by Calculated Risk on 7/05/2007 02:06:00 PM

From the WSJ: Soaring Rents Pinch Businesses Across the U.S.

Nationwide, effective rents on office properties -- the amount tenants pay after concessions -- jumped an average of 3.1% during this year's second quarter, up from gains of 2.8% in the first quarter and 2.1% in the year-earlier period, according to a report scheduled for release today by real-estate research firm Reis Inc.

That was the sharpest quarterly increase since the third quarter of 2000 ...

Just a few months ago, CB Richard Ellis reported that vacancy rates were rising:

The U.S. office vacancy rate rose in the first quarter, according to CB Richard Ellis. ... The rate was 12.8 percent in the first quarter, up from 12.6 percent the previous quarter.

And, in April, the WSJ reported that office absorption was "sluggish". According to the WSJ, Q1 office space absorption rate was about 8 to 10 million square feet per quarter, but "... developers will open 76 million square feet of new office space by the end of this year."

But today's report suggests absorption picked up in Q2:

Meanwhile, demand for office space has been growing. Net absorption -- a measure of the space taken up by commercial tenants -- increased markedly during the latest quarter, a sign that the economy is producing more office jobs, says Sam Chandan, chief economist for Reis. Nationwide, the office-vacancy rate, at 12.7%, is the lowest since the third quarter of 2001.

One of the keys to economic growth in the second half of '07 is investment in non-residential structures. It is possible that the big investment slump in the early '00s has left many markets with too little supply of commercial and office buildings (and other non-residential structures). So, even though the typical pattern is for non-residential investment to follow residential investment by 5 or so quarters, it is possible that investment in non-residential structures will decouple (at least somewhat) from the typical pattern - and remain strong throughout '07.

by Calculated Risk on 7/05/2007 12:30:00 PM

For what it's worth, ADP reports:

Nonfarm private employment grew 150,000 from May to June of 2007 on a seasonally adjusted basis

The BLS reports June employment numbers tomorrow.

And from MarketWatch: Services expanding at best pace in more than year

More nonmanufacturing companies in the United States were growing in June than at any time since last April, according to a survey of companies released Thursday by the Institute for Supply Management.

The ISM nonmanufacturing index rose to 60.7% from 59.7% in May.

by Tanta on 7/05/2007 12:01:00 PM

An update to this post:

A Brevard County judge on Thursday refused to shut down a Palm Bay appraiser's Web site that contained comments critical of the California-based appraisal management company First American eAppraiseIT.

The company was seeking a temporary injunction to prevent appraiser Pamela Crowley from making any comments, or posting comments from others, about it on her Web site, www.mortgagefraudwatchlist.org.

Crowley's Web site serves as a discussion platform for issues in the appraising industry. It also is a place for appraisers to report lending and appraisal fraud, and questionable activities in the industry.

First American eAppraiseIt acts as a middle party, finding appraisers for clients such as banks and mortgage companies.

Circuit Court Judge John Dean Moxley Jr. dismissed eAppraiseIT's request, because the company had not proved defamation or any financial harm based on the postings.

"If it's not defamation at this point, there's no need for an injunction," Moxley said. "What you asked for is not permissible under the law in the state. Therefore, I deny it."

And a word of warning for firms considering SLAPP suits against websites:

So far, one of the best-read postings to the site, which requires a registration, has been about eAppraiseIt's efforts to silence Crowley, Potts said.

by Calculated Risk on 7/05/2007 02:45:00 AM

From the WSJ: Number of Unsold Homes Increases

The number of homes on the market in 18 major metropolitan areas continues to grow.

Total listings of homes in these metro areas at the end of June was up 2.5% from May, according to figures compiled by ZipRealty Inc.

If the NAR number follows Zip Realty for June, then the June existing home inventory levels will be over 4.5 million - another all time record - and total inventory, including new homes, will be over 5 million units.

Click on graph for larger image.

