San Fernando Valley Office Rental Market Picking Up Slowly

Year end 2010 left us with conservative but encouraging recovery in the office sector.  Still the fourth quarter left landlords with presistent challenges ahead.  With multiple spaces for quality tenants to choose from, low market rents coupled with high improvement cost have pushed majority of the smaller landlords without deep pockets out of this leasing market. Not to mention the need for many existing tenants that has excess space trying to downsize.

The pace of lease transactions have picked up toward the end of the year as confidence in our economy is slowly recovering.   Over the course of this year, we should see a stabilization of rents as we have seen a decline for 12 straight quarters.  New employment and business growth is certainly the leading factors to stabilization of rents and absorption of excess space.

Commercial Real Estate Deals Getting Done!

Compared to last year, Buyers are getting off the sidelines and refocusing on acquiring deals.  It just makes sense to buy a property as an Owner User if your intension is to hold on to it for the next 5 to 10 years.  The market has come down significantly since the peak of 2007 and many potential Buyers that were once on the fence to purchase now see more opportunity than ever.  As a stable or growing businesses, it looks like you're in luck as rents have come down significantly and the opportunity to buy as an owner user is tremendous.  The SBA financing market is a driving force to the amount of sales transactions we are seeing today.  

Sellers that have to dispose of their assets will find a challenging market ahead of them.  Until traditional financing comes back to the marketplace, creative financing is the only option.   Unfortunately as a Seller trying to unload a property that has signs of becoming distressed will certainly face competition against some of the toxic bank assets that are now being forced to sell on to the open market with realistic prices. 

I've been tracking some of the banked owned properties for the past year now and those that went into distress about a year ago are now being sold. For some of the Banks that tried the "Pretend and Extend", the reality is that some of the distressed assets have no other option than to be sold at a loss.

See what Lee & Associates LA/North has recently sold and leased on the link below. 



Still On The Fence

San Fernando Valley Office & Industrial 2nd Quarter 2010 Market Analysis

Leasing Activity Jumps; Pushes Absorption Into Positive Territory

Q2 2010-LAN Office 7-10

Leasing Momentum Continues and Sales Activity Increases

Q2 2010-LAN Industrial 7-10