August Newsletter

1. CB RICHARD ELLIS :: MIAMI-DADE
Elizabeth Santos | Office Specialist | 305.779.3133 | elizabeth.santos@cbre.com
OUR VIEW August 2010
on recent economic releases
The following is an excerpt from a memo by Raymond G. Torto, early 2013—just over five years from the previous peak level of
PhD, CRE, my company’s Global Chief Economist with our Global employment.
Research and Consulting group.
The Employment % Change chart shows that this downturn was far
We urge caution in setting expectations into the third quarter longer and deeper than any in recent memory. This was partly due
and recommend steering clear of the panic of those suggesting to the double shock to both the credit and job markets. The credit
a double dip recession. The problem with the double dip analysis market shock has hurt small businesses in particular, as these firms
is that it had assumed that the pace of growth in early 2010 was are often viewed with more risk and typically face higher costs
normal and that future growth would continue at that pace. In for capital. The push by financial institutions to rein in lending to
addition to the hiring of temporary census workers, there were high-risk clients has hurt otherwise profitable businesses, forcing
other one-time events early in cutbacks, job losses and outright firm
2010 which will not be repeated. closures.
Firms started restocking
inventories that had been cut to Despite the fear in the job market,
the bone. Once restocked, the the recovery in the property market
pace of growth in manufacturing is progressing slightly better than
will slow. Federal transfers to expected. National office vacancy
state governments have helped rates and both retail and industrial
state and local governments availability rates increased only 10
avoid severe cutbacks in services basis points(bps) apiece in the second
as local tax revenues waned, but quarter. Given the recent pace
with these transfers reaching an of tenant demand and economic
end, state and local governments growth, we had expected growth
are expected to detract from anywhere from 20 to 30 bps in the
growth moving forward. quarter.
These temporary and one-time Part of the better-than-expected
effects helped the economy create performance is due to a fast-shrinking
more jobs than should have been development pipeline. The credit
seen at this point in our economic recovery. A sense of panic is shock has cut two ways with developers now facing severe limits
now setting in with those who set expectations that the strong pace on lending available for new construction. As a result, CBRE-EA
of growth seen early in the year would continue. The stock market is forecasting that the construction slowdown that will be seen as
has been on decline in response to this negative sentiment, but in a result of this economic downturn will actually surpass that of the
part this turnaround is to be expected as stock investors often get early 1990s, with many markets seeing an absolute shutdown of
ahead of themselves. new supply.
CBRE-EA is forecasting growth that suggests that the U.S. For the full memo, please e-mail your request to:
PROFESSIONAL PROFILE previous peak level of employment by
economy will return to the elizabeth.santos@cbre.com
Ms. Santos focuses on tenant representation for office users. She provides
Elizabeth Santos has over 18 years of experience in office leasing with over $150 million of
16 years of knowledge and expertise to her clients thus enabling them to
make informed real estate decisions. Ms. Santos has expertise in space
lease transactions during that time. Her primary focus is tenant representation. Elizabeth is
planning, lease negotiation, financial analysis, budgeting and construction
management.
currently on the Leadership Council for Take Stock in Children and a member of both the Doral
In the past three years, Ms. Santos has completed over 300,000 SF of
lease rep transactionsCouncil Dade County with a focus on the
Business within Miami and The Commonwealth Institute. She is the 2009 Rising Star for CBRE’s Miami
Airport West submarket. She is an acknowledged expert in this submarket
and Office and Top 25 for CBRE Florida.
has negotiated multiple transactions with every major landlord in the
submarket.
Elizabeth Santos
Senior Associate
Between 1992 and 2002, Ms. Santos represented institutional landlords on
Office Properties two significant suburban office parks in the Airport West submarket. Today,
©2010 CB Richarddraws upon that experience to advise her clients been obtained from sources believed reliable. While we do not doubt its
Miami Airport she Ellis, Inc. The information above has in their real estate
elizabeth.santos@cbre.com have not verified it and Santos was instrumental in warranty due representation about it. It is your responsibility to independently
accuracy, we decisions. In addition, Ms. make no guarantee, the on-site or
T: 305.779.3133 diligence phase of three separate sales of commercial properties totaling
F: 305.381.6462 its accuracy and completeness.
confirm over 2.4 million square feet and valued at over $160 million.
