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SD Realtor.
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February 17, 2008 at 3:53 PM #154567February 17, 2008 at 4:13 PM #154853
davelj
ParticipantI basically agree with you Bugs. When I use the term “bifurcation” I use it in the sense that “everything will suffer, but to varying degrees.” Perhaps I wasn’t clear on that point.
To use the residential market as an example, if the median peak-to-trough decline in SD County ends up being 40% – just to pick a number – there will be certain areas (think Chula Vista, Imperial Beach, etc.) that will decline by 50% and other areas (think La Jolla and RSF) that will decline by 20%. We have seen similar outcomes in previous downturns. (“Location, location, location” won’t save anyone from a decline, but it may save a lot of folks from the dramatic declines witnessed in other areas.)
I think we will see something similar on the CRE front going forward. All will suffer, but to dramatically varying degrees. But I could be wrong.
February 17, 2008 at 4:13 PM #154862ParticipantI basically agree with you Bugs. When I use the term “bifurcation” I use it in the sense that “everything will suffer, but to varying degrees.” Perhaps I wasn’t clear on that point.
To use the residential market as an example, if the median peak-to-trough decline in SD County ends up being 40% – just to pick a number – there will be certain areas (think Chula Vista, Imperial Beach, etc.) that will decline by 50% and other areas (think La Jolla and RSF) that will decline by 20%. We have seen similar outcomes in previous downturns. (“Location, location, location” won’t save anyone from a decline, but it may save a lot of folks from the dramatic declines witnessed in other areas.)
I think we will see something similar on the CRE front going forward. All will suffer, but to dramatically varying degrees. But I could be wrong.
February 17, 2008 at 4:13 PM #154953ParticipantI basically agree with you Bugs. When I use the term “bifurcation” I use it in the sense that “everything will suffer, but to varying degrees.” Perhaps I wasn’t clear on that point.
To use the residential market as an example, if the median peak-to-trough decline in SD County ends up being 40% – just to pick a number – there will be certain areas (think Chula Vista, Imperial Beach, etc.) that will decline by 50% and other areas (think La Jolla and RSF) that will decline by 20%. We have seen similar outcomes in previous downturns. (“Location, location, location” won’t save anyone from a decline, but it may save a lot of folks from the dramatic declines witnessed in other areas.)
I think we will see something similar on the CRE front going forward. All will suffer, but to dramatically varying degrees. But I could be wrong.
February 17, 2008 at 4:13 PM #154876ParticipantI basically agree with you Bugs. When I use the term “bifurcation” I use it in the sense that “everything will suffer, but to varying degrees.” Perhaps I wasn’t clear on that point.
To use the residential market as an example, if the median peak-to-trough decline in SD County ends up being 40% – just to pick a number – there will be certain areas (think Chula Vista, Imperial Beach, etc.) that will decline by 50% and other areas (think La Jolla and RSF) that will decline by 20%. We have seen similar outcomes in previous downturns. (“Location, location, location” won’t save anyone from a decline, but it may save a lot of folks from the dramatic declines witnessed in other areas.)
I think we will see something similar on the CRE front going forward. All will suffer, but to dramatically varying degrees. But I could be wrong.
February 17, 2008 at 4:13 PM #154577ParticipantI basically agree with you Bugs. When I use the term “bifurcation” I use it in the sense that “everything will suffer, but to varying degrees.” Perhaps I wasn’t clear on that point.
To use the residential market as an example, if the median peak-to-trough decline in SD County ends up being 40% – just to pick a number – there will be certain areas (think Chula Vista, Imperial Beach, etc.) that will decline by 50% and other areas (think La Jolla and RSF) that will decline by 20%. We have seen similar outcomes in previous downturns. (“Location, location, location” won’t save anyone from a decline, but it may save a lot of folks from the dramatic declines witnessed in other areas.)
I think we will see something similar on the CRE front going forward. All will suffer, but to dramatically varying degrees. But I could be wrong.
February 17, 2008 at 5:23 PM #154973SD Realtor
Participant“Over the long term, I think there are some Class A tenants who would be willing to move to Class B space if the rent differential made it worth their while.”
Funny you mention that Bugs. Right now I am negotiating a new lease for a business my wife owns. She is finishing up a 5 year term in class A space and we are searching in some class B/B+ space which should reduce our rent by close to 50% with very little loss of business. Our landlords in the current class A space refuse to budge on base rent price and it is also a NNN lease. Most of the class B/B+ buildings we are looking at are modified or full gross.
SD Realtor
February 17, 2008 at 5:23 PM #154896Participant“Over the long term, I think there are some Class A tenants who would be willing to move to Class B space if the rent differential made it worth their while.”
Funny you mention that Bugs. Right now I am negotiating a new lease for a business my wife owns. She is finishing up a 5 year term in class A space and we are searching in some class B/B+ space which should reduce our rent by close to 50% with very little loss of business. Our landlords in the current class A space refuse to budge on base rent price and it is also a NNN lease. Most of the class B/B+ buildings we are looking at are modified or full gross.
SD Realtor
February 17, 2008 at 5:23 PM #154882Participant“Over the long term, I think there are some Class A tenants who would be willing to move to Class B space if the rent differential made it worth their while.”
Funny you mention that Bugs. Right now I am negotiating a new lease for a business my wife owns. She is finishing up a 5 year term in class A space and we are searching in some class B/B+ space which should reduce our rent by close to 50% with very little loss of business. Our landlords in the current class A space refuse to budge on base rent price and it is also a NNN lease. Most of the class B/B+ buildings we are looking at are modified or full gross.
SD Realtor
February 17, 2008 at 5:23 PM #154872Participant“Over the long term, I think there are some Class A tenants who would be willing to move to Class B space if the rent differential made it worth their while.”
Funny you mention that Bugs. Right now I am negotiating a new lease for a business my wife owns. She is finishing up a 5 year term in class A space and we are searching in some class B/B+ space which should reduce our rent by close to 50% with very little loss of business. Our landlords in the current class A space refuse to budge on base rent price and it is also a NNN lease. Most of the class B/B+ buildings we are looking at are modified or full gross.
SD Realtor
February 17, 2008 at 5:23 PM #154597Participant“Over the long term, I think there are some Class A tenants who would be willing to move to Class B space if the rent differential made it worth their while.”
Funny you mention that Bugs. Right now I am negotiating a new lease for a business my wife owns. She is finishing up a 5 year term in class A space and we are searching in some class B/B+ space which should reduce our rent by close to 50% with very little loss of business. Our landlords in the current class A space refuse to budge on base rent price and it is also a NNN lease. Most of the class B/B+ buildings we are looking at are modified or full gross.
SD Realtor
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