They feel your pain…

Since a lot of us are feeling some pain from the residential housing market in San Diego, I thought it might do us some good to hear of others in similar situations. Misery loves company, right?

Commerical real estate is falling right along with the residential market. Many thought this wouldn’t happen, that the two were not interwoven. In a Voice of San Diego article “Housing Trouble Spills Over into Commercial Real Estate“, one commentator said, “Anyone that says that residential is not affecting commercial is nuts, because it simply is. There are a ton of tenants who are in a difficult situation because of the housing market, residential real estate offices are closing their doors. … And that’s happening at the same time as the credit crunch.”

Residential sellers aren’t the only ones pulling their homes off the market. The LA Times reported in an article “The chill spreads to commercial real estate” that “One of Southern California’s largest office landlords, Arden Realty Inc., recently put six buildings on the block and then yanked most of them off. Two were in Los Angeles County, two in Orange County and two in San Diego.” Even with the properties valued at more than $200M, Arden didn’t like the offers they were getting and, as an Arden representative said in the LA Times article, “We’re moving forward on one sale in West L.A. and pulling back on the other five…We think we will get better values next year.”

The apartment sector of commercial real estate is included in this mess. Voice of San Diego’s interview with another expert cited woes of apartment properties due to the drop in the condo-conversion fad: “Robert Vallera, principal with local firm Commercial Realty Advisers, referred to an apartment property about to close in El Cajon that is selling for ‘perhaps 25 percent below where it would’ve sold two-and-a-half years ago.’”

If you’ve ever thought about investing in San Diego commerical property, then you must read Rick Halperin’s article “San Diego Commercial Rental Property“. He warns, “So if you are considering diversifying your investment portfolio by investing in San Diego commercial rental property, for now, you may want to think twice and even three times before taking the plunge.”

And since one man’s misfortune leads to another man’s fortune, there are investors out there that have played their cards right. The Union Tribune’s article “Prepping for reentry” spotlights two investors who are trying to make a buck on the commercial real estate meltdown. David Bourne and Chad Carpenter, co-founders of Equastone look to buy distressed and under-priced properties, even buying “ahead of the curve” with even lower prices. Bourne and Carpenter have done it before when they found “easy pickings in San Diego during the economic downturn of the mid-90s, buying several buildings in Carlsbad, Kearny Mesa and Rancho Bernardo.” Now, they’re back looking for San Diego property owners in distress.

We’re are far way away from where we were in 2006. To remember when we saw “62 deals valued at $3.5 billion and totaling 12 million square feet [which had] the market jumping” as well as the expected a rise in commercial lease rates and employment rates, go to San Diego Metropolitan’s Gary London’s post from 2006.

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Just the Facts, Ma’am: The Current State of Buyer Information

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