- Tough times repress commercial real estate - black elk, 29.01.2002, 10:43
Tough times repress commercial real estate
Big Al's letzte Hoffnung bricht weg, der Immobilienmarkt. Erst der Markt für Industrieimmobilien, irgendwann dürfte auch der private Wohnungsmarkt das zu spüren bekommen.
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Tough times repress commercial real estate
Outlook contrasts with rebound
BY DAVID A. SYLVESTER
Mercury News
Just as Silicon Valley is starting to recover from its economic earthquake, the aftershocks are still rumbling through one of its biggest and most important businesses: commercial real estate.
A number of leading real estate firms are releasing their forecasts for this year, and all point to tough times ahead. The consensus says that rents will continue to fall and the amount of vacant space will grow this year. At the peak, more than 50 million square feet of office, industrial and research space could stand idle in the Bay Area, waiting for the next big boom.
``It's going to be a bleak year,'' agrees Ken Rosen, chairman of the Fisher Center for Real Estate at UC-Berkeley's Haas School of Business.
Or, as Philip Mahoney, executive vice president at Cornish & Carey Commercial, puts it: `` '02 is going to be rough.''
The squeeze on commercial real estate is one of the last major repercussions of the 2000 tech bubble. Just as commercial rents soared and vacancies plunged to historic lows during the bubble, the real estate market is suffering the brunt of the decline. An analogy would be that the flash of fireworks is seen long before the sound is heard, because sound travels more slowly than light.
In this case, the flash of the bubble popping has preceded the sound of the commercial real estate crunch by about a year.
``Silicon Valley goes through some pretty vicious cycles in both its economy and its commercial real estate market,'' said Mark Zandi, chief economist at Economy.com, a West Chester, Pa., regional consulting firm.
In 2001, the average rent asked for office and research space fell 58 percent from the previous year, from $4.83 a square foot to $2.02 a square foot, according to data from Joint Venture: Silicon Valley Network based on a survey by BT Commercial. Still, this remains above the average rent of $1.66 a square foot asked in 1999.
Similarly, vacancies have zoomed from 3.5 percent in 2000 to 16.2 percent last year, the survey showed.
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