Legislation to watch in 2008:

AB 1309 (C. Calderon) Mobilehome Rent Control:  California has had vacancy decontrol for apartments since 1995 under the Costa-Hawkins Rental Housing Act.  AB 1309 will insert vacancy decontrol provisions into local mobilehome rent control ordinances.  As with apartment vacancy decontrol, this bill does not prohibit rent control nor does it raise rents for existing tenants beyond that permitted by local ordinance.  Rather, vacancy decontrol only permits an owner of a mobilehome park to raise rent to market price for a new resident when the space or mobilehome unit is voluntarily vacated, which usually happens when the unit is sold. 

AB 1646 (DeSaulnier) Public Health Districts:  AB 1646 would authorize county boards of supervisors to establish public health districts that would be charged with providing disease prevention, surveillance, and containment.  The county supervisors would either sit as the district’s governing board, appoint the governing board or require that the voters of the district elect the board.  Finally, this bill grants the board the authority to fund the establishment and administration of the public health district.

The fundamentals in commercial real estate remain healthy with only slight increases in vacancy rates expected for the office and industrial sectors during 2008, although credit restrictions have recently slowed overall investment activity, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of Realtors®.

With jobs still being created, the demand for office space remains positive and is helping to absorb the more than 30 million square feet of new space becoming available in the current quarter.  Investment grade office properties with solid income streams will be the most in demand by institutional investors, equity funds and foreign investors.

Projections for the fourth quarter include the Los Angeles and Riverside area with the lowest office vacancies, all with vacancy rates of 10.0 percent or less.

The weaker dollar is fueling an increase in exports, but leasing activity has declined in port distribution hubs, and vacancy rates in those markets are edging up; some users are building or renting in secondary markets.  The areas with the lowest industrial vacancies include Los Angeles and Orange County, all with vacancy rates of 6.1 percent or less.

Even with a decline in consumer confidence, retail vacancy rates remain fairly stable.  Declining production of new space will help improve fundamentals in this sector during 2008.  Retails markets in the area with the lowest vacancies include Orange County, with vacancy rates of 5.5 percent or less.

The apartment rental market – multifamily housing – is experiencing increased demand from the slowdown in home sales.  With a rising population and a growing number of households, vacancies are tightening and rents are rising.