homesmillbrae.com » Sequestration

A chat with commercial real estate broker Phil Mahoney

Sat, 27 Apr 2013 05:52:42 +0000

When a megadeal lands in Silicon Valley, there’s a decent chance veteran Bay Area commercial real estate broker Phil Mahoney had a hand in making it happen.

Google’s 715,000-square-foot lease in Sunnyvale. The 600,000-square-foot campus for LinkedIn in Sunnyvale. A Sunnyvale lease for 600,000 square feet for a new campus to be occupied by Amazon unit Lab 126. The just-concluded 100,000-square-foot deal for Softbank affiliate Starburst in San Carlos. Mahoney, an executive vice president with the Santa Clara office of Cornish Carey Commercial Newmark Knight Frank, helped guide all of these to a successful conclusion.

Each year, Mahoney kicks off the Cornish Carey annual forecast for the commercial property sector in the South Bay. This newspaper recently spoke with him about his outlook for the Silicon Valley commercial property sector. Mahoney’s comments have been edited for length and clarity.

Q How do you see the Silicon Valley market in 2013?

A There is no way that 2013 will repeat what occurred in 2011 and 2012. Those were incredible years, and there was so much space leased that it was not sustainable. We never expected that this year would be like either of those years. The market is taking a bit of a breather in that tenants have absorbed millions of square feet. Much of that square footage that was leased the last year is now being retrofitted for occupancy.

Q How long might this breather

last?

A We see 2014 returning to a very strong leasing mode when companies have digested what they took in in 2011 and 2012. Late 2013 and into 2014 should be very good.

Q What is driving the leasing?

A This is all underpinned by a strong economy, a good tech economy. The economy is strong enough to withstand problems, whether they be things such as North Korea or budget sequestration.

Q Is it helpful that there is a breather?

A If you are a property owner with a big empty building, now is not a good time to take a breather. But it is healthy in that it gives transportation infrastructure time to catch up to all the leasing that has occurred. And if you get into an overheated situation, you can get an overbuilt market, which isn’t good.

Q San Francisco’s mayor has said his city is the innovation capital of the world, which suggests San Francisco overshadows Silicon Valley. Is that assessment on target, or off target?

A I’d say the reports of San Francisco becoming the new Silicon Valley are overdone. Quietly, some of the larger tech companies are starting to push back a little bit on the whole San Francisco scene. There is a little bit of a wait and see about how it all works out. Some of companies have deferred major expansions in San Francisco and are doing it in the Santa Clara Valley proper instead.

Q Is the current surge in tech leasing like the dot-com boom that became a bubble, or is this the real deal?

A There is no comparison. This time there are no Pets.com, no Webvan. There is very little fluff we can see. These are real companies with real revenues and real profits. They don’t just depend on eyeballs looking at their websites.

Q How strong is the current crop of tenants?

A Never in my 30 years have I seen this number of creditworthy tenants in the market. Amazon, Google, Apple, LinkedIn, Facebook, Microsoft, Juniper, these are strong multibillion-dollar companies with healthy balance sheets.

Q This tech boom looks to be here for a while?

A This definitely has legs. We are probably in the middle innings of a recovery in Silicon Valley.

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos.

Phil Mahoney
Age: 53
Birthplace: Cambridge, Mass.
Company: Cornish Carey Newmark Knight Frank
Position: Executive vice president
Residence: Los Altos Hills

Five things about Phil Mahoney
He was a lifeguard on Cape Cod while in college.
He is a former college football player, a starting defensive end with Stanford University and a teammate of NFL Hall of Fame quarterback John Elway.
He has lived in England, in a small town on the Thames River as part of a Stanford overseas program.
He once skied in Scotland.
When he began his current career, he had three jobs: commercial real estate broker, a mover for a moving company, and a bouncer at a Palo Alto night club

Article source: http://www.insidebayarea.com/breaking-news/ci_23115274/chat-commercial-real-estate-broker-phil-mahoney

US Homeowners Rise Above Water on Mortgages

Fri, 22 Feb 2013 00:35:44 +0000

The negative equity numbers also don’t say anything about whether or not the loans coming out from underwater are delinquent. While the overall delinquency rate dropped dramatically in the fourth quarter of 2012 to 7.09 percent of all loans, according to a survey released Thursday by the Mortgage Bankers Association, nearly 11 percent of all U.S. mortgages are either delinquent or in the foreclosure process.

“One cautionary note is that the 90 day delinquency rate increased by 8 basis points, reversing a fairly steady pattern of decline and the largest increase in this rate in three years,” notes the MBA’s chief economist Jay Brinkmann.

(Read More: Why Sequestration Will Hit Housing on Several Fronts)

These so-called “seriously delinquent” loans are being processed more quickly now that new foreclosure rules are in place and will therefore be sold back to banks or investors in the next few months. Those sales would therefore be shown as loans coming out from underwater because they would cease to exist.

Another important factor in looking at negative equity, as with everything else in real estate, is location:

“Among the nation’s 30 largest metro areas, those with the highest number of homeowners freed from negative equity last year were Phoenix (135,099 homeowners freed in 2012); Los Angeles (72,936 homeowners freed in 2012); Miami-Fort Lauderdale (70,484 homeowners freed in 2012); Dallas-Fort Worth (59,461 homeowners freed in 2012); and Riverside, Calif. (58,417 homeowners freed in 2012),” notes the Zillow report.

(Read More: Taking The Real Estate Recovery Local)

The highest volume of underwater borrowers were in the most distressed states, where the foreclosure rates are high and where investors are pursuing short sales fervently. It is therefore incorrect to make the assumption that all of the “newly freed” borrowers are either still in their homes with newfound equity or sold at any kind of profit. Of course this also means that negative equity may cure faster than anticipated, since it is so highly concentrated in certain hot investor markets.

The return of home equity is good news for the greater economy, as it makes borrowers feel better about their own personal wealth and therefore more apt to spend. It could also prompt more borrowers to sell their homes. Unfortunately that will not do much to ease the severe inventory shortage of homes for sale, as most sellers will be buyers as well. There are currently just 1.74 million homes for sale, the lowest since December of 1999.

(Read More: Fewer Borrowers Are Behind on Mortgages, but for How Long?)

Article source: http://www.cnbc.com/id/100480500

How Sequestration Cuts May Pummel Housing

Thu, 21 Feb 2013 06:20:28 +0000

Sequestration could also hit the nation’s home builders, especially those with a large footprint around Washington, DC and Northern Virginia, like Toll Brothers, which reported a first quarter profit Wednesday, and NVR.

“Industry tailwinds look to be gaining steam, but we believe Toll has one very large impediment to cross: The sequester,” said housing analyst Stephen East at ISI Group. “With a large portion of its sales in the Mid-Atlantic area, the next few months order streams will be extremely important as the sequester knife is falling hard on well-paying defense industry jobs.”

Sequestration could even slow the improvement in the nation’s foreclosure rate. It would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling through HUD grants, according to the government agency.

(Read More: The Inside Story of America’s Economic Crisis)

“This counseling is crucial for middle class and other families who have been harmed by the housing crisis from which we are still recovering, and are trying to prevent foreclosure, refinance their mortgages, avoid housing scams, and find quality, affordable housing,” said Secretary Donovan. “Studies show that housing counseling plays a crucial role in those two efforts. Distressed households who receive counseling are more likely to avoid foreclosure, while families who receive counseling before they purchase a home are less likely to become delinquent on their mortgages.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100474955