Chill Spreads to Commercial Real Estate

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The global credit crunch that took hold of financial markets in the summer is now taking the steam out of commercial real estate, the Los Angeles Times reports.


Office buildings, warehouses and shopping centers looked like a safer haven for big investors wary of falling prices for houses and condominiums. But now, the commercial side is feeling the pinch.


Even Southern California, which has been one of the country’s favored markets for investment in recent years, has seen sales cool off and prices paid for business properties decline. Some owners are holding onto their buildings and waiting for the market to improve.


But with a falling stock market, a shrinking dollar and widespread concern about recession, real estate deals are getting dicier.


“The biggest issue on both sides — seller and buyer — is that no one wants to pay or sell at a bad price,” said real estate analyst Raymond Torto. “They are all searching for ‘the market.’ ”


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.


Arden valued the properties at more than $200 million but didn’t like the offers it received.



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