The London Group in the News

DEL MAR, California—Hotel markets in southern and coastal California are hopping and as buyers who have been sitting on the sidelines begin to jump back in, the window of opportunity on attractive deals is starting to close, according to a panel of experts last week.

“We’re in the second inning of the recovery,” said Gary London, a San Diego real-estate economist and president of The London Group Realty Advisors. “We have a long way to go,” but the worst appears to be over, London said, pointing to strong gains in occupancy, revenue and transaction pricing in California’s coastal markets in 2011. Lenders remain cautious, however, making this primarily a cash market.

London and three other hotel real-estate experts offered forecasts and advice to an audience of investors and hotel operators from around the San Diego region at a panel called “Let the Good Times Begin.” Robert Rauch, president of R.A. Rauch & Associates, a San Diego-based hospitality management company, hosted and moderated the event in Del Mar.

Ben S. Bernanke’s success in pushing mortgage rates to record lows is enabling Congress to fund last month’s payroll tax cut extension by siphoning money from Fannie Mae and Freddie Mac, while homebuyers still benefit from the cheapest borrowing costs in history.

The legislation mandated that Fannie Mae, Freddie Mac and the Federal Housing Administration charge more to guarantee home-loan debt, starting with an increase of 0.1 percentage point at Fannie Mae and Freddie Mac in April. It will force further increases of as much as 0.45 percentage point over the next two years at the two U.S.-supported companies, according to Nomura Securities.

Increases of twice that amount would leave 30-year home- loan rates at levels unseen before 2009 after Federal Reserve Chairman Bernanke kept the short-term lending benchmark near zero and bought $1.25 trillion of mortgage bonds. The greater fees suggest that Congress and President Barack Obama’s administration are willing to bet the housing recovery is far enough along to withstand the rise.

“Rates are so low right now, that additional cost is marginal, said Mark Goldman, a mortgage broker at C2 Financial Corp. in San Diego. ‘‘The only impact it will have is on people who have a visceral reaction to being singled out to fund the extension of the payroll tax cut.”

We have survived a year of stagnation, but 2012 will be characterized by gradual growth. I had expected better numbers over the past year, but I should have known better. This was the big recession — for most of us still active in the workforce — and the big ones necessitate a longer recovery process. While the economic statisticians called the recession “over” a couple of years ago, they apparently were not the ones unemployed. They chose not to talk to the engineers of our economy — the employers — who failed to hire people back.

The San Diego housing market has been mired in a slump of low prices and low demand, due to a lack of financing. But the desire to buy homes hasn’t gone away. And that pent-up demand will eventually require the construction of more homes. But what will our future housing stock look like? And where will new homes be built? Morning Edition host Tom Fudge spoke with Gary London, president of the London Group Realty Advisors.

By Alan Nevin

It’s turban time!

It is that time of year when I gaze into the future and make inevitably accurate projections for the coming year in San Diego County.

It all starts with jobs and that’s a good thing because San Diego County gained some 25,000 jobs in 2011 and that’s totally without the assistance of the moribund construction industry.

This past year our County gained jobs in virtually every industry category except construction. Even the government, with all its prattle about cutbacks, actually gained jobs at all levels. And the bleeding stopped in manufacturing. Since 2008, our County lost 10,000 manufacturing jobs, but this year we had a net gain of 700 jobs.

San Diego County house prices continued a 2011 slide, hitting a new low for the year in October, according to a respected measure released Tuesday.

This past year has been a rough one for local housing, especially in contrast to the frenzy surrounding government subsidies in 2010. Foreclosed houses and short sales, in which borrowers sell for less than they owe in loans, accounted for much of the price decline locally, but so did the uncertainty of prospective buyers. Still, some observers expect prices to start climbing again in 2012.

“In 2011, the market hadn’t recognized that the economy was recovering,” said Alan Nevin, an economist and principal at The London Group in San Diego. “All they were getting was the national news, which was completely negative.”

Born 20 years ago at the depths of last big real estate slump, the London Group, specializing in economic analysis and strategic consulting, has reinvented itself to prepare for the inevitable upturn.

The company, founded by Gary London, has brought in new partners — former competitors — to backfill builders who downsized during the downturn.

“The past is not prologue in our society and the real estate sector,” says London, who is a member of the U-T’s EconoMeter weekly panel of economic experts. “What we’re doing is positioning ourselves to serve that new group of real estate entrepreneurs we think are just now starting to emerge as the economy slowly turns back toward the long road to economic prosperity.”

The Union-Tribune sat down with Gary London and some of his new partners at their office on the ground floor of the former El Cortez Hotel. Here’s their take on the future in their individual pursuits.

San Diego County office buildings’ vacancy rate inched up in the second quarter, though the best buildings saw vacant space dropped here and across the country, according toCoStar Group’s mid-year office market report.

The local rate was 14.6 percent on 111.4 million square feet, up from 14.4 percent in the first quarter but down from the cyclical peak of 15.3 percent in the first quarter of 2010. The last time the rate was below 10 percent was in 2000 at 6.1 percent on 89.6 million square feet.

