Market Update – December 2008
The Labor Department released the new unemployment rate on December 5, 2008 at 6.7%. In November of 2008 roughly 533,000 jobs were cut, the most in 34 years. From the start of the recession on December of 2007, the U.S. economy has lost 1.9 million jobs totaling unemployment to 2.7 million. This rapid decrease in unemployment will cause companies to downsize and create more of a buyers market in commercial real estate acquisitions.
Insite Vision Inc. based in Alameda have plans to cut 35% of its staff, currently laying off 15 people, in hopes to save $2 million in the following 2009 calender year.
Emeryville based LeapFrog Enterprises Inc. will lay off 70 people and will substantially reduce their office space in their current location. On Dec 1, 2008 LeapFrog filed a layoff notice for 10% of their workforce. The company plans to save $9 million annually during these tough economic times with the size reduction of their employees. This should allow more prime commercial real estate to flood into the Emeryville market at very competitive price.
Oakland’s Golden State Warriors value rises to $335 million. The Warriors team and headquarters based in the heart of downtown Oakland has managed to increase its value by 8% due to attendance. Warriors became the 18th most valuable basketball team in the NBA.
One of Oakland’s major tenants, American President Lines (APL), will vacate its national headquarters in one of Oakland’s premier Class-A office spaces. Shorenstein’s 1111 Broadway, in Oakland, will include roughly 139,000 ft (over 6 floors) with their already existing 95,501 ft of vacancy after APL’s move. APL’s lease expires in 2016. This sublease vacancy will add additional opportunity for full floor (24,000 sqft) office users to obtain Class-A space for below market rent cost.
Alameda-based Avigen will reduce its workforce by 25 people, approximately 70%, after the clinical failure of its multiple sclerosis drug in October. They are currently seeking an additional partner to further fund their pain and blood-clotting drug. Due to the failure Avigen may see less funding which could result in further downsizing; thus resulting in prime lab and office space available.
Citigroup Inc. has currently made 18 Bay Area Citibank branch locations available for sale. Citigroup Inc. has announced they will be laying off approximately fifty thousand people nationwide and is looking to downsize due to the weathered economy. The 18 Bay Area locations are said to be very well located and are top real estate sites for retail. This will provide ample opportunity to obtain prime real estate at a very market competitive cost.
Jamba Inc., located on Christie Ave in Emeryville, announces their 3rd quarter loss ending on October 7th at $12.4 million. The parent company of Jamba Juice has rebounded quickly by adding previous Safeway top executive James White as its new president and CEO effective December 1. Jamba’s huge loss and shift in power may lead to rapid changes in the companies near future.
Blue Sky, an alternative to Chuck-E-Cheese, has closed its doors after only two months of initial business. The ‘family club’ was intended to become a chain, opening its first location in Emeryville. The 9,500 square foot restaurant blames its closure on the tough economic times.