The following are some of the major lease transactions Ms. Santos has
Clients Represented
recently represented:
APL Logistics

2. CB RICHARD ELLIS :: MIAMI-DADE
Elizabeth Santos | Office Specialist | 305.779.3133 | elizabeth.santos@cbre.com
August 2010
Are we there yet?
I am frequently asked “do you think the increasing staff and other overhead. a commercial real estate broker – it costs you
recovery has begun?” My answer is not the nothing. Use a broker that focuses on office
one many want to hear. My gut is telling Why does this matter in your office decision? space and particularly in your area. Com-
me that we are at the bottom of the reces- Because business leaders are not making bold mercial office landlords crush residential and
sion. However, the bottom is going to be decisions. When faced with either relocating industrial brokers because they do not have
long and bumpy. I compare the bottom of or renewing, the vast majority is opting for the the expertise specific to office leases. Even
this recession to a dirt road – it’s bumpy with safe decision – renew. Even if the renewal I use experts. Last year my client needed
occasional potholes. This means that typically costs more or the space is slightly too large, a 60,000 sf warehouse. I brought in an
the road is flat, but then you hit some upward a renewal can be more easily justified than industrial broker to team with me because
bumps or you dip into a pothole. the expense and headache of a relocation. even though I was very familiar with both
Landlords realize this as well. Building owners the landlord and his leasing agent, my client
My theory comes from my conversations with are becoming extremely frustrated as they see deserved the best team possible. By bringing
the numerous business and community lead- quality tenants tour the market and then use on an industrial broker to team with me, the
ers I meet and confirmed by the information them as leverage in negotiations with their ex- landlord and leasing agent realized our client
provided by my Global Research group. I isting landlord. It means your landlord knows was getting the best advice and market data
have spoken to several companies that are it has an edge over its competitors. Having available. As a result, our transaction lowered
hiring, but from our discussions I find that said that, it is still a tenant’s market and land- the bottom on rental rates for the Airport West
these jobs are just pent-up demand and not lords are struggling to preserve income stream industrial market.
due to a strong increase in business. Fortu- during this downturn. No one wants to lose a
nately I am not seeing the fear I observed dur- single tenant, however, some fight harder than Call me for a free lease analysis and strategy
ing 2009. Even though business leaders are others. session. Meeting new people and learning
cautious this year, their panic has subsided. about their business is one of my favorite parts
The consensus is that productivity and rev- If your lease is a year from expiration, level of my profession.
enues must increase and stay elevated prior to the playing field with your landlord and utilize
The Oracle Agrees With Me
The Huffington Post and Yahoo! interviewed Warren Buffet recently. He described this recession as a “particularly tough” recession because it was
the “biggest bubble” he had ever seen and its effect “reverberates throughout the economy”. Mr. Buffet explained that “the American economy
almost sputtered to a stop in September 2008” and people became afraid. “People get scared in crowds. Their confidence comes back one at a
time.”
He says the stimulus is working and the economy will improve in the next 2-3 years. "We're hiring," he adds referring to many of his Berkshire
Hathaway companies, another sign that the recovery is on track. Mr. Buffet disagrees with Nobel Prize winning economist Paul Krugman’s predic-
tion of the economy “in the early stages of a third depression.”
In the interview, Mr. Buffett says "we're on the right course" and encourages President Obama to speak with "enormous confidence" about the coun-
try's economic future. As for the deficit, he believes that it is not a sustainable course to have the deficit equal to 10% of the GDP but believed it
,
was necessary to stimulate the economy.
He believes that the two most important items in the financial reform legislation should be changing the incentives for the CEO’s and Boards of the
“really big financial institutions” and “reducing leverage where it exists in extreme amounts”.
The best slides to watch are #1, #2, #8 and #10. See the interview at:
http://www.huffingtonpost.com/2010/07/08/warren-buffet-on-the-econ_n_639165.html#s111449
Personal Note
I recently celebrated my birthday and it was a wonderful day because my friends and family all remembered it. It reminds me of
a beautiful quote by Henry David Thoreau. “The most I can do for my friend is simply to be his friend. I have no wealth to bestow
upon him. If he knows that I am happy in loving him, he will want no other reward. Is not friendship divine in this?” I agree – the
phone calls were the best gifts. J