $5 billion. Small and midsize banks are particularly vulnerable to being dragged down by their real-estate portfolios.
"There are going to be huge losses and a huge number of banks failing," says Deutsche Bank commercial-real-estate analyst Richard Parkus. "This is just the tip of the iceberg."
More than $1.4 trillion in commercial mortgages will come due by 2013, and as much as 65% of those will have trouble getting refinanced, Mr. Parkus says.
One major wild card in 2010: When will big investors get back into the market?
For now, institutions that control more than $100 billion in unspent capital earmarked for real-estate deals have been gun-shy, waiting for prices to drop and more distress to come.
Research firm Real Capital Analytics recorded only $42 billion in U.S. commercial-real-estate transactions through November 2009, compared with $136 billion in the same period in 2008 and $489 billion in 2007. But optimists believe that all that money on the sidelines will make for a quick rebound when investor sentiment improves.
"When confidence returns to the markets," says Dan Fasulo, Real Capital's head of research, "I think things are going to spiral upwards again very quickly."
Corrections & Amplifications
More than $1.4 trillion in commercial mortgages will come due by 2013, according to a Deutsche Bank analysis. A previous version of this article incorrectly said the number was $1.4 billion.
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