Last November, San Francisco Federal Reserve Bank President Janet Yellen gave a speech on the national economy and put the prospects for the commercial real estate market in stark perspective.
For decades, the contours of the Capital Region economy seemed etched in stone. Government, manufacturing and construction employed the bulk of the population. After the boom and bust of the past decade, however, the job profile of the future could be almost unrecognizable.
There’s an old joke that no two economists can agree on the economy, but as the nation, California and the Capital Region continue to weather the worst downturn since the Great Depression, economists are showing remarkable solidarity: They think we’re in a mess.
At a time of extreme economic stress, our state government has taken aim at one of the few resources communities have to repair their bruised economies — local redevelopment funds.
The design-build industry has been absolutely battered by the spoiled economy. Architecture and design firms lament layoffs, nonexistent financing and an utter lack of optimism for 2010. Yet a number of large regional projects are keeping local firms afloat and offering a silver, albeit temporary, lining.
Just because you can design, doesn’t make you an architect. That was certainly the message sent when the California Architects Board issued two fines of $2,500 each in September 2008 to Diana Suhanova, owner of All in One in Sacramento.
It might be hard to imagine, but Sacramento will start building thousands of houses and condominiums again — some day.
City planners and private developers in Sacramento envision a downtown shopping and entertainment hub pulsing with revenue and pedestrians. The mind’s eye replaces vagrants with decorative park benches and rundown storefronts with shiny new facades. And rather than dispersing at sundown, restaurant patrons and theatergoers would linger into the wee hours.
No part of the region has been immune to the retail woes that come with a lagging economy, but the Highway 50 corridor — Rancho Cordova, Folsom and El Dorado Hills — entered the slowdown crippled by its own geography.
A drive past a neglected home in Natomas or a shuttered Mervyn’s in Roseville is more than a sign of the strained Capital Region economy. It is also an expensive risk that can hit property owners at the knees.
If there was a soundtrack to banking this summer, it sounded something like the theme from “Jaws” — tense, ominous and hinting at unknown dangers below the surface.
The smart landlords are doing whatever it takes to keep old tenants and lure new ones. That includes free rent, bigger allowances for tenant improvements, free signs and plain old cash. “If there is less than two years remaining on the lease, a savvy landlord really should be talking to them about extending,” Frisch says. “Oftentimes landlords and property managers don’t start that conversation until it is much later in the lease term.” But if a tenant is in good enough financial shape to keep paying the rent, very few landlords will renegotiate a deal with more than two years left, Frisch says.
The new-home market in Solano County soared even higher than that of California as a whole, and it fell harder too.
The cost of lumber, steel, asphalt and other construction materials has been on a wild ride since the early part of this decade, but don’t be fooled by the relatively placid prices in 2009. Industry players say it’s likely just a brief respite before the roller coaster starts climbing again.
Liz Lum knew her 79-year-old mother, Anne Fong, wanted to live independently as long as possible, but Lum also knew that her mother’s Greenhaven house would need some modifications.
Before UC Davis played a huge role in bringing science and agriculture together and changing the course of history for California and the world, the importance of collaboration across disciplines was well recognized. That vision is perhaps nowhere better exemplified than at the campus Quad — the true heart of the campus since its founding — where the new Centennial Walk was unveiled last October.
The potential benefits of high-speed rail are huge. Transportation planners say a bullet train would meet or exceed the demand for transportation from our growing population between now and 2030 — at less than half the cost of building the five airport runways, 90 departure gates and 3,000 miles of new freeways that would otherwise be required. Building the system will provide 160,000 construction jobs and 450,000 permanent jobs in related industries, providing a much-needed boost to the economy.
The credit crunch and other broad changes in economic conditions cut a wide swath through the ranks of potential buyers. Those who are left are biding their time, lining up cash and waiting for a sweet deal, probably a distressed property at a bargain price. But far fewer multifamily properties are facing the default notices that helped drive down prices for single-family homes, and many landlords are trying to ride out the storm. The result is very few deals.
If Napa County is wine country and Calaveras County is frog-jumping territory, where does that leave a place like Solano? Trying to catch up, perhaps.Thirty years ago Napa County was where Solano is today, says Solano County Supervisor Mike Reagan. In 1992, Napa brought in $361 million in tourism revenue, and with $319 million, Solano wasn’t far behind. Fast-forward to 2006: Napa brought in almost $890 million, but Solano’s revenue only rose to $554 million.
Asset values are down, interest rates are down, and industry experts doubt the Obama administration will allow the current estate tax exemption to expire in 2010. That combination makes a ripe environment for creating or adjusting an estate plan, and financial advisers say acting now could save thousands — if not millions — of dollars later.