By Darren Kim
A sluggish first quarter was a tough way to start 2009 in North and Central County.
Economists at University of California, Los Angeles, have forecast a bleak year, with significant unemployment increases through the second quarter of 2010.
In May, California’s unemployment rate reached 11.4%,the only time since the 1982 recession and the Great Depression that it has exceeded 10%.
In light of such forecasts, companies tend to delay real estate decisions in order to see what course the economy will take. These employers will continue to streamline by cutting labor and other costs, until the economic climate supports them in making longer term business decisions.
The first quarter saw deals in North and Central County decline, resulting in negative 1.25 million square feet of absorption across all property types.
Industrial space was hardest hit, as it recorded negative 1.14 million square feet of absorption, which is the worst recording since 2001.
Retail and research and development trailed the industrial market with negative 148,241 square feet of absorption for retail and negative 163,139 square feet of absorption for research and development.
Office space bucked the trend, yielding 36,881 square feet of absorption.
Vacancy increased from the fourth quar-
ter, with office space rising slightly to 15.4% from 15.3%.
Retail space rose to 4.9% from 3.9%, manufacturing and warehouse space hit 7.1%, up from 6.2%, and research and development jumped to 3.1% from 1.4%.
Average asking lease rates decreased as well, with office dropping to $2.13 from $2.23 in the fourth quarter, manufacturing and warehouse dropping 4 cents to 57 cents and research and development also dropping 4 cents to 85 cents.
Retail recorded the only increase, $2.09 to $2.21, likely due to the recent completion of development projects and new buildings on the market
Though it’s been a slow start, as we move through the second quarter, things seem to be getting a bit better. Activity in North and Central County has picked up, as prospering businesses are beginning to explore the market. Landlord concessions have been on the rise, and tenants and buyers are being enticed to take advantage of some of the best economic opportunities we’ve seen in the last several years.
Kim is a senior associate in the Anaheim office of CB Richard Ellis Group Inc.
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