Hours before Escondido held a forum Wednesday on plans to build a ballpark for the Padres’ Triple-A baseball team, it released a city-commissioned report outlining construction of a complex that includes the sports venue, more than 3,200 homes, two hotels and 760,000 square feet of commercial and retail space.

The 150-acre Sports Entertainment District would be a major undertaking that could take well over a decade to complete. It could generate $774,000 per year in local sales tax revenue, $1.4 million in annual hotel tax revenue, about 2,500 new office jobs and more than 1,000 new retail jobs, according to The London Group, which prepared the study.

REGION: State Attorneys General Launch Nationwide Probe of Eviction Practices

Real estate data show that foreclosure rates fell sharply last month in Southwest County, as pressure on lenders to fix flawed home-seizure practices seemed poised to lock up the real estate market for months, analysts said.

DEVELOPMENT: Council Seeks Final Say on Downtown Projects With 100 or More Rooms

The San Diego City Council has taken the first step in a controversial move to give itself a final say in the approval of downtown hotel projects with 100 or more rooms, down-shifting the role of the agency that has overseen those developments for the past 30 years.

From birthing centers to hip bowling alleys, retailers are pitching ideas for stores that might fill empty spaces in San Diego malls.

And commercial real estate brokers and property managers are so eager for business that they listened to entrepreneurs at a “retail runway“ sponsored by the local chapter of the International Council of Shopping Centers earlier this week.

A proposal that its backers say will lead to a more transparent process for reviewing downtown hotel projects won the support Wednesday of a key City Council committee despite claims from the tourism industry that it will kill future developments.

Bridgepoint Education to sponsor Holiday Bowl

Any recovery to be slow, report suggests

Analysts discern signs of stability

Grubb to stay: Cassidy Turley To Debut in 57 Locations.

Sale is San Diego’s largest real estate transaction in 2009.

Seaview Corporate Center, a four-building, Sorrento Mesa office complex with athletic facilities for its high-tech tenants, has been sold for $75 million to its previous owner.

Experts see end to plunging values, but hesitate to predict near-term strength.

Commercial real estate professionals in San Diego County are bracing themselves for more lean times in 2010, as the recession continues to fuel high vacancy rates and a tight credit market makes it difficult to refinance loans.

If you’re a lawyer downtown, a warehouse operator in Poway or a restauranteur in North Park, the bad economy makes it a good time to be a tenant.

Pressure to find a new stadium site for the Chargers is growing. At the end of this football season the city of industry will be asking six NFL owners, to move there. And the Chargers, will be one of them.

A key index of home prices released Tuesday indicated that San Diego County home values rose in August for the fourth month in a row.

Raising concerns that a new wave of real estate foreclosures is building, an industry survey released yesterday shows that the mortgage delinquency rate among commercial properties in California has more than doubled in the past three months.

Hopes that a recent rise in San Diego County home prices would signal an end to the housing slump were tempered yesterday when MDA DataQuick reported that foreclosures in June surged nearly 66 percent over the previous month.

Evidence continues to mount that the commercial real estate slump is tightening its grip on Southern California and that San Diego won’t escape any time soon. Two new studies paint a bleak picture for building owners, although a somewhat brighter on for tenants who can expect to pay less in renewals and perhaps even find their way into a more desirable setting.

When San Diego developer Doug Wilson debuted his 32-story, downtown condo building two years ago, he did it in style, feting 650 guests with go-go dancers and acrobatic performances, specialty cocktails and gourmet fare.

With great aplomb, the luxury hotel opened in 2002 after building considerable hype. It even employed a hotel-room-on-wheels with Plexiglas walls where underwear-glad models frolicked on plush beds as it drove through the city streets. Another iteration featured partying swimsuit-wearers to promote the hotel’s beach-style bar with a sand floor.

California’s state budget has become the darkest cloud on the state’s economic horizon, threatening to push the jobless rate to new heights and quash the chances for a strong recovery, according to a forecast released today by economists at the University of California Los Angeles.

Two big development projects in downtown San Diego planned years ago are stalled, lacking the financing to move ahead and with little prospects in finding the money anytime soon.

San Diegans expressed their concerns Tuesday over the proposed sale of the Del Mar Fairgrounds in an attempt to help deter the state from its $24.3 billion deficit.

Gov. Arnold Schwarzenegger has proposed selling the Del Mar Fairgrounds and six other California venues to raise cash and reduce a crushing state deficit.

Local Developer Perry Dealy unveiled his proposal to replace Qualcomm Stadium in Mission Valley yesterday, a day after the San Diego Chargers called his plans unrealistic in a fax sent directly to him.

Pity the suburban commuter, caught in the rush-hour rut, inching onto the freeway every day with the rest of the four-wheeled crowd.

Foreclosures in San Diego County last month rose by 23 percent over March, while notices of default, which mark the start of the foreclosure process, dropped by 12 percent.

Despite growing unemployment, continuing home foreclosures and a crippling state budget deficit, there are growing signs that the economic slump in San Diego County could be approaching a bottom.

