Tuesday, March 24, 2009

Early Warning on Governor's Race Issue

An amendment to Proposition 13 allowing for 'split rolls'. It is an idea that has been bandied about by certain people who are entertaining a run for the governor's office in 2010.

Basically, the idea is to allow a larger annual increase in property taxes for commercial properties and keeping residential restrictions in place. This may sound fine for some. Let the commercial market bear the brunt of any potential tax increase. What this is, however, is a job killer. Most landlords here already have figured out that it is smarter to structure your leases so that the property tax burden is shifted to the tenants. If taxes are allowed to increase annually this just passes the burden on to the business owner. If they cannot pass that on through price increases then it affects their ability to operate. California already has enough legislation on the books that makes it difficult for businesses to thrive. Don't do something that will make more businesses decide to consider Texas, Nevada or other tax friendly locations.

Just an early warning. I doubt it will gain any traction but if it does we will let you know.

Tuesday, March 10, 2009

Government Moving Towards Commercial Real Estate Bailout

The Christian Science Monitor has a very good article discussing the addition of commercial backed mortgage securities (CMBS) to the TALF (Term Asset Backed Securities Loan Fund) in order to assist with the growing amount of commercial debt that will be coming up for refinance this year. Some estimates now put the number at $300 billion that developers and owners need refinanced this year. With vacancies rising, values are falling and this could end up costing upwards of $1 trillion in government funds.

Here is a link: http://features.csmonitor.com/economyrebuild/2009/03/09/real-estate-woes-seep-into-malls-office-towers/

Thursday, March 5, 2009

New Unemployment Numbers Released

The latest unemployment numbers have been released for California and individual cities. The statewide unemployment reported in January is up to 10.1% from a revised 8.7% in December of 2008.



More interesting is that the Santa Barbara County unemployment numbers are up to 8.3% for the county as a whole, 5.9% for the City of Santa Barbara and 4.1% for the City of Goleta. Those numbers are still pretty low. We average more unemployment for the County than the US does as a whole but we have some pockets with unnaturally high unemployment like Montecito and Isla Vista. The individual city numbers can be more useful however and they still show a relatively strong market for Santa Barbara and Goleta.



We are confident that unemployment in this area will not see a drastic increase due to the relatively stable industries located here. Some areas that might possibly see some reductions would be continued layoffs in the financial services industry, as well as the tourism industry.

Wednesday, March 4, 2009

Blockbuster next on the block?

Blockbuster has hired Kirkland & Ellis LLP to help them explore a bankruptcy protection filing. This could affect the 7,500 Blockbuster stores around the country, but specifically those in our market. Their stock has dropped over 75% today on word of the exploration.

It is hard to not have seen this coming. With the competition from Netflix and the online streaming of video, Blockbuster in its current incarnation was not long for this world. They could emerge from this with a new business plan but that won't help the investors and landlords that have single tenant locations that will be affected by the loss of this tenant.