This graph is based on the Zip Realty estimate of the inventory increase for existing homes in June. Inventory usually increases in June, but the levels of inventory (already an all time record) are a reason for concern.

A 2.5% increase would put inventory at 4.54 million. A word of caution: we have seen the Zip Realty estimate vary significantly from the NAR estimate in the past, probably because the Zip Realty numbers are only a subset of the total NAR numbers.

The second graph shows the impact on the "months of supply" using the Zip Realty estimate for inventory, and the NAR estimate for pending home sales (down 3.5%).

This would put months of supply at about 9.4 months - very close to my estimate of the peak this summer of 9.5 months. Once again, this is just an estimate.

by Calculated Risk on 7/05/2007 02:39:00 AM

From the WSJ: Funds Accelerate Subprime Exit Strategy

Investors received a letter earlier this week from Braddock Financial Corp. of Denver. It said it was closing its Galena Street Fund, which mainly invests in bonds backed by subprime mortgages extended to borrowers with poor credit, and suspending redemptions until it can sell assets in the roughly $300 million fund.

by Calculated Risk on 7/04/2007 12:30:00 PM

Professor Hamilton looks at June auto sales.

by Calculated Risk on 7/04/2007 12:22:00 PM

From July 4th, 2005 in New York (just over 2 minutes long):

by Calculated Risk on 7/03/2007 08:11:00 PM

From the WSJ: Blackstone to Acquire Hilton

[Blackstone] agreed to acquire Hilton Hotels Corp. for $47.50 a share in cash, or $18.5 billion, plus the assumption of $7.5 billion in debt.

Also from the WSJ: Buyout Firm KKR Files For Initial Public Offering

Private-equity heavyweight Kohlberg Kravis Roberts & Co. filed for an initial public offering Tuesday, ... seeking a $1.25 billion in the offering.

by Calculated Risk on 7/03/2007 02:56:00 PM

From the WSJ: GM, Ford, Chrysler Sales Slide As Toyota Reports 10% Gain

General Motors Corp. said its June sales decreased 21%, which the auto maker attributed to its planned reduction of rental-car sales, a "soft industry" environment and heavier incentive spending by its rivals.

Ford Motor Co. posted a 8.1% drop in light-vehicle sales for month ...

Toyota Motor Corp., which is running neck-and-neck with Ford for the No. 2 sales ranking, saw its U.S. sales jump 10% ...

Chrysler Group recorded a 1.4% fall ...

It is pretty clear that Q2 PCE will be sluggish. I wonder how much of this is related to the housing slump and declining Mortgage Equity Withdrawal (MEW)?

by Calculated Risk on 7/03/2007 11:53:00 AM

Following the sluggish consumer spending numbers for April and May, June doesn't look any better. From Econoday on Redbook:

Redbook reports a very soft June 30 week for U.S. retailers, showing only a 1.2 percent year-on-year rise in the week. For the month of June, Redbook pegs year-on-year sales growth at 1.6 percent which compares with ICSC-UBS's range of 1.5 to 2.0 percent. Vehicle sales later today will offer another angle on consumer spending in June, which based on chain-store reports looks no better, if not weaker, than May.
emphasis added

I think we are looking at a significant slowdown in real PCE growth for Q2; my estimate is around 1.5% (Northern Trust's Bangalore estimated 1.7% before the Redbook and ICSC-UBS reports were released).

UPDATE: Car sales from the WSJ: Ford Sales Decline 8.1%; Toyota Posts 10% Gain

Ford Motor Co. on Tuesday posted a 8.1% drop in U.S. sales of light vehicles for June ... [Ford] launched a new incentive campaign late in June, offering 0% loans for 36 months on domestic vehicles and an additional $2,007 discount on trucks and SUVs.

Toyota Motor Corp., which is running neck-and-neck with Ford for the No. 2 sales ranking, saw its U.S. sales jump 10% ...

Chrysler Group recorded a 1.4% fall ...

GM will also report its June sales data Tuesday afternoon.

Note: Haloscan is having more problems today.