by Calculated Risk on 2/04/2009 11:30:00 AM

From the San Diego Union-Tribune: Offices' vacancy outlook gloomy

[T]he latest prediction from a survey conducted by the UCLA Anderson Forecast and real estate law firm Allen Matkins ... are grim. UCLA's computer models predict that office rents will continue to decline all the way through 2010. When adjusted for inflation, they are expected to be at levels seen in the mid-1990s.

Occupancy also is expected to fall over the next few years. UCLA's computer models have vacancies topping out at 22 percent by the end of 2010.

Today, office vacancies range from 14 percent to 17 percent, according to reports from local commercial brokers.

This still might be too optimistic.

by Calculated Risk on 2/04/2009 10:03:00 AM

From the Institute for Supply Management: January 2009 Non-Manufacturing ISM Report On Business®

"The NMI (Non-Manufacturing Index) registered 42.9 percent in January, 2.8 percentage points higher than the seasonally adjusted 40.1 percent registered in December, indicating contraction in the non-manufacturing sector for the fourth consecutive month, but at a slightly slower rate. The Non-Manufacturing Business Activity Index increased 5.3 percentage points to 44.2 percent. The New Orders Index increased 2.7 percentage points to 41.6 percent, and the Employment Index decreased 0.1 percentage point to 34.4 percent. The Prices Index increased 6.4 percentage points to 42.5 percent in January, indicating a decrease in prices from December. According to the NMI, two non-manufacturing industries reported growth in January. Respondents are concerned about the global economy and the continued decline in business and spending."

This is a weak report. The service sector is still contracting but at a slightly slower pace than in December. The employment numbers remain especially weak.

by Calculated Risk on 2/04/2009 09:23:00 AM

From the WSJ: Condo King Corus Weighs Its Options (hat tip James)

Corus Bankshares ... reported a $260.7 million quarterly loss late Friday and said that more than one-third of its $4.1 billion in outstanding loans were nonperforming. Amid what it called a "precipitous decline" in property values, the Chicago lender also warned that banking regulators may soon strip Corus of its standing as a well-capitalized bank and impose higher cash requirements.
...
Corus is one of the few lenders to report that the Treasury Department intends to reject the bank's application for funds from the ... TARP.
...
While it has been clear for months that thousands of condo projects were doomed, the full impact on financial institutions is only now being felt. Construction loans were structured with "interest reserves," provisions that gave developers funds to pay interest until the projects were complete. Now that projects are completed and failing to sell, the loans are going into default.
...
Corus has about $2 billion in unfunded construction commitments and that in the event of a federal takeover, regulators wouldn't be obligated to fund these commitments.

Another candidate for Bank Failure Fridays. Corus is heavily exposed to condos and Construction & Development (C&D) loans. When the interest reserves run dry, these deals blow up. And down goes the lender ...

by Calculated Risk on 2/04/2009 12:10:00 AM

An open thread and a few posts today you might want to read:

Q4: Homeownership Rate Declines to 2000 Level

With graphs on the rental vacancy rate, homeowner vacancy rate, and homeownerhip rate.

Looking for the Sun

The economic outlook is grim. The unemployment rate will rise all year, house prices will fall, commercial real estate (CRE) will get crushed ... but a few areas will probably finally hit bottom.

Update: Tanta Scholarship Fund

An update from bacon_dreamz. Check it out. And check out the map of where the Mortgage Pigs have gone!

by Calculated Risk on 2/03/2009 09:28:00 PM

A word from bacon_dreamz:

I would like to thank everyone for the very generous response we have received to Tanta’s memorial scholarship and bench fund at ISU. There have been a large number of donations totaling just over $20,000 to date, and all of them are very greatly appreciated. The bench has already been purchased and will be placed on the ISU campus this spring (where Tanta’s parents will be able to visit it whenever they like), and the scholarship itself is very nearly fully endowed, so I’m hopeful that the first award will be next spring.

Tanta’s family has been very touched by the kindness and generosity of everyone here (as have I), and I know they have found comfort in the fact that she touched so many lives so deeply. My sincerest thanks to all of you for helping to make this happen in her memory.

Tanta_Vive!

Note from CR: To be fully endowed, The Doris Dungey Endowed Scholarship Fund at Illinois State University needs another $1,500 or so (I've dropped a few bills in the kitty today).

Donations can be made at the link below by entering "Doris Dungey Endowed Scholarship" in the Gift Designation box. Checks made out to the ISU Foundation with “Doris Dungey” in the memo can also be mailed to:

ISU Foundation
attention: Mary Rundus
Illinois State University, Campus Box 8000
Normal, IL 61790.
http://www.development.ilstu.edu/credit/credit.phtml?id=8000

Also here is map of where the Mortgage Pigs are (from Tanta's brother-in-law):

Click on graph for larger image in new window.

No Pigs in Florida?

A special thanks to bacon_dreamz for setting up the Scholarship Fund.

For much more on Tanta - tributes, charities, her writing - please see Tanta: In Memoriam

All my to best to everyone, CR