What follows is an abbreviated tale I’ve adapted from Dr. Seuss’s “How the Grinch Stole Christmas,” tailored to comment on certain conditions in our local real estate market.
Let me get to the point, and let me get to it now.
Whoville’s not only where Grinches abound.
And Christmas is not the sole thing they steal.
It’s anything good they consider ideal.
Sad to say, our local “Whoville” has many, many Grinches, who left unchecked, will steal things from San Diego far more precious and long-lasting than the Christmas trees and gifts Dr. Seuss’ Grinch stole. Maybe these local real estate Grinches are not green or covered with yak fur, but they’re mean, meaner, and even the meanest kind nonetheless.
And, who really knows how many Grinches are here?
Who really knows all the bad things they’ve done?
But four are in our Whoville’s real estate sphere.
Let me now count them one by one.
Grinch No. 1 has been with us for some time and is certainly no stranger to our Whoville’s office tenants. In fact, his behavior resembles another Christmas villain – Ebenezer Scrooge from Charles Dickens’ “Christmas Carol.” We’ve seen this hideous beast manifest himself collectively in the number of landlords and their property managers who each day steal any notion of customer service and respect from the buildings they represent. They’ve forgotten the primary reason they are in business – to offer high-quality and responsive services to attract and keep their tenant customers in a competitive marketplace.
Despite the abundance of office space in our metropolitan submarkets, we still find a “Bah, humbug!” and a chilling “take-it-or-leave-it” mentality on the part of not all — but enough of them — to pose a real threat to our city’s real estate market. Hopefully, the continuing reality that it is a tenant’s market will create the competition to either eradicate or reform these gruff and insensitive property-management and landlord Grinches.
Grinch No. 2 is a distant relative of our first one, cleverly and collectively disguised as those landlords’ leasing agents. This Grinch also is either half-blind or chooses not to see the nearly 20 percent availability rate in office space countywide. Yet, he dutifully does his masters’ bidding, using scare tactics and misinformation to try to lure uninformed tenants into his masters’ caves where there are growing numbers of available office suites. He’s clearly the noisiest of all these creatures.
Our third Grinch represents the absurd real estate speculation in recent years that has resulted in many greedy owners who paid outrageous prices for San Diego office buildings and are trying to pass along the cost excesses in their rental rates and other expenses.
Most San Diego submarkets have thousands of square feet of vacant or otherwise available square feet of space to lease out; yet in the recent past, these under-occupied buildings have been bought and sold for prices that defy reason.
Every time a sale takes place, the county tax assessor takes note and adjusts the property tax to roughly 1.2 percent of the building’s new sales price. Together with the other glutted operating expenses payable by tenants, such increases put further strains on the tenant’s costs of doing business. Even tiny Cindy Lou Who can see the trickle-down effect of that situation on the overall economy.
Our final Grinch represents the equally absurd parking expenses that office tenants are being forced to absorb, not only downtown, but also in Whoville’s suburban office markets of University Town Center, Carmel Valley and more recently, Mission Valley.
Parking throughout much of the San Diego metropolitan area has become a scarce commodity in the past several years and is destined to become even more so in the future. Parking facilities haven’t even begun to keep up with the number of office suites in most areas.
This Grinch knows full well that many, if not most Whoville office tenants, their employees and clients are not about to ride busses and the trolley to and from their places of business. His cohort, Grinch No. 1, also knows how vulnerable his tenants are and, in many cases, leaps – green fur and all — at the opportunity to not only pass along the increased costs of parking, but also to see if he can slip other operating expenses and revenue shortfalls into the so-called parking cost.
I’ve told you a tale of some of our Grinches
Whose many bad deeds fill these column inches.
Hopefully, the message will be taken as true
And will keep these bad creatures from hurting you.
Happy holidays to all.
Jason Hughes is founder of Hughes Marino, an award-winning commercial real estate company with offices across the nation. A pioneer in the field of tenant representation, Jason has exclusively represented tenants and buyers for more than 30 years. Contact Jason at 1-844-662-6635 or firstname.lastname@example.org to learn more.