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The first quarter was very telling. The national office vacancy rate moved almost a full percentage point higher to register 14.8 percent, occupied space fell by 26.7 million square feet and new office development, both completions and construction that is still under way, dropped precipitously. The same pattern is almost assured for the balance of the year.The vacancy rate is expected to rise by one percentage point or more in each of the remaining quarters through the end of the year, and occupied space is anticipated to shrink 25 million square feet. Tenants are looking to reduce their real estate…

The continuing recession has driven up office vacancy rates, depressed rents and increased the amount of sublease space at an accelerating pace, according to a Jones Lang LaSalle Inc. report on the U.S. office market’s first-quarter 2009.Effective office rents nationwide fell 10 percent in the first three months of this year, and the amount of leasing activity also fell sharply, falling 31.5 percent from the fourth quarter of last year. It remained more than 48 percent lower than levels achieved in the first quarter of 2008. Some markets saw much sharper drops than that, topped by St. Louis with 84…

The Department of Commerce announced last week that total business inventories, stocks of finished goods, work in progress and raw materials, decreased 1.3 percent in February, in line with expectations. The largest decline took place across the categories of furniture, electronics and appliances, consumption of which can be deferred until consumer confidence returns.Prior to every recession since World War II, unsold merchandise would accumulate in company warehouses. And past recessions have, in part, been attributed to excessive inventory levels. Historically, adjustment was slow and inventories did not meaningfully contract until the recession was over. Companies now employ minimal safety stock…

Southern California’s Inland Empire is a conduit for nationwide shipping for cargo arriving from the ports of Los Angeles and Long Beach. That placement had led to robust growth in recent years as developers added an average of 20 million square feet of new inventory annually, according to reports released recently from Marcus & Millichap Real Estate Investment Services Inc. But judging by first-quarter performance, declining fundamentals are adding up to a tough year for the 452 million-square-foot market, which spans Riverside and San Bernardino counties. For example, vacancy has jumped from 7.7 percent to 11.3 percent since the first…

The San Francisco Bay Area’s apartment market, which for some time seemed impervious to the economic downturn, has finally started to soften. In the first quarter of 2009, apartment vacancy rates rose to 5 percent from 4.2 percent, the largest increase since the dot-com bubble burst in 2001 as rates rose 71 percent. However, the Bay Area’s apartment vacancy rate still falls well below the national rate of 7.2 percent.Part of the decline in fundamentals links directly to the sudden and severe falloff in employment. As of March 2009, California’s unemployment rate reached a historical high of 11.2 percent, and…

Job losses are decreasing demand for apartments, but multi-family REITs may have some long-term trends in its favor, according to a recent Moody’s Investors Service report. The ratings agency tracks nine multi-family REITs, eight rated stable and one bearing a negative outlook. In the near term, these REITs are unlikely to face pressure from U.S. residents who are leaving their apartments to buy homes, owing to the fact that people do not want to buy assets that are falling in price, tough lending standards and the frightening employment picture.But multi-family REITs will face tremendous challenges from that same weak job…

As is the case with the multi-family industry, seniors housing is faring better than such real estate sectors as office and retail, and can still rely on the government for financing assistance in the midst of the credit crunch. In both cases, it is market fundamentals that are buoying the sectors. A case in point is Cambridge Realty Capital Cos.’ recent closing of $90.6 million of HUD-insured Section 232 loans on behalf of an Illinois-based borrower for the refinancing of a group of 10 skilled nursing facilities, referred to as the Granite Portfolio. “Right now, taking out a HUD-insured loan…

Just days after one of the largest commercial real estate bankruptcies ever–that of retail giant General Growth Properties last week–another high profile firm has filed for Chapter 11. Opus South Corp., one of the divisions of Opus Corp., has also been forced to say Uncle in bankruptcy court, citing the slumping Florida condo market as the main culprit.Opus South’s chief restructuring officer Anne Marie Solberg said that, though the firm had begun pulling back the pace of new condo development almost two years ago as the credit crunch and industry downturn began to loom, the severe nosedive taken by the…

Miami commercial property veteran Tere Blanca’s new services firm looks to be coming out of the gate quickly, despite the industry’s current slump. Just weeks after she launched Blanca Commercial Real Estate, the company landed the exclusive leasing duties for 1450 Brickell, a Class A office tower currently under construction in Miami’s Brickell financial district.Being developed by Rilea Group, the 586,000-square-foot 1450 Brickell is set for completion in the first quarter of 2010, and will become the first Miami office to be LEED Gold-certified for sustainability. For Rilea, tapping Blanca Commercial to oversee leasing was motivated by the past history…

With Texas’ business climate not quite as dire as in other parts of the country, Fort Worth’s AllianceTexas development hit almost record levels of leasing in the first three months of 2009 with more than 1.2 million square feet. About 600 new jobs were created at AllianceTexas in the first quarter, too. Last year, Dallas-based Hillwood leased 710,000 square feet in the first quarter at the 17,000-acre development. “Being in Texas is a huge advantage, in good or bad times, because companies are looking to be more strategic and efficient and Texas enables a lot of that,” Bill Burton, senior…