Posts
“There’s no nice way to spin it,” keynote speaker Richard Green, director of the USC Lusk Center for Real Estate, said of the local economy. “The jobs picture in San Bernardino-Riverside County right now is not particularly good. People want to know when are things going to bottom. Will we have a 'V' or 'U' in terms of the recovery?”
Green was one of a host of speakers and panelists who tackled issues ranging from how the changes in the economy, the credit markets and commercial real estate have affected the Inland Empire to what industry leaders see for the immediate and long-term future. His remarks, and those of some others, stood in contrast to the upbeat news that emanated from the Inland Empire for years before the nation's subprime excesses, soaring energy costs and general economic malaise clamped down on every part of the country, even high-flying regions lining the Inland Empire.
The Inland Empire chalked up some of the nation's biggest growth numbers before the downturn. Powered by one of the country's biggest home-building booms, the Inland economy provided a fertile ground for developers to launch scores of retail, office, industrial and multifamily projects.
Now that the economy has slowed and the capital markets are in turmoil, industry leaders and other professionals in the commercial real estate industry are facing a host of questions regarding the near and long-term future of this two-county region east of Los Angeles. Chief among the questions is “When do we hit bottom?” both nationally and in the Inland Empire.
There has never been, until now, a decline in the median home prices nationally since the Great Depression, Green pointed out. The median income is falling and “financial institutions are in an environment of fear,” he added.
In the Inland Empire, existing home sales rose from a year ago, but a lot of that was foreclosure sales, he noted. The good news is “prices have come down so fast and rents have gone up enough that house prices in this region are sensible.”
Green also said educational attainment in the area is lacking. “The Inland Empire lags Southern California, it lags the state of California, it lags the United States as a whole,” he added. According to Green, the percentage of high school students taking college prep classes in Los Angeles County is 37%, slightly above California’s 35.3%, while in Riverside the number is 31.8% and in San Bernardino it’s is 25.5%.
That’s a bad sign for the Inland Empire because educational attainment is a good measure of future incomes, Green said. “This is a good projection of how incomes grow,” he said.
Following Green, a Town Hall Meeting tackled the question, "How Will the Inland Empire Fare in 2009?" The topics covered ranged from the impact of high fuel prices, the credit crisis, the housing slump, flat job growth--and how real estate professionals find and capitalize on opportunities in a confused market.
Job losses for 2008, diminished tenant demand and a generally rugged economy, “have pushed class A office vacancy to its highest level in more than two decades,” said panelist Doug McCauley, regional manager for Marcus & Millichap. He added that Marcus & Millichap anticipates vacancy to reach 15.2% by the end of the year.
Panelist Kim Snyder, senior vice president of the southwest region for AMB Property Corp., says the pinch at the pump is impacting industrial. “Fuel costs are definitely having a major impact on the industrial business in the Inland Empire,” Snyder said.
Panelist Mary Jane Olhasso, economic development director for Ontario, defended the region. “We also have a lot of industrial manufacturing, engineering related to the manufacturing process…medical manufacturing,” she said, noting that “The office sector along the I-10 corridor, that’s the future in our opinion” and that the general development plan from Vineyard to the Interstate 15 Freeway is “just phenomenal.”
She acknowledged the area is “in this bubble of negativity that’s not shared by everyone,” but that the long-term outlook for the Inland Empire is positive, she said, noting that “he who has the work force wins. And guess what? We have the work force. At the end of the day this is where people are going to live in the next two decades.”
Snyder also added his confidence in the long-term outlook for the Inland Empire: “Not only is it a good value, but it’s the best real estate product in the business.”
A new session at this year's RealShare event was a corporate perspectives panel, which included commercial real estate end users and those who represent them talking about the market from their standpoint, why they are in the market, where they are expanding as well as why and where they think the economy is headed.
Another new panel this year addressed how to improve return on investment and save money by going green. Aside from the panels above, RealShare Inland Empire's panels throughout the day included sessions on the capital markets and how investors are getting deals done in today's climate, how the cities and municipalities of the Inland Empire are catering to the diverse needs of its end-users, what it takes and costs to finance deals.
G. Ryan Smith, a senior vice president with Newport Beach-based Buchanan Street Partners, said that “It used to be if you had a heartbeat, you could get a loan. It’s a different world than it used to be.”
Harold Rose, managing director for Greystone, summed things up: “We’re back to the basics,” Rose said.
Following the final session, the event concluded with a networking cocktail hour. RealShare Inland Empire and other RealShare events are produced by Real Estate Media, the publisher of GlobeSt.com, Real Estate Forum magazine, Real Estate Southern California magazine and other publications devoted to commercial real estate.
No comments:
Post a Comment