Over the holidays, I had lunch with a friend who owns her own business. The conversation got around to 2007 and our wishes for the coming year. Among other things, she wanted to work less and earn more, a most admirable goal to my way of thinking. My lunch came to mind as I began thinking about what I would say to my readers about the coming year because I think, for most of them, the work-less-earn-more option simply won’t be available in 2007. A number of dynamics are likely to negatively impact brokers and developers this year, despite the general optimism about continued economic growth in the greater San Fernando Valley. They are, not necessarily in order of importance, a lack of space to build; extremely tight vacancy rates and super high property prices, a perfect storm of real estate dynamics that, I believe, will mean everyone will have to work harder and accept less for their efforts in ’07. Sure, many sectors of the economy, particularly in Southern California, are expected to expand, and corporate growth typically boosts the demand for real estate. But on the leasing side, a shortage of available space means there won’t be many obvious choices for those companies. They will be looking longer and harder to find suitable properties, and, without good choices, some may choose to stay put. The acquisition side has already begun to show signs of slowing thanks to record-high pricing. Now, if interest rates continue to creep up and prices hold steady at their current record highs or increase further, that slowdown could deepen. Survey results recently released by researchers at Marcus & Millichap Real Estate Investment Brokerage Co. with National Real Estate Investor found that buyers are likely to get more cautious in 2007, even as landlords see rents rise. The survey, of 1,042 private and institutional investors showed that 60 percent plan to increase their investments in commercial real estate by an average of 19 percent over the next 12 months. But that is down from 70 percent who said they planned to increase their investments at the start of 2006. The Marcus & Millichap researchers concluded that the market will remain strong, albeit somewhat more selective, and they make a pretty good argument. With space scarce, rents will continue to escalate, encouraging buyers to pay the higher asking freight. In effect, buyers will be willing to trade the escalating property values they saw in the past few years for increased income from their investments. But so far at least, while rents are rising, there are no signs that investors prefer the higher income yields to the soaring property values that drove an acquisition frenzy in the recent past. And with a Dow Jones Industrial Average teetering at record 12,000 levels, the alternatives are bound to look better and better. A slowdown is already underway in some sectors of the marketplace. A recent survey conducted by Rory Ferlauto, Don Hudson and Nancy Uy, the L.A. North Multifamily Team at Colliers International, showed that for a nearly full year of 2006 total multifamily sale transactions had declined more than 30 percent to 227 deals in the San Fernando Valley compared to 2005. What does it all mean? In a nutshell, brokers will have to work harder, smarter and longer to seal a deal. Some, particularly those who entered the business to get on the gravy train of the past few years, are going to find other employment. Veterans will hang on, working with the long time clients they have nurtured and downsizing their expectations. And a few will get tough creating deals and opportunities not visible to the naked eye. That may be especially true for developers. Many have been looking and working outside the Southern California area for a year or more now as land has evaporated in the region. Only a few brave souls have ventured into the much harder work of assembling urban infill parcels to create local projects. But it is those few that will create the business model for real estate in the coming year. Forget slow and steady. It will take ingenuity to win the race in ’07. Whizin Center Sold The Whizin Shopping Center, a 84,979-square foot property in Agoura Hills, has been sold to a development company for $26 million. The center is old and under-utilized, but the owners nonetheless drew a hard bargain, thanks largely I’m told to Peter Lowy, chairman of Westfield’s U.S. division which owns the Topanga and Promenade malls among others. The center, developed by Art Whizin, has since passed to a charitable trust that largely benefits the University of Judaism. Lowy, fresh from the redevelopment of the Topanga mall and a board member of the Whizin Foundation, was given the job of divesting the property. “Normally, you put together a book and get it out and people tour the property and make offers and you pick your guy,” said John DeGrinis, senior vice president at Colliers International, who, with Colliers’ Steve Nanino and Michael Ross, managing director of the Colliers Investment Services Group, represented the foundation. “(Lowy) said, ‘I want to do it like an auction. Everyone does their due diligence upfront. When they put their offers in, they give a million dollar check and be ready to go.’ ” The conditions deterred some, but not many of the would-be buyers, DeGrinis said, and in short order, Tucker Investment Group emerged the winner. The deal took about 30 days to close. Bill Tucker, president of the Calabasas-based development company, said he is proceeding slowly with his plans for the property, which sits at the gateway to the city’s Agoura Village, earmarked for revitalization. “Our project is right at the doorstep to that and we want to be part of that urban living concept that’s being created there. We think this center will fit in nicely,” Tucker said. Credit Union Expands Universal City Studios Credit Union has acquired a 40,542-square-foot office building in Burbank for $12.5 million. The credit union will locate a branch and its headquarters at the new facility. The property, at 175 E. Olive Ave., is 75 percent occupied. Senior Reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at firstname.lastname@example.org .