Although we hold out hope for the best outcome and outright survival of General Growth Properties, Inc., the Chapter 11 bankruptcy of this real estate titan was a devastating event for the Bucksbaum family and the REIT’s employees. Further, it is a terribly disheartening account for those who have long admired and truly respected the story of how Martin and Matthew Bucksbaum expanded their family grocery store business in 1954 with the building of Town and Country Center in Cedar Rapids, Iowa, one of the earliest retail centers in the Midwest. I personally was saddened by the events and hold…

Curtailed expansion plans and store closures seem to be the most common trend in the retail sector, yet a pair of large-scale retail projects marked milestones just a few miles and hours apart from each other. Muss Development L.L.C. disclosed that a 121,000-square-foot BJ’s Wholesale Club will open this November at Sky View Center in the Flushing section of Queens, N.Y. The 800,000-square-foot shopping center is part of Muss’ Sky View Parc redevelopment project, which will also include six high-rise condominium towers. The developer also announced that a 6,500-square-foot Applebee’s Neighborhood Bar and Grill is scheduled to open there next…

Jones Lang LaSalle Hotels recently published a five-year forecast for average daily rates, occupancy and RevPAR for the United States and the six major markets of Chicago, Los Angeles, Miami, New York City, San Francisco and Washington, D.C. This forecast was based on an analysis of economic indicators that show strong correlation to hotel performance, including gross domestic product, gross metro product, per capita income, non-farm payroll, the S&P 500 Index and room supply.Jones Lang LaSalle Hotels projects that U.S. RevPAR will decline 12.1 percent in 2009, the result of a 7.4 percent average-daily-rate decline and a 5.1 percent decrease…

Lou Plasencia, president & CEO of hotel brokerage and consulting firm Plasencia Group stated that the lodging market is the worst in 25 years, calling the industry’s recent performance “deplorable.” Many institutional lenders like banks and insurance companies that have hotel loans on their books have lodging assets in their portfolios that have suffered severe declines in net operating income, which will likely translate to an increased number of foreclosures.The firm’s hospitality advisory services group, which consults with lenders on its troubled hotel assets, reported a 400 percent increase in business over the past 90 days. Plasencia cited some hotels…

The first quarter was very telling. The national office vacancy rate moved almost a full percentage point higher to register 14.8 percent, occupied space fell by 26.7 million square feet and new office development, both completions and construction that is still under way, dropped precipitously. The same pattern is almost assured for the balance of the year.The vacancy rate is expected to rise by one percentage point or more in each of the remaining quarters through the end of the year, and occupied space is anticipated to shrink 25 million square feet. Tenants are looking to reduce their real estate…

The continuing recession has driven up office vacancy rates, depressed rents and increased the amount of sublease space at an accelerating pace, according to a Jones Lang LaSalle Inc. report on the U.S. office market’s first-quarter 2009.Effective office rents nationwide fell 10 percent in the first three months of this year, and the amount of leasing activity also fell sharply, falling 31.5 percent from the fourth quarter of last year. It remained more than 48 percent lower than levels achieved in the first quarter of 2008. Some markets saw much sharper drops than that, topped by St. Louis with 84…

The Department of Commerce announced last week that total business inventories, stocks of finished goods, work in progress and raw materials, decreased 1.3 percent in February, in line with expectations. The largest decline took place across the categories of furniture, electronics and appliances, consumption of which can be deferred until consumer confidence returns.Prior to every recession since World War II, unsold merchandise would accumulate in company warehouses. And past recessions have, in part, been attributed to excessive inventory levels. Historically, adjustment was slow and inventories did not meaningfully contract until the recession was over. Companies now employ minimal safety stock…

Southern California’s Inland Empire is a conduit for nationwide shipping for cargo arriving from the ports of Los Angeles and Long Beach. That placement had led to robust growth in recent years as developers added an average of 20 million square feet of new inventory annually, according to reports released recently from Marcus & Millichap Real Estate Investment Services Inc. But judging by first-quarter performance, declining fundamentals are adding up to a tough year for the 452 million-square-foot market, which spans Riverside and San Bernardino counties. For example, vacancy has jumped from 7.7 percent to 11.3 percent since the first…

The San Francisco Bay Area’s apartment market, which for some time seemed impervious to the economic downturn, has finally started to soften. In the first quarter of 2009, apartment vacancy rates rose to 5 percent from 4.2 percent, the largest increase since the dot-com bubble burst in 2001 as rates rose 71 percent. However, the Bay Area’s apartment vacancy rate still falls well below the national rate of 7.2 percent.Part of the decline in fundamentals links directly to the sudden and severe falloff in employment. As of March 2009, California’s unemployment rate reached a historical high of 11.2 percent, and…

Job losses are decreasing demand for apartments, but multi-family REITs may have some long-term trends in its favor, according to a recent Moody’s Investors Service report. The ratings agency tracks nine multi-family REITs, eight rated stable and one bearing a negative outlook. In the near term, these REITs are unlikely to face pressure from U.S. residents who are leaving their apartments to buy homes, owing to the fact that people do not want to buy assets that are falling in price, tough lending standards and the frightening employment picture.But multi-family REITs will face tremendous challenges from that same weak job…