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Thursday, Mar 28, 2024
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Economy Forces Tenants to Think Short-Term

Tenant leasing remains weak, according to Grubb & Ellis|BRE Commercial? first-quarter office report released this month. Vacancies crept up to 16.8 percent in the first quarter from 15.8 percent in the fourth quarter of 2008 and from 12.8 percent from the same quarter last year.

The local brokerage said major reasons for the rising vacancy rate included downsizing by businesses affected by the economic downturn, an increase in supply of office space due to new construction completions in 2008, and an overall decrease in tenant activity.

Grubb & Ellis noted two prominent trends. Tenants are signing leases for less space due to previous staff reductions, downsizing space to save money, or decreased optimism in regard to future expansion.

The second trend was tenants with expiring leases are opting to sign one-year extensions rather than long-term leases to keep their options open.

The brokerage said these two trends exist despite landlords offering free rent and other concessions to tenants willing to sign long-term leases.


???p>Mall Owner Seeks Quick Exit From Bankruptcy:

General Growth Properties, one of the nation? largest shopping center owners, filed for Chapter 11 bankruptcy April 16. The Chicago-based real estate investment trust is owner of 158 shopping centers, including Otay Ranch Town Center in Eastlake and Chula Vista Center in Chula Vista.

General Growth Properties said it intends to emerge from bankruptcy as quickly as possible, and added day-to-day operations at its properties will continue as usual.

?ur core business remains sound and is performing well with stable cash flows,?said CEO Adam Metz in a statement. ?e believe that Chapter 11 is the best process for restructuring mature mortgage loans, reducing the company? corporate debt and establishing a sustainable, long-term capital structure for the company.?

Metz said that while the REIT worked for several months to address its debts, the collapse in the credit market has made it impossible for it to refinance debt outside of Chapter 11.

Otay Ranch Town Center was built in 2006 and is 100 percent leased, according to CoStar Group, a Maryland-based commercial real estate researcher. Its anchors are AMC Theatres, Barnes & Noble, Macy? and REI.

The Chula Vista Center, built in 1962, was renovated in 2004. Its anchors are J.C. Penney and Macy?.

The two malls are ranked among the county? largest on the Business Journal? latest Shopping Centers list, published in March, by gross leasable square feet. The Chula Vista Center is ranked ninth with 885,000 square feet and Otay Ranch Town Center 14th with 627,000 square feet.

General Growth also owns South Street Seaport in New York and Fashion Show in Las Vegas.

General Growth Properties trades on the New York Stock Exchange under the symbol GGP.


???p>Lee & Associates Hires Five:

Lee & Associates has added five brokers to its San Diego office team this year. The brokerage picked three brokers from Sperry Van Ness and two from Cushman & Wakefield.

Steve Malley, a former vice president and managing director of Sperry Van Ness in San Diego, joined the firm as a principal. Malley specializes in selling and leasing office, industrial and retail properties. Before his tenure at Sperry Van Ness, Malley worked for Studley.

Mary Kay Bier and Ryan Munson joined Lee & Associates as senior associates. The two came from Cushman & Wakefield.

Mark Lewkowitz and Evan McDonald joined as associates from Sperry Van Ness.

The additions bring the University Towne Center office broker count up

to 21.


Send real estate, construction, design and urban planning news to Michelle Mowad at mmowad@sdbj.com. She may also be reached at 858-277-6359, ext. 3109.

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