BAILOUT FATIGUE?: DEVELOPERS SEEK FEDERAL ASSISTANCE

Will the bleeding stop? Now, the developers go in...

Fearing an onslaught of troubled commercial real estate loans in 2009 in the absence of normalized credit markets, leaders from trade associations across the industry have banded together to request federal assistance. But is there enough political will at the U.S. Treasury to rescue once high-flying lenders and developers on the heels of bailouts of the banking and auto industries? [...more...]

STORE CLOSINGS COULD DOUBLE IN 2009

Circuit City’s announcement Monday that it was closing 155 stores, or 21 percent of its 721 U.S. locations, and planning to start lease renegotiations for others, will be echoed by numerous retailers throughout 2009, with the total number of stores shuttered in the United States expected to double the figure predicted for this year.

By the end of 2008, store closing announcements will total 6,100, according to an October forecast from ICSC. [...more...]

DESPITE RESCUE BAILOUT, INSTITUTIONS WAIT

The spread between asking prices and buyers idea of "market value" may still have a ways to go. For those who are waiting to sell, lowering prices and carrybacks may be ways to create buying pressure.

Despite Rescue Bailout, Institutions Wait on the Sidelines

For more than a year, transaction volume, particularly in the office sector, has been stuck in a bid/ask logjam. Closed sales of downtown and suburban office properties year-to-date through August fell by 70% from a year ago, according to New York-based research firm Real Capital Analytics.[...more...]

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Office Subleases Portend Softening Fundamentals

It's a tenants market...

Landlords across the nation are competing for tenants not only with other property owners, but also with tenants that are offering space on the cheap for sublease. While the amount of subleases available today isn’t alarming, researchers say it is a growing trend that signals softening fundamentals today and declining rental rates ahead. [...more...]

REAL ESTATE RECOVERY EXPECTED IN 2011

The nation is in for more than a year of stagnant job creation and tepid economic growth that will set the stage for marked improvement in 2011, according to two of academia’s respected authorities on the economy and commercial real estate. [...more...]

INDUSTRIAL MARKET IS SOFT BUT NOT SOUR

Weakened demand for warehouse and distribution space contributed to a rise in the nation’s industrial vacancy rate in the second quarter, but rents are still rising in some major metros and port cities, researchers say. [...more...]

Office Fundamentals Weaken in Second Quarter

The U.S. office vacancy rate climbed in the second quarter amid decreasing demand and new deliveries of space, according to research by Colliers International. Downtown rents showed modest increases but suburban office properties have begun to feel the impact of the slowing economy as those rents edged downward. [...more...]

Commercial Real Estate Easing in Economic Slowdown

NEWS FROM REALTOR's COMMERCIAL ALLIANCE shows rising vacancies and slowing activity, but the commercial market is still "active", despite “tight credit availability".

NAR Chief Economist Lawrence Yun said economic weakness is impacting commercial real estate. “Although the supply-demand fundamentals are broadly favorable in most commercial real estate markets, vacancy rates are rising modestly and rent gains are slowing,” he said. “Slow economic growth is lowering demand for commercial space, mostly in the office and industrial sectors. Despite the slowdown, the commercial real estate market is in much better shape compared to conditions during the 2001 recession.” [...more...]

STARBUCKS TO CUT & CLOSE STORES

Starbucks trimming to prepare for a solid 2009. A bit more than previously expected, right?

In January, Starbucks brought back founder and chief executive Howard Schultz to turn around the company. Soon after, Schultz targeted 100 stores for closure -- a number that grew by 500 when firm plans were announced on Tuesday.

He has also slashed plans for store openings and shifted the company's most ambitious expansion efforts to international markets. [...more...]

COMMERCIAL PROPERTY RETAIL MARKETS UPDATE

Reporting from the first quarter of 2008 shows definite slowing nationally for the number of transactions; however, pricing remains stable. Financing is more difficult to attain, but the asset value remains constant, and CAP rates probably will rise through 2008.

As the industry makes its way through the second quarter of 2008, the outlook for the U.S. retail property market remains muddled, according to the first quarter report from Reis, Inc., a New York City-based provider of commercial real estate information. Transaction volume during the first quarter continued its downward slide, but pricing for the assets that did trade hands remained relatively stable.[...more...]

NAR Sees Slim Ray of Light for Commercial Sectors

NAR's predictions for future transaction volume and vacancy rates in the commercial RE markets show slowing, but overall the market still shows strong. Read below...

The U.S. economy will likely avoid a recession and pick up in the second half of this year, according to the National Association of Realtors, which expects the commercial property market to turn in a mixed performance.

“Commercial fundamentals are good, but investment has been hurt by the credit crunch. Investment in the commercial sectors decelerated in the first quarter after setting a record in 2007,” says Lawrence Yun, chief economist at NAR. [...more...]

Is Real Estate Sentenced to Hard LIBOR?

“If you take a look at the spreads over a period of time, they’re certainly wider than they traditionally have been,” says Jamie Woodwell, senior director of commercial and multifamily research, Mortgage Bankers Association.

For now, LIBOR remains low enough that floating rate debt is still low and manageable for most commercial real estate borrowers, says Capmark’s Cannon. At 2.91%, today’s three-month LIBOR rate is roughly half the 5.06% it was six months ago. “I don’t think anybody is pushing any panic buttons yet,” he says, “but they’re watching it.” [...more...]

