To get a sense of how much Los Angeles' commercial real estate boom has sputtered out, try this.
Vacancy rates have doubled in some industrial strongholds, Class A office buildings are opening without a single tenant and high-profile marquee projects are being all but abandoned.
Consider SunCal Cos. plans for 10000 Santa Monica Blvd., a 45-story condo tower with a $400 million price tag.
When the Century City project was unveiled in February, it appeared to have an impeccable pedigree: The 600-foot glass tower was designed by French architect Jean Nouvel to appeal to European buyers. Signing up as an equity partner was storied investment bank Lehman Bros. Holdings Inc.
But that was before the financial markets collapsed and Lehman Bros. went bankrupt, forcing the Irvine developer to shelve the project.
"We are in an unprecedented time right now, when you see the instability in the financial markets. It is something like nobody has seen before," said Lew Horne, executive managing director of CB Richard Ellis Group Inc.'s greater Los Angeles region. "There is really no pattern or trend line to look at in terms of historical trend lines or other bear markets."
But it isn't just the big stuff and it's not only the financial crisis. With the economy soft, job losses piling up and international trade slowing, the real estate market is getting hit from all sides with nearly every county submarket affected, and midsize and small deals hit hard, too.
The average monthly asking rent for Class A office space across the county fell in the third quarter by six cents to $3.49 per square foot. The last time the county experienced a similar quarter-over-quarter decline was in 2001 amid the tech bust and Sept. 11.
And while the industrial market has remained relatively strong, it's not the hot market it was a year or so ago when booming international trade drove port-related businesses far and wide in search of warehouse space.
"So much of this is being by driven by investor psychology," said Richard Green, director of the Lusk Center for Real Estate at USC. "Because so much of this is being driven by fear, as well as real stuff going on, as long as people are scared and no lending is happening this is going to ripple through every sector of the economy."
The commercial real estate market got hit earlier this year when the capital markets froze in response to the continuing ripple effects of the subprime lending disaster, which ravaged the investment banking and insurance industries.
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