Commercial Real Estate Blog

The latest unemployment numbers for August 2008 have been released and the economy continues to trend lower as unemployment nationwide, statewide, and locally have all continued to trend higher.

The graph to the right shows the trend over three years, but what we are seeing over a longer time period is that statewide, the unemployment rates have eclipsed now clearly eclipsed the rate which was reached during the lows of 2002-2003.

Locally, the story is a little different. While unemployment rates continue to rise here, we are still a ways off from reaching the type of situation we faced in 2002-2004, though our current unemployment rate has now reached a four-year high. In the San Jose-Santa Clara-Sunnyvale MSA, the unemployment rate now stands at 6.6%. In the San Francisco-Oakland-Fremont MSA, it stands at 6.2%.

Though likely not surprising to anybody, year over year investment sales both in the United States and on a worldwide basis are down dramatically. According to a Jones Lang LaSalle (NYSE:JLL) report cited by NREI, first quarter investment sales in the US came in at $39.2 Billion, a number which is down 69% from the year ago period.

Internationally, investment sales during the first quarter were $154 Billion, which is down 46% less than the $283 Billion number from a year ago. This statistic was provided by Real Capital Analytics.

There is a lot of money currently waiting on the sidelines to acquire assets, but for the time being sellers are not conceding much on price. That might change though over the course of the next one to two years as loans mature. As Macklowe Properties found out, refinancing a short term loan in this market is difficult to do. If owners don’t can’t meet the heightened equity requirements currently facing those looking to acquire or refinance assets, they might be forced to sell.