<p>^^ You shlud realize that the rent in some parts of SF has REVERTED to 30 years ago. But there are some hot spots in SF as well.</p>
<p>I do not READ some one’s article to determind the rent level. I do it.</p>
<p>I did not ask you if you read somebody’s article to determine rents. ;)</p>
<p>I understand that some areas are hotter than others…parts of SF are seeing large increases in rents… what daily?</p>
<p>DStark, I asked DS your question. He thinks that Slicon Valley has shrunk and will stay that way. He says companies will keep fewer people there because it’s so expensive and those people want the towns around PA and a few areas of SF. He also said residential real estate is going crazy again in Palo Alo and the better neighborhoods around it. Some areas were up 40% last year!</p>
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<p>Believe me, it will spread out. As ppl found its too expensive, they will be willing to travel further and thus the cycle begins.</p>
<p>I think the Silicon Valley is coming back, it will start will few pockets, commercial or residential. Then it will spread. Its a good sign…</p>
<p>In Seattle office rents peak at around the upper 30’s and then fall back to the low 20’s each cycle. I would agree that the long-term net gain over 20 years approaches zero. Only the interest rates change. You want to buy when the rents are in the 20’s and sell as soon as they hit the high 30’s because that brings new construction. Amazon just bought land to build 3 million SF in the near downtown area. The office value peak already is near for class A+</p>
<p>One of the first buildings I bought as a large investor person had office rents of around $16-$20 NNN in the mid 80’s in Columbus Ohio. I doubt they average much more today in an average year.</p>
<p>Waverly…thanks…</p>
<p>40%…increases…wow…</p>
<p>Barrons…interesting…Different markets with similar characteristics…</p>
<p>30 years is a long time with no real increases…</p>
<p>When we renewed our office lease a few years back, the rate per rsf was lower than for original term that started in 1985. </p>
<p>Yes, the TI $ can be a killer. I have a client who is putting new tenants into a very high end office building…it’s a very dicey proposition until the rent money starts coming in.</p>
<p>Missypie, I guess I am not getting the allure of investing in office buildings…</p>
<p>Dstark:</p>
<p>I don’t know if we are leaving the Midwest. I like our condo in Madison, and I like living in Madison, we are a couple of blocks off the square by Lake Monona, just not in the winter. I think we will use our timeshares to go to warm places during the winter or we will rent places. I am very fond of Palm Desert CA although as I recall Barrons doesn’t like it.</p>
<p>A friend of mine lives in Palm Desert half the year…he does like it. He plays a lot of golf, tennis, and is very social.</p>
<p>If you like Palm Desert…who cares if Barrons doesn’t.</p>
<p>Most of my friends think my townhouse is too small…it is big enough for me. :)</p>
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<p>For the initial developer, I think there’s a lot of ego involved. Have you read Tom Wolfe’s A Man in Full? I pretty much hate Tom Wolfe’s books, but I learned to skip entire chapters of subplot. The second chapter is priceless and should be read by everyone in the real estate world. (Summary: The big shot developer misread where the growth in Atlanta was going, and ended up with a big ol’ empty office tower in the middle of nowhere. He now has to meet with the lenders. But instead of the posh offices and real china he experienced when he was borrowing the money, now he meets with the workout people in tired conference rooms with dead plants and coffee in styrofoam cups.)</p>
<p>Haven’t read that…sounds interesting…thanks…</p>
<p>I read the entire book and tried to ID various people as I worked in Atlanta during the time the book was set. Think it was based on Cousins development. There is lots of ego in the million SF office tower. And they can make lots of money if timed right. But nearly every big office developer ends up losing just about everything sooner or later. You have to not mind that possibility. We have one working on my floor–made an lost a fortune but still a great guy. I think he’s fine with it. Right now a fomer local developer has gone AWOL after losing everything but refusing to turnover some asstes. Guy is over 80 but still fighting. His partner in some deals now lives in a friend’s RV in New Mexico. Probably smoking lots of weed.</p>
<p>I need trees, water, hills and backroads. Just not a desert person. Except for maybe SoCal near the water.</p>
<p>" But nearly every big office developer ends up losing just about everything sooner or later. You have to not mind that possibility." :)</p>
<p>For some people …it is just the thrill of the game…</p>
<p>As long as they can play…of course if you lose everything…it is hard to keep playing.</p>
<p>The guy I was talking about now manages a building he used to own. You would be amazed how many can get back in the game if they want to. Banks don’t seem to mind failure as long as it was the market changing on you and not just bad mgt or the like. And how you handled the situation when it went sideways.</p>
<p>Well…I never thought bankers were that smart… ;)</p>
<p>Well, that do have to get the money out the door. What else is there? “Green” companies?</p>
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<p>Investing in office CAN make a LOT of money, if you know how.</p>
<p>I have a office developer client who lives in a “small” house on Belveder Island… and I did not see his “house” is in foreclosure ( current value in the mid 20’s)…:)</p>
<p>case in point, a friend of mine was “given” a large empty office complex in Reno by the bank in 2000 when the dot com bubble bursted, he only have to assume $1million debt. He tried every thing to rent the place and after 6 mo. he had the bank taken it back. So the bank sold the property to an investor for $600K cash. 6 years later, the complex was fully rented and the investor sold the property for $6 million. I think there is a profit for the investor.</p>
<p>I am sure there are great deals in office buildings…</p>
<p>I don’t think the deal you mentioned artloverplus is the norm…</p>
<p>I was in Belvedere yesterday…</p>
<p>Maybe, I walked by that 20 million dollar house. :)</p>