Commercial Real Estate Markets Hold Steady

"A new report by Moody’s Investors Service indicates that six of the seven commercial property types held their ground at the end of the first quarter. Limited service hotels bucked the trend, with scores declining to 64 on Moody’s scoring system, from 77 in the fourth quarter of 2007." [...more...]

BID/ASK GAP BRINGS INVESTMENT SALES TO A HALT

Time to make an offer...

Real estate brokers had hoped the steep decline in investment sales of retail properties in the last quarter of 2007 was a temporary setback. Now it's well into the second quarter of 2008 and little has changed. [...more...]

COMMUNITY SHOPPING CENTER VACANCY AT 12-YEAR HIGH

The national vacancy rate for neighborhood and community shopping centers increased by 20 basis points in the first quarter to 7.7% — the highest level since 1996, according to real estate research firm Reis. Mall vacancy increased 10 basis points in the first quarter to 5.9%. [...more...]

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NAR: EXISTING HOME SALES RISE IN FEBRUARY

A small turn upward on the residential front in the month of February.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September. [...more...]

REPORT: PANIC OVERSTATED

...Despite an expected incremental rise in vacancies across all major property types over the next few years, vacancies are still expected to remain lower than 2002/2003 peak levels, and the 2008/2009 period is projected to see rents to continue moving upward into positive territory... [...more...]

Q&A: Philip McAndrews of TIAA-CREF

This is a very interesting perspective from a big player in Commercial Real Estate investments. Enjoy!

New York-based TIAA-CREF is considered one of the largest institutional real estate investors in the world. The self-described financial services organization has more than $435 billion in total assets under management and about $25 billion in real estate assets.

That size alone makes TIAA-CREF’s perspective important in today’s uncertain economic environment. We caught up with Philip McAndrews, the company’s managing director and head of real estate portfolio management, to pick his brain about the state of the markets and how the company is sourcing deals and building its investment portfolio. [...more...]

1,600 ACRE BUSINESS PARK PLANNED

The West Valley is continuing mixed use growth...

SunCor displayed its first building at an event on Monday. The 440,000-square-foot, speculative cross-dock distribution building is the first of about 60 buildings planned for the project. SunCor plans to ultimately build-out with office, retail and industrial space. [...more...]

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RETAIL BUYING OPPORTUNITIES AHEAD

Effect of the credit crunch and curtailed expansion plans by retailers will bring enticing retail property offerings to market in 2008

The combined effect of the credit crunch and curtailed expansion plans by retailers will bring enticing retail property offerings to market in 2008, researchers predict. Lackluster asset sales in January, however, confirm that buyers remain rooted to the sidelines.

“It’s a very difficult selling market right now,” says Bernie Haddigan, a managing director at Marcus & Millichap and director of the company’s national retail group.[...more...]

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FUNNY

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HOUSTON CBD TOPS NATION IN OFFICE RENT GROWTH

While office vacancy rates nationwide are on the increase, Houston has found an impressive absorption rate as of late. In other markets, now may be the time to seek new, under-priced space or purchase that office condo instead of renting.

Office rent in downtown Houston increased 52.4% year-over-year in 2007 – the greatest gain of any central business district in the nation, according to Colliers International. [...more...]

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A RETAIL REINVENTION OF MANHATTAN'S FINANCIAL DISTRICT

Vision is everything. Redevelopment awaits in many places...

For decades, Manhattan's Financial District held zero cachet as a shopping destination. Its crooked street grid, which bears little in common with the uniform retail corridors of Madison Avenue and Fifth Avenue, didn't help. Manhattan's southernmost tip also became a ghost town every weekend.



But over the past six years, Lower Manhattan has undergone a dramatic transformation. [...more...]

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RESIDENTIAL REFINANCE OPPORTUNITY

Refinancing may be a great option for well-qualified owners. Falling interest rates may just pay off.

Another mortgage-refinancing boom is under way. But this time around, many homeowners will be watching from the sidelines.

For the first time since 2005, mortgage rates have slipped well below 6%, ending last week at about 5.87%, according to mortgage tracker HSH Associates. Some lenders are offering even lower deals. At these levels, about 37% of homeowners could refinance...[more]

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SCHULTZ' PLANS TO SAVE STARBUCKS

Look for changes in the days ahead...especially interesting is their confidence in their Real Estate processes...

Q: Thanks for returning the call, Howard. First, can you tell us about
the process that you went through to compel you to return?

A: The board asked me to return, but I was on a parallel track with them. Obviously, I was a witness to the downturn in the business and had concerns about shareholder value and given my passion for the company I accepted the board's offer. The board and I had conversations over the last few months as we headed into the holiday season. The final decision was made after the holidays.

Q: You say 'witness to the downturn,' but shouldn't you take responsibility for where the company is now?
...[...more...]

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NEW STUDY SLAMS PROPOSED TAX HIKE

Could a new bill tax your partnerships over twice the current rate?

The latest assault in the heated battle over legislation that could double taxes on real estate partnerships and private equity firms comes in the form of a new study that argues the law would squeeze $5 billion in additional taxes from real estate investors alone.



The study, released in November by the Real Estate Roundtable, a trade group based in Washington, D.C., also asserts that the law would weaken commercial real estate markets by prompting investors to pass on projects that don't offer a “competitive return,” specifically marginal projects in less desirable locations. But advocates of the tax change disagree with...[more]

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