by Calculated Risk on 9/12/2007 01:05:00 PM

From the WSJ on Orange County, CA: Troubled Lenders May Chill Once-Hot Market

The subprime-mortgage industry crisis and Orange County's economic tailspin are likely to have a chilling effect on nearly all types of commercial real estate in this formerly go-go market, some analysts say.

A number of shrinking mortgage companies are already dumping office space on the market. The area's weakening job and housing market will also pinch consumer spending ...

...many office landlords are trying hard to win tenants with deals of free rents and other concessions that have masked the downward pressure ... Asking rents on premium space that now average about $35 a square foot are likely to fall as much as 15% over the next 18 months as building owners face the double whammy of a drop in demand and a surge of new speculative construction coming on line, Mr. Ingham says.

The CRE story: falling demand, rising supply.

In the previous story on shopping centers, Orange County was consider one of the strong areas:

In metropolitan areas with strong population growth, like Phoenix and Orange County, Calif., new shopping centers are easily attracting tenants, according to a report by the CoStar Group, a research company in Bethesda, Md. But new centers in several other metropolitan areas — Memphis, Cleveland, Indianapolis, Tucson, Southwest Florida and Nashville — are having trouble leasing space, CoStar said.

Phoenix and Orange County are the strong areas? Oh my ...