the Editors of Commercial Property Executive
Construction Firms Cope with Difficult Economy
There’s little doubt that the construction industry has felt the full force of hard times, earlier in fact than most other industries. With the popping of the housing bubble beginning in 2006, the residential side of the industry started to suffer, and with the credit freeze setting in in 2007, the commercial side of the business also faced a slowdown. Now the recession has dampened demand for new buildings even more. According to the U.S. Department of Commerce, construction spending during January 2009 stood at a seasonally adjusted annual rate of $986.2 billion, down 3.3 percent from the month before,…
Uninterrupted by Credit Crunch, Army’s $1B Office Project Kicks Off
While office projects fall off drawing boards across the country, scrapped as a result of the frozen credit market and dwindling demand, Indianapolis-based Duke Realty Corp. is not experiencing any hitches with plans for the development of the U.S. Department of Defense’s 1.7 million-square-foot office complex in the suburban Washington, D.C., town of Alexandria, Va. Duke has just broken ground on the $1 billion project and is on target to complete construction in September 2011, as originally scheduled. The Defense Department’s new administrative office campus (pictured), to be managed by the U.S. Army Corps of Engineers, will sit off I-395…
600,000-SF Raytheon Deal a Rarity in Quiet Leasing Market
While Internet firm AOL and defense contractor Raytheon Co. would seem a strange pairing, the two firms have negotiated a real estate deal under which Raytheon will occupy 600,000 square feet at AOL’s Dulles, Va., office campus. The magnitude of the lease is especially notable given the downturn in leasing activity seen by the area–like many markets across the nation–since the recession has taken hold.Under terms of the deal, the defense contractor will occupy space in four separate buildings at Pacific Corporate Office Park, where AOL maintains a presence despite moving its headquarters to New York City last year. Waltham,…
Markets Frozen for Some But Not All; Macerich Secures Financing Deals Totaling $446M
Lenders still aren’t rolling out the red carpet for the real estate industry, but some firms, like the Macerich Co., are managing to get their hands on financing despite the inhospitable environment. The Santa Monica, Calif.-based shopping center REIT just announced two refinancing deals totaling $320 million, and two loan extensions valued at $126 million. Macerich will refinance the Shops at North Bridge, a 680,000-square-foot retail destination in Chicago, to the tune of $205 million, courtesy of a loan from a life insurance company. Scheduled to close in June, the loan is for a seven-year term and carries a fixed…
Another Troubling Report on the Manhattan Office Market
News of the Manhattan office market’s poor performance continues to roll in as FirstService Williams releases its first quarter 2009 report. The dismal numbers, the real estate services firm concludes, come as no surprise given New York City’s–and the country’s–economic downslide. What a difference a couple of years make. During the first quarter of 2007, the average vacancy rate in Manhattan was just 7.7 percent; now it’s well into the double-digits at 12 percent, having jumped substantially from 10.9 percent just three months ago at the close of 2008. Net absorption figures, a negative 3.9 million square feet, serve as…
Corporate Debt Problems May Spur Sale-Leasebacks This Year
The volume of sale-leasebacks took a nosedive late last year, but given the credit environment, that can be said of most kinds of real estate transactions. However, there are hints that as the recession grinds on, companies will once again look to monetize their physical assets through sale-leasebacks, provided investors can be found with ready cash and an interest in long-term real estate holdings. In fact, the current state of the capital markets might even provide an incentive for companies to seek sale-leasebacks. “That’s because the current debt market is presenting a challenge for borrowers,” Maureen Ehrenberg, a principal with…
Economic Update – Obama Turns Up Heat on Detroit
GM and Chrysler’s efforts so far to turn themselves around have proven to be lemons. That was the contention of the Obama administration as it gave failing grades to the automakers and vowed to perform a sweeping overhaul of both firms if they failed to get their financial ducks in a row soon. Under the current plan, the federal government will foot the bill for GM and Chrysler to operate over the next several weeks–with plenty of strings attached. The companies will have to undergo major restructuring, said the administration, lest the government make good on its threats of a…
Mixed Futures Await Vacant Single-Tenant Stores
The demise of familiar national brands like Circuit City, Linens ’n Things and Mervyns is having as big an impact on single-tenant leasing and investment as it is on the retail sector itself. Of the 73,000 store closings that the International Council of Shopping Centers estimates will take place during the first half of 2009, hundreds will involve net-leased properties. That, in turn, poses the challenge of re-tenanting properties ranging in size from a few thousand square feet to big-box locations of 100,000 square feet and up. On the whole, stores with small footprints may be relatively easy to re-tenant….
The Expert: Select-Service Buyers Hungry for Deals
While liquidity is virtually unavailable for big-ticket hotel investment sales, investors are eager for select-service properties and pockets of financing are available for hotels trading under $15 million. But competition is tight, according to Jones Lang LaSalle Hotels’ recently conducted biannual U.S. Select Service Hotel Investor Survey, which revealed that hungry buyers now outnumber sellers by more than six to one.According to the survey, 55 percent of investors are targeting distressed assets or loans/notes. But many equity-rich buyers are forced to sit on the sidelines, eagerly awaiting opportunistic acquisitions, as both distressed and performing assets are being put up for…
The News: Marriott Takes on Landmark Resort
With hotel fundamentals in a nosedive due to the recession, many hotel companies’ finances are coming under stress. But Marriott International Inc. recently put its strong balance sheet to work on a deal that seems to have a lot of upside for the hotel giant.Marriott is setting out to save one of America’s signature resorts, having agreed to acquire The Greenbrier, a 721-room resort in White Sulphur Springs, W.V., that has hosted 26 U.S. presidents on its grounds but is currently in Chapter 11 bankruptcy.Pending bankruptcy court approval, Marriott is striving to secure a long-term management agreement at the resort,…