Hours before Escondido held a forum Wednesday on plans to build a ballpark for the Padres’ Triple-A baseball team, it released a city-commissioned report outlining construction of a complex that includes the sports venue, more than 3,200 homes, two hotels and 760,000 square feet of commercial and retail space.

The 150-acre Sports Entertainment District would be a major undertaking that could take well over a decade to complete. It could generate $774,000 per year in local sales tax revenue, $1.4 million in annual hotel tax revenue, about 2,500 new office jobs and more than 1,000 new retail jobs, according to The London Group, which prepared the study.

REGION: State Attorneys General Launch Nationwide Probe of Eviction Practices

Real estate data show that foreclosure rates fell sharply last month in Southwest County, as pressure on lenders to fix flawed home-seizure practices seemed poised to lock up the real estate market for months, analysts said.

DEVELOPMENT: Council Seeks Final Say on Downtown Projects With 100 or More Rooms

The San Diego City Council has taken the first step in a controversial move to give itself a final say in the approval of downtown hotel projects with 100 or more rooms, down-shifting the role of the agency that has overseen those developments for the past 30 years.

From birthing centers to hip bowling alleys, retailers are pitching ideas for stores that might fill empty spaces in San Diego malls.

And commercial real estate brokers and property managers are so eager for business that they listened to entrepreneurs at a “retail runway“ sponsored by the local chapter of the International Council of Shopping Centers earlier this week.

A proposal that its backers say will lead to a more transparent process for reviewing downtown hotel projects won the support Wednesday of a key City Council committee despite claims from the tourism industry that it will kill future developments.

Bridgepoint Education to sponsor Holiday Bowl

Any recovery to be slow, report suggests

Analysts discern signs of stability

Grubb to stay: Cassidy Turley To Debut in 57 Locations.

Sale is San Diego’s largest real estate transaction in 2009.

Seaview Corporate Center, a four-building, Sorrento Mesa office complex with athletic facilities for its high-tech tenants, has been sold for $75 million to its previous owner.

Experts see end to plunging values, but hesitate to predict near-term strength.

Commercial real estate professionals in San Diego County are bracing themselves for more lean times in 2010, as the recession continues to fuel high vacancy rates and a tight credit market makes it difficult to refinance loans.

If you’re a lawyer downtown, a warehouse operator in Poway or a restauranteur in North Park, the bad economy makes it a good time to be a tenant.

Pressure to find a new stadium site for the Chargers is growing. At the end of this football season the city of industry will be asking six NFL owners, to move there. And the Chargers, will be one of them.

A key index of home prices released Tuesday indicated that San Diego County home values rose in August for the fourth month in a row.

Raising concerns that a new wave of real estate foreclosures is building, an industry survey released yesterday shows that the mortgage delinquency rate among commercial properties in California has more than doubled in the past three months.

Hopes that a recent rise in San Diego County home prices would signal an end to the housing slump were tempered yesterday when MDA DataQuick reported that foreclosures in June surged nearly 66 percent over the previous month.

Evidence continues to mount that the commercial real estate slump is tightening its grip on Southern California and that San Diego won’t escape any time soon. Two new studies paint a bleak picture for building owners, although a somewhat brighter on for tenants who can expect to pay less in renewals and perhaps even find their way into a more desirable setting.

When San Diego developer Doug Wilson debuted his 32-story, downtown condo building two years ago, he did it in style, feting 650 guests with go-go dancers and acrobatic performances, specialty cocktails and gourmet fare.

With great aplomb, the luxury hotel opened in 2002 after building considerable hype. It even employed a hotel-room-on-wheels with Plexiglas walls where underwear-glad models frolicked on plush beds as it drove through the city streets. Another iteration featured partying swimsuit-wearers to promote the hotel’s beach-style bar with a sand floor.

California’s state budget has become the darkest cloud on the state’s economic horizon, threatening to push the jobless rate to new heights and quash the chances for a strong recovery, according to a forecast released today by economists at the University of California Los Angeles.

Two big development projects in downtown San Diego planned years ago are stalled, lacking the financing to move ahead and with little prospects in finding the money anytime soon.

San Diegans expressed their concerns Tuesday over the proposed sale of the Del Mar Fairgrounds in an attempt to help deter the state from its $24.3 billion deficit.

Gov. Arnold Schwarzenegger has proposed selling the Del Mar Fairgrounds and six other California venues to raise cash and reduce a crushing state deficit.

Local Developer Perry Dealy unveiled his proposal to replace Qualcomm Stadium in Mission Valley yesterday, a day after the San Diego Chargers called his plans unrealistic in a fax sent directly to him.

Pity the suburban commuter, caught in the rush-hour rut, inching onto the freeway every day with the rest of the four-wheeled crowd.

Foreclosures in San Diego County last month rose by 23 percent over March, while notices of default, which mark the start of the foreclosure process, dropped by 12 percent.

Despite growing unemployment, continuing home foreclosures and a crippling state budget deficit, there are growing signs that the economic slump in San Diego County could be approaching a bottom.

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