Every day it seems, we read in the newspapers or see on television economists and other media analysts telling us that our national economy is having serious problems. The recent takeover of IndyMac Bank by the Federal Deposit Insurance Corp., the second largest bank failure in U.S. history, and the federal government’s emergency planning for the propping up of Freddie Mac and Fannie Mae are indicators of the seriousness of the problems. The homebuilding industry, which has a multiplier effect that touches so many areas of our national economy, has come to a virtual stop as a result of a combination of oversupply and foreclosures on defaulted mortgages. Additionally, rising oil prices are affecting everything from auto, boat, and RV sales, retail and restaurant sales and tourism (air travel, hotels, rental cars, and entertainment). Retail chains are downsizing and restaurant chains are slowing their growth. Food prices are rising at unprecedented rates. Manufacturing jobs are leaving our shores for countries where labor costs are significantly lower than they are here in our country, increasing unemployment in countless communities as they close plants. Detroit’s automakers continue to struggle to survive against foreign brands that are more stylish, more fuel efficient, and cost less than what the Big Three are producing.
The astute real estate investor or expansion minded business person will see opportunities in a difficult market like the one that we are currently experiencing. The land investor sees the presence of fewer potential competitive buyers and lessening land prices as an opportunity to secure quality properties now at bargain prices for future development. The oversupply of office rental space in the Coachella Valley has caused owners to become aggressive in lowering initial rental rates and increasing tenant improvement allowances. Office tenants looking for space have leverage that they may have never previously experienced in negotiating for space. They can choose from many opportunities at this time.
Likewise, retail rental rates have stabilized. The rampant increases in rental rates for pads and in line shop space that took place over the past few years have plateaued as more shopping centers have been completed and both national retailers and restaurants have slowed expansion plans. They are focusing more attention on same store or restaurant sales growth than on just adding additional operating units in order to achieve sales growth. Fewer tenants are competing for new retail space. Landlords are now working diligently with tenants to insure that the tenants’ occupancy costs are within a range that will allow the tenants to be successful if other operating objectives are achieved. These are opportunities for smaller retailers who are looking to add additional stores or else relocate to a larger facility.
The Coachella Valley continues to see new upscale retail and restaurants arriving to serve our growing permanent and seasonal populations, even in these difficult times. Mass merchandiser Target will be opening its first Supercenter in the CV this year in Indio. WINCO Foods will also open in Indio later this year. Fresh & Easy has opened two stores in the Valley with three more presently planned. Gucci, Bottega Veneta, Leggiadro, Optical Shop of Aspen, Buckle and Kate Spade are among the new specialty retailers that are either recently opened or coming soon to Palm Desert. Nordstrom keeps telling Valley residents that it is coming, although the exact year and location remain allusive. Mastro’s, Piatti, and McCormick & Schmick are among some of the upscale restaurants who will soon open units here. All of these folks have recognized the opportunity that the Coachella Valley presents.
Whether you are a tenant looking for space, a developer looking for land upon which to build or a landlord needing tenants, the professionals at Coldwell Banker Commercial Lyle & Associates can meet your needs. Give us a call today at 760-772-6400.
