January 17, 2009
All the major brokerage houses have now rushed onto the bandwagon to announce the formation of new departments designed to assist lenders and owners of distressed assets. I even read that regional brokerage Cornish & Carey announced one the other day.
There is certainly plenty of blame to go around about why the industry is where it is today. You can point to the credit rating agencies, to Wall Street, and certainly to the investment managers and developers who ultimately were responsible for pulling the triggers. But I find it a bit disconcerting that the brokerage industry is taking so little responsibility for what has transpired.
Is it really sheer bad luck or timing that has led to millions of square feet of brand new, Class A office space sitting empty right now in Silicon Valley? Many of the projects which sit vacant today were being marketed well before the market tanked and credit froze up. The fact that those projects were unable to attract tenants even when the valley was experiencing unemployment rates south of 4.5% should tell you something about the actual market fundamentals and the contrasting data which was fed to developers and investors.
Developers, investors, and financiers very often use data about the market which they rely on their brokers to provide. Sure some of the developers are to blame as well for not doing their own critical thinking, but at some point their culpability ends where that of their own advisors kicks in.
Ultimately though things will find a way of working themselves out. But the difference seems to be that developers take responsibility in the form of a bankruptcy filing (that is unless they find some bailout money under the mattress) and brokers take responsibility by creating business units to help “solve” the problem they helped create. Is this an unfair attack? Perhaps, but only because it is a general observation and it doesn’t apply to every broker.
- The Irony of Silicon Valley
- California and Silicon Valley Unemployment Rate Numbers
- Silicon Valley Chapter of NAIOP Broker Luncheon
- Silicon Valley Rent, Vacancy, and Unemployment
- Startups Today, VC’s Tomorrow