With all the talk of economic recovery — even in these pages — we think it’s a good idea to keep things in perspective.  Yes, nationwide, things are getting less bad.  But the aftermath of the property bust will be with us for quite some time, particularly in Southern California, where there was overbuilding of practically everything — houses, retails, offices, you name it.

This WSJ headline pretty well sums up the situation: “Vacancies Suppress Southern California Recovery.”

How  bad is it?  Office vacancies in San Bernardino and Riverside counties have more than tripled, rising to 24.6% from 8% in 2006.   Orange County’s office vacancy rates stands at a comparable 20%.   The Inland Empire’s retail vacancy rate has more than doubled to 10.6% from 5% in 2006 (and will likely rise further in the sluggish consumer environment we see ahead).  Anecdotal reports tell of new office buildings sitting completely empty and shopping malls defaulting on bank loans.  It is truly a depressing picture. Read the rest of this entry »

The Economist reports that Caribbean tourism is down by as much as a third.  The Americans and Europeans that filled the hotel rooms in years past are worried about the future, and an extended beach holiday is not something many can justify at the moment. 

None of this is surprising, of course.   What we found interesting was one particular comment about the targeted clientele for beach homes:

Lonely Beaches

The Economist, January 31, 2009

The scarcity of tourists has halted some ambitious expansion plans, and is a blow to fragile economies…. Since the 1990s, most big Caribbean tourism projects have been planned around second (or third) homes for baby boomers. [Emphasis HS Dent]  Grand designs show a sprawl of houses and apartments arrayed around a small but pricey hotel, a golf course and marina, and perhaps a casino. Most of the development is financed by sales of unbuilt real estate, much of it as timeshares. Plunging housing markets and the credit crunch have put paid to all that.

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Having our main offices in Tampa,Florida, we’ve been able to watch the housing bust at ground zero.  Coastal Florida, one of the main centers of speculation from 2000-2006, has seen its real estate values absolutely decimated in the months that followed.  The boom brought unprecedented wealth to the region…and the bust has virtually taken it all away, leaving a path of destruction in its wake.

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