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Economy recovering in Silicon Valley ?
invite response
2011 Apr 29, 9:47am 3,492 views 6 comments
by rdm ➕follow (1) 💰tip ignore
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CrazyMan
2011 Apr 29, 11:26am
This isn’t my market but I would be nervous if I were in this area and waiting for further substantial drops in price.
That's a huge stretch which is too vague to be meaningful.
Prices inflated due to creative lending along with 4% unemployment, and that was with $2.50 gas and a head of lettuce that didn't cost me my next born.
Creative lending is gone. Even with 4% unemployment, it would be difficult to argue that current prices are sustainable.
I'm all for the economy recovering (never wanted to see it fail in the 1st place) and while this is good news, it certainly doesn't equate to current prices being sustainable. It's much more complex than just some commercial RE filling up.
Serpentor
2011 Apr 29, 2:38pm
commercial RE has been needing a pickup since the dot com bust. There are still a ton of office spaces empty in Sunnyvale/Santa Clara/Mountain View. Its slowly picking up but from Mathilda to Lawrence expressway, there are a ton of office space thats been empty for over 6 years.
terriDeaner
2011 Apr 29, 4:11pm
Prices inflated due to creative lending along with 4% unemployment, and that was with $2.50 gas and a head of lettuce that didn’t cost me my next born.
Creative lending is gone. Even with 4% unemployment, it would be difficult to argue that current prices are sustainable.
Right on. rdm, keep California dreaming dude.
Long way to go to come close to 1999 levels. Many of these building have been empty for the past 10 years. Most interesting to have seen is former smaller mfg, r&d space converted over as retail stores, government buildings and churches. We are still around 20-25% vacancy with little motivation to occupy and expand.
Read more: http://www.businessinsider.com/alaska-miller-silicon-valleys-ghost-towns-2009-10#ixzz1KzgTNiuD
Silicon Valley's booms set fire to the local real estate market and new construction followed. But after a year or so of recession, south bay is littered with ghost buildings and empty office complexes.
At 20.5%, vacancy rates are the highest they've been in the Valley since 2003. Vacancy in research and developments spaces is at 18.9%, according to CB Richard Ellis. In Sunnyvale, more than half of the available offices are empty.
Combined, a total of 41.7 million square feet of R&D and office space lay bare in Silicon Valley. That's twice the size of Monaco
Its slowly picking up but from Mathilda to Lawrence expressway, there are a ton of office space thats been empty for over 6 years.
Go back to mid to late 80s and it seems more like 20 years+ for that specific area.
B.A.C.A.H.
2011 Apr 30, 6:40am
The area used to be known as Golden Triangle, bounded by 237, 880 and 101 is also like a ghost town, lotsa commercial space there has been vacant the entire decade I have been commuting to that area.
One commercial building in that Triangle that my partner's employer vacated in 1995 still doesn't have a tenant. Nice building, too. Or at least it was in 1995.
There have been a few new industrial venues that were occupied here and there, probably also true in Detroit. But (perhaps unlike Detroit) most of the new development in the past couple of decades in that Golden Triangle has been residential and retail, mainly in and around The Rivermark, thank goodness for the ongoing continuation of the wave of wealthy Asians buying their way into the South Bay.
This isn't my market but I would be nervous if I were in this area and waiting for further substantial drops in price. Office space rentals generally mean new hires (if they are expansions rather then reshuffles) and this could at the least stabilize the mid and upper range residential market. I do not see this happening where I live (Southern Sonoma County), in fact there is an incredible amount of commercial real estate available for lease and no apparent takers.
When San Francisco developer Jay Paul left town for a Pacific Ocean yacht voyage about 10 weeks ago, his shiny new office complex in Sunnyvale, Calif., had been sitting mostly empty since it was completed in late 2008.
But by the time Mr. Paul returned last week, most of the Moffett Towers project's 1.6 million square feet of space had been accounted for.
Hewlett-Packard Co. and Motorola Mobility Holdings Inc. snapped up more than 600,000 square feet of space, while Microsoft Corp. was close to signing a lease for as much as 300,000 square feet, say people familiar with the matter. Brokers in the area now expect Mr. Paul to break ground on a 230,000-square-foot third phase of the Moffett project by next year, even if he doesn't sign a tenant ahead of time.
Technology firms, from tiny start-ups to giants like Google Inc., are again racing to expand, sparking a turnaround in the Silicon Valley office market that seemed far off just a few months ago. The amount of occupied office space in the area is on pace to increase by three million square feet this year, which would be the biggest one-year jump since 1999, according to Jones Lang LaSalle Inc. Rents for the best space in the most highly desired market, downtown Palo Alto, are up 25% from a year ago, while the vacancy rate has fallen to about 7%, the brokerage firm says.
Read more: http://online.wsj.com/article/SB10001424052748704729304576287241623208406.html#ixzz1KxVboA2u
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