the Editors of Commercial Property Executive
Economic Update – CRE Delinquencies Spike in First Quarter
For some time now, commercial real estate defaults have been one of the other shoes waiting to drop on the economy, and that day may be closer at hand. Real Capital Analytics has reported that delinquent commercial real estate loans grew by 43 percent by the end of the first quarter of 2009 to $65.9 billion, compared with $46 billion at the end of last year.That hardly means that investment activity is going to grind to a halt, though. Indeed, one owner’s serious misfortune is another’s opportunity. A large (even trophy) example of that would be last week’s sale of…
Despite Economy, Plans Move Ahead for $1B L.A. Mixed-Use
What recession? Even in bustling Los Angeles, demand for office, condo and hotel space has plunged, but Thomas Properties Group, which was just selected by Korean Air to develop the airline company’s $1 billion mixed-use project in the city, is undaunted by today’s economic conditions and hopeful about the future. Korean Air purchased the site of its future mega-development (pictured), spanning a full city block Downtown at the intersection of Wilshire Blvd. and Figueroa St., in 1989. The 2.7-acre property is located a few blocks from the L.A. Live mixed-use entertainment development and the Staples Center sports and entertainment arena,…
Economic Update – Retailers, Retail RE Investors Still Looking to China
A subset of the overall job loss numbers in March included the evaporation of 48,000 retail positions, according to the U.S. Department of Labor. That number, though large, is down considerably from the recent peak of retail job-cutting, which was 91,000 jobs in November of last year. The Labor Department tracks employment in 12 different kinds of retail operations, and of those exactly one category had any kind of employment growth last month–namely general merchandisers, which includes discounters. That category saw a net gain of 13,800 jobs in March. Aside from the discount sector, where are retailers looking for growth…
Fitch: Looking for Liquidity, REITs Find Choices, Conundrums
Staying liquid is job one for many equity REITs these days, and the lack of a CMBS or unsecured market makes that a formidable task. Most of the choices bring both answers and potential pitfalls at a time of unusual urgency, contends Fitch Ratings in a recent report. “In essence, the clock is ticking for REITs to maintain adequate liquidity,” the report stated. Of all potential sources of capital, bank lines of credit will be the leading source of liquidity for REITs through 2010, Fitch predicts. By the end of last year, revolving credit facilities represented 64.4 percent of the…
DTZ: Outlook Stable for 2009 U.S. Office Occupancy Costs
Declining rents and rising vacancy are the bane of many landlords in the United States these days, but by another measure–total occupancy costs–prospects for 2009 look fairly positive compared to the overall global outlook. In 61 percent of markets in the United States and Canada, Class A occupancy costs are expected to remain stable, according to a study released last week by DTZ. By contrast, 78 percent of the 114 global markets surveyed by DTZ are likely to sustain a significant drop in occupancy expenses this year. Specifically, Class A office occupancy costs will decline in every major central business…
Report: Recession Hits D.C. Office Market
As the country struggles in the midst of an economic downturn, Washington, D.C., with its large governmental employment sector, has thus far managed somewhat better than most cities. But according to a new report by Cassidy & Pinkard Colliers, the area market is starting to feel some pains. The D.C. metropolitan area office sector met an overall negative net absorption of 817,000 square feet in the first quarter of 2009, up from negative 793,200 square feet in the fourth quarter of 2008, according to the first quarter 2009 Cassidy & Pinkard report. Vacancy rates, meanwhile, have grown in the D.C….
As Indian Tourism Rises, IHG Plans 7,800-Room Expansion
In an attempt to capitalize on India’s growing prominence as a vacation destination, Intercontinental Hotels Group–which already has 11 hotels in the nation–plans to develop an additional 31 hotels in major metro areas and secondary cities across India over the next several years, adding a total of 7,800 rooms.Three brands are represented in the pipeline: InterContinental Hotels and Resorts; Crowne Plaza Hotels & Resorts; and Holiday Inn Hotels and Resorts. The hotels will be located in India’s tier I and tier II cities, such as New Delhi in the north, Bangalore and Chennai in the south; and Mumbai and Pune…
Economic Update — Market Shrugs Off Another Unemployment Uptick
Wall Street must be getting desensitized to bad news. While the number of Americans filing new claims for unemployment rose to 669,000 last week from a revised 657,000 in the previous week, the market seemed anything but worried. Much of the optimism might have sprung from the G-20 meeting in London, where the member nations agreed to a $1 trillion boost for the International Monetary Fund, and to closely monitor the global financial system.On the New York Stock Exchange, winners beat losers by more than seven to one on volume of 1.87 billion shares with advancers topping decliners by more…
Despite Sagging Market Stats, KBS Nabs 504,000-SF Dallas Office
The one-two punch of the credit crisis and the recession has significantly slowed office building sales in many cities, and Dallas is no exception. But KBS Realty Advisors pulled off the biggest commercial real estate buy in the city so far this year, with its purchase of Providence Towers, a 12-story, 504,700-square-foot office tower from CB Richard Ellis Investors L.L.C. The sales price was not disclosed. Located in the Far North Dallas Tollway submarket, Providence Towers is a familiar city landmark, featuring polished red granite exteriors and a nine-story entrance arch that splits the building into identical east and west…
Economic Update – Unemployment Hits Midsize Businesses Hardest
As the job market continues to erode, it is employees at medium-size companies who are suffering the most. According to the newest ADP national employment report, almost one-half of the jobs lost from February to March were at companies with 50 to 499 workers. Overall, U.S. private employment decreased 742,000 from February to March, the report stated.The estimated change of employment from January to February was revised down by 9,000, from a decline of 697,000 to a decline of 706,000. March’s ADP Report estimates private employment in the service-providing sector fell by 415,000. Employment in the goods-producing sector declined 327,000,…