Tag Archives: Orange County

New Office Construction Down 91% in Orange County – Dozens of High-Rise Projects Stalled

An ominous sign for the Southern California commercial real estate market – and for the economy in general – is the report this week that office construction in Orange County, California, plunged 90.8 percent in the second quarter of 2008 from last year’s figures.

According to a report from Voit Commercial Brokerage, “The first half of 2008 has been characterized by a significant reduction in office development in Orange County.” 

“The total space under construction in Orange County at the end of the second quarter is 325,276 square feet,” said Jerry Holdner, vice president of market research for Voit Commercial Brokerage. “The total amount of construction is 90 percent lower than what was under construction at the same time last year.”

A drive down the 405 Freeway in Irvine shows dozens of stalled high-rise office construction projects.

Perhaps another indicator of the bust in office construction are the recent closings of several high-end restaurants in the Irvine Spectrum, which had relied substantially on business lunches. 

The slowdown in new office construction in Orange County means that more jobs will be lost in the building sector, and indicates that few companies plan to expand, or move to, this affluent and still high-priced Southern California county, which had served as the epicenter of the subprime mortgage industry.

On the other hand, the lack of new construction will likely mean that the vacancy rate for Orange County offices, which has been climbing steadily, will come down.

The vacancy rate is at 14.46 percent this quarter, which is significantly higher than the 8.95 percent vacancy rate recorded in the second quarter of 2007.

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New Toy Story Ride at Disney’s California Adventure is a Blast — and David Beckham is For Real

We went to Disney’s California Adventure today to ride the newest attraction — “Toy Story Midway Mania!”

We had won an annual pass-holder contest and we got to test the ride before it officially opens for the public on June 17.

The ride is gracefully charming and fantastically fun. You’re given 3-D glasses, then seated in a double-facing car that takes you through a nostalgic world of old children’s games (including Candy Land, Barrel of Monkeys, Chinese Checkers, Old Maid, and Disney’s own old Adventureland game) and then to a series of virtual midway style “shooting galleries” hosted by 3-D characters — including Woody and Buzz Lightyear — from the Toy Story movies.

You score points by hitting virtual 3-D targets with various virtual 3-D projectiles – including darts, baseballs, and eggs – from a cannon.  Targets explode, rockets take off, balloons burst, and china plates are blasted into hundreds of flying pieces – all in stunningly realistic 3-D.

Our family rode the ride at least seven times (maybe eight) and it was great fun each time.  I think we grown-ups enjoyed it at least as much as our nine year old son.

We saw something else noteworthy at California Adventure today – soccer great and Los Angeles Galaxy captain David Beckham and his wife Victoria (“Posh Spice”) and their children.

They looked like the moms and dads that sit next to us on the T-Ball field.  Nice to see celebs dressed down and kickin’ it with the kids.  We did do a double take on Posh’s tattoo on the back of her neck just to be able to check and make sure it was her (yes it was). 

What was especially noteworthy about the Beckhams was their complete lack of pretentiousness, affectation or self-importance – no entourage, no bodyguards, no (visible) security, and no nannies. Just the Beckhams and another couple enjoying the park with their children on a beautiful Southern California day.

UPDATE:

Someone sent us a picture of the Beckhams at Disneyland later in the day, looking a bit tuckered out.

 

Chronology of Home Price Declines in Orange County — Median Home Price Now Lowest Since March ’04

We found this chronology of the decline in median home prices in Orange County, California, showing a $179,000 decline in single family home prices from its high in June 2007:

Single Family Median Home Price:

2006 ~ Monthly

$690,000 = Feb
$695,000 = Mar
$705,000 = Apr
$705,000 = May
$700,000 = Jun
$699,000 = Jul
$685,000 = Aug
$680,000 = Sep
$665,000 = Oct
$660,000 = Nov
$665,000 = Dec

2007 ~ Monthly

$675,000 = Jan
$675,000 = Feb
$695,000 = Mar
$720,000 = Apr
$695,000 = May
$734,000 = Jun — Peak of O.C. Housing Bubble
$718,000 = Jul
$710,000 = Aug
$655,000 = Sep
$650,000 = Oct
$655,000 = Nov
$600,000 = Dec

2008 ~ Weekly ~ Monthly

$600,000 = 01/07
$595,000 = 01/15
$595,000 = 01/23
$583,250 = Jan
$585,000 = 02/07
$575,000 = 02/13
$575,000 = 02/22
$575.000 = Feb
$580,000 = 03/07
$575,000 = 03/14
$567,000 = 03/20
$570,000 = 03/26
$570,000 = Mar
$553,750 = 04/08
$565,000 = 04/14
$563,000 = 04/22
$550,000 = 04/28
$555,000 = Apr

The most recent DataQuick stats from April 2008 show a $500,000 median selling price. 

The last time median home prices were this low in Orange County was March 2004.

Perhaps even more disturbing: nearly four out of every 10 homes sold in Southern California last month was a foreclosure.

 

Seasonal Boost in Southern California’s Home Sales Lowest in 20 Years — Median Home Prices Continue to Fall as Foreclosures Rise

According to DataQuick, “The onset of spring did little to thaw Southern California’s semi-frozen housing market: The seasonal boost in sales between February and March was less than half its normal level and a record low.”

The data shows that 12,808 new and resale homes and condos sold in Southern California Los Angeles, Orange, San Diego, Riverside, Ventura, and San Bernardino Counties in March. 

Although that figure was 18.8 percent higher than the 10,777 sales reported in February, it was down 41.4 percent from March 2007.

In addition, while DataQick’s statistics show an average seasonal increase of 38 percent in sales between February and March for the last 20 years, the 18.8 percent increase for March 2008 was the lowest seasonal sales boost in DataQuick’s records, which go back to 1988.

As expected, the data showed a continued increase in foreclosure resales and a decline in median sale prices.

More than one out of three Southern California homes that resold last month, nearly 38 percent, had been foreclosed on at some point in the prior year.  Last year such sales were only 8 percent of the market.  At the county level, foreclosure resales ranged from 28.8 percent in Los Angeles County to 56.4 percent in Riverside County.

The median price for a Southland home last month was $385,000, the lowest since $380,000 in April 2004. Last month’s median was down 5.6 percent from February’s $408,000, and down a record 23.8 percent from $505,000 in February 2007.

Significantly, the psychology of the current real estate market is creating its own downward drag on prices, as potential sellers are waiting for the market to hit bottom and potential buyers are waiting for prices to fall further. 

DataQuick president Marshall Prentice explained: “We continue to believe a lot of people who could be buying or selling right now are opting to sit tight until they sense we’ve hit bottom. Often what we’re left with, especially in inland areas, are sales driven by foreclosure or the threat of it.”

Here’s what we know:

Those who can hold on to their property are holding.

Those who can buy are waiting.

Like scene before the climax in an old Hollywood Western, the California real estate stand-off continues…

Or as Commander Bart Mancuso says in The Hunt for Red October: “The hard part about playing ‘chicken’ is knowing when to flinch.”