Facebook Inc. significantly expanded its footprint in Palo Alto’s Stanford Research Park by signing a lease for another 265,000 square feet.
This marks the second move in a year for the social media company, which left downtown Palo Alto last spring for a 150,000 square foot building once owned by Agilent Technologies. The buildings at 1050 Page Mill Road had been vacated by the medical diagnostic firm, Beckman Coulter Inc., several years ago.
The news of the new lease comes as a report by comScore said the social networking company passed 100 million users in the U.S. in November, more than double last year's total. Its global user base is now estimated at more than 350 million.
ComScore said on Tuesday that Facebook had passed AOL as the fourth most popular Web property in the U.S., trailing only No. 1 Google Inc. (NASDAQ:GOOG), No. 2 Yahoo Inc. (NASDAQ:YHOO) and No. 3 Microsoft Corp. (NASDAQ:MSFT).
Source: Biz Journals
As Facebook expands MySpace is leaving huge amounts of office space in it's wake costing them more than $1 million / month. See post Empty MySpace Offices Cost $1 Million Per Month. It seems pretty clear who is winning and loosing in the Social Media arena.
A recent report from the AP: "Oil-rich Abu Dhabi pumped $10 billion into its indebted neighbor Monday, sending stocks soaring and sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown's star companies.
The bailout was about more than petrodollar transfers from one United Arab Emirates sheikdom to the other. Dubai officials also seized on the news to try to repair damage done by weeks of uncertainty stemming from their unwillingness to fully stand behind Dubai World as the conglomerate looked to restructure some of its $60 billion in debts."
This should help to calm the immediate fears of a major commercial real estate default in Dubai, but also may foreshadows what will need to happen in the US as the Commercail Real Estate Crash intensifies during 2010.
Commercial Real Estate , Office Space
According to Bizjournals "Delinquencies in the commercial mortgage-backed securities market skyrocketed more than 500 percent in October from a year ago, with California reportedly topping the U.S.
Numbers released Monday by RealPoint Research show more than to $32.6 billion worth of loans are in default compared to $5.4 billion in October 2008. The total unpaid balance for the CMBS market for October 2009 was $810.9 billion, up from $805 billion in September, according to the Horsham, Penn.-based research firm.
California reported $4.7 billion in bad loans, or 14 percent of all delinquencies. The bulk of the state’s delinquent loans were concentrated in the Los Angeles and Orange County metropolitan areas. Sacramento reported two troubled spots in October when Natomas Crossing and Del Paso Retail were liquidated."
This right on the heels of the Dubai Commercial Real Estate crisis...
Office Space , Office Vacancy Rate
Dubai World's credit problems are not going to seriously affect the economy of the US, but are they a forewarning of things to come? We have been hearing about the coming Commercial Real Estate Crash in the US. Well, it has happened in Dubai where overbuilding has led to a glut of space and no money to pay the mortgages. While the government of Dubai could step in and take responsibility for the debt, it appears they are unwilling to do so.
What are the risks to the US economy?
From WSJ - The (US's) $3.4 trillion outstanding in debt backed by office buildings, shopping malls and other commercial real estate is easily large enough to pose a real threat to the recovery.
The Moody's/REAL Commercial Property Price Index has lost 43% of its value since peaking in 2007, recently falling to its lowest level since 2002. As commercial property values fall, debt defaults rise.
This problem has been well-telegraphed and will likely take a long time to unwind—through 2012, according to Guy LeBas, fixed-income strategist at Janney Capital Markets. That might lessen the impact on financial markets.
But much commercial real-estate debt is held by regional banks that aren't too big to fail and that, during this slow unwinding, might be hesitant to lend more money. That should, at the very least, keep the brakes on the economic recovery.
From Bizjournals - The commercial mortgage-backed securities market has collapsed – there has not been a single issuance since mid-2008. If this huge monster lumbers unchecked, it has the potential of massive portfolio destruction, devaluation and crumbled investor confidence in the capital markets, and in any hope for rebound of commercial real estate any time soon. Our industry agrees this must not happen and looks for the Fed to exhibit strength and competence in the form of meaningful legislative rescue driven by private sector ideas.
Let's hope we can all hang on for the ride.
Buying Office Space , Commercial Real Estate , Office Space , Office Vacancy Rate
According to new projections released Tuesday, top Federal Reserve officials expect unemployment to remain elevated for years to come, suggesting that the economic recovery will be too gradual to create rapid improvement in the job market.
The forecast of 17 top Fed officials anticipates that unemployment rate will still be in the 6.8 to 7.5 percent range at the end of 2012. With a 10.2 percent rate in October, it is an improvement, but a slow one to get down to a healthy level of around 5%. They stated that they "anticipated that about five or six years would be needed for the economy to converge fully to a longer run path."
As we have discussed in previous posts, the office space recovery is linked with employment. If there are no new jobs or a slow growth in jobs, office space vacancy will remain high. What this message tells us, if it turns out to be accurate, is that the office space recovery will take at least five to six years going hand in hand with employment growth.
So what does this mean to businesses looking for office space for lease? It means that it will be a tenants market for the next five to six years with rates perhaps dropping a little in the short term and remaining stable for at least the next few years.
Businesses can make sure to take advantage of this opportunity by obtaining the services, at no cost, of a qualified tenant representative.
Office Relocation , Office Rental , Office Space , Office Vacancy Rate , Tenant Representation