the Editors of Commercial Property Executive
Sheraton’s $4B Revitalization Plan Continues Despite Economy
Starwood Hotels and Resorts Worldwide Inc.’s plans to renovate Sheraton Hotels & Resorts, its most global and largest brand, are still going forward in spite of the difficult economic situation. The global, multi-year revitalization program includes an investment of more than $2 billion in new hotels, $1.3 billion in renovations and $400 million in signature brand initiatives.Arrangements and financing for the Sheraton brand’s revitalization were made long before the current economic crisis, with renovations and upgrades to properties beginning in 2007. The bulk of investments were made prior to the fall of 2008, allowing the worldwide work to carry on…
Economic Update – Uncertain Future for Big 3 Vexes Detroit RE
Detroit has been edging back into the news lately, as the U.S. Department of Treasury is reportedly sidling the auto giant GM toward a late springtime bankruptcy. For Detroit real estate markets, that might actually be a positive of some kind, since it would clear away some of the uncertainty that’s been hanging over the market since the Big Three were double-punched by the oil-price bubble and the recession. For the Detroit industrial market, conditions have been surprisingly stable lately. According to Grubb & Ellis’ most recent report on the market, industrial vacancies stood at 13.5 percent marketwide in 4Q08,…
With Large Chunks of Space Scarce in Philly, Law Firm Relocates
Fox Rothschild L.L.P., a tenant at 2000 Market St. for three decades, has wrapped up its search for a new home, having found just the right space right under its nose. The law firm signed a new lease for nearly 104,500 square feet of premier space on three floors in the 665,600-square-foot building. Located in the Market Street West area of Philadelphia’s Central Business District, 2000 Market St. is a 29-story tower that was developed in 1972. The Class A building consists of 648,800 square feet of office space, 5,900 square feet of ground-level retail and 10,800 square feet of storage…
Pocketing $756M for Construction, Hospital Nabs Largest Ever FHA Loan
Capital Health System Inc. has just broken a record with its obtainment of a $756 million construction loan from the Federal Housing Administration for the development of its new hospital on a 165-acre site in Hopewell Township, N.J. The financing, arranged through FHA’s Section 242 Hospital Mortgage Insurance Program, is being funded by TIAA-CREF and marks FHA’s biggest loan yet.Ground broke in October 2008 on the new state-of-the-art hospital (pictured), which will consist of a 540,000-square-foot six-story hospital structure connected via an atrium to a six-story medical office building with 320,000 square feet of space. TIAA-CREF will buy high-quality, low-risk…
The Expert: 90/10 Is the New 80/20
Having professionally grown up following the precepts of Pareto’s Principle, which essentially holds that 80 percent of profits derive from 20 percent of the customer base, I have stood fast in support of it oh these many years. But, it strikes me that today’s dire economic conditions might call for a fresh re-evaluation of how applicable the Italian economist’s heralded rule is today.The recession has reached its 16th month—having officially started in December 2007—more jobs vanish every day and an estimated one in eight American homeowners is either in foreclosure or behind on payments. Thus, the lasting effects of economy…
The News: Receivership May Spell Relief for Distressed Assets
During the next few quarters, the increasing volume and value of delinquent retail loans will bring scores of lenders and retail property owners to a crossroads. In February alone, 46 retail CMBS loans valued at $277 million became newly delinquent, bringing the total value of delinquent securitized retail loans to $1.7 billion nationwide, according to Fitch Ratings. Though lenders will likely choose between foreclosure and workouts for the vast majority of distressed retail properties, a small but growing number of lenders are making a third choice: a court-appointed receiver.Specifically, the court appoints a receiver for a retail property or other…
The Expert: Sustainability Makes Double Sense
The Hotel Palomar Dallas, a Kimpton hotel, demonstrates a conscious commitment to the environment, as well as a strong business case for sustainability. Like other properties owned by Behringer Harvard, including the Hotel Palomar Los Angeles Westwood, it employs energy and water conservation, recycling, green cleaning and the use of environmentally sensitive materials and finishes. Also among its best practices are paper conservation, including paperless checkin and checkout; washable mugs in the guest rooms; copy machines that default to double-sided printing; and washable napkins. Motion sensors and energy-efficient lighting reduce energy consumption. Non-toxic products are used for cleaning and maintenance…
The News: Opportunity in War-Torn Land
In an unusual market in which traditional demand sources prove unpredictable, global hotel companies can seek business in unexpected places. Thus, Marriott International has entered a locale that most would rather avoid, signing on to manage a five-star, 228-room hotel in Afghanistan’s capital of Kabul. Scheduled for completion by the end of 2010, the property is rising next to the U.S. embassy within the security perimeter.Rick Jenney, partner in the law firm of Morrison & Foerster L.L.P., represented Overseas Private Investment Corp. in its $60 million financing for the project, which is rising in a 3 million-resident city that offers…
The Expert: Real Meaning of ‘Recovery’
Grubb & Ellis Co.’s first-quarter office market statistics are ready in draft form, and the preliminary snapshot appears about as expected: not encouraging but not bad enough to set any new records.The vacancy rate ended the quarter at 15.5 percent, an increase of 70 basis points from the year-end rate of 14.8 percent. Net absorption plunged to negative 17 million square feet, on par with some of the worst quarters during the 2001 recession. The inventory of available sublease space ended the quarter at 110 million square feet, a gain of 10 million square feet since the beginning of the…
The News: New Jersey Ready for Rebound?
The New Jersey office market is seeing signs of increased tenant activity in the first quarter of 2009, according to two market watchers. The clouds have not all cleared, certainly, as FirstService Williams reported that the New Jersey office availability rate increased slightly to 21.4 percent from last year’s first-quarter figure of 20.5 percent and from 21.2 percent at the end of 2008. Year-over-year availability in Northern New Jersey increased from 18.8 percent to 19.7 percent, and in Central New Jersey it grew from 23 percent to 23.8 percent.But, upticks in office cycles usually begin with increased tenant activity, and…