the Editors of Commercial Property Executive
Economic Update – Retailers See May Malaise
May comparable-store sales numbers are filtering down from various retailers, and the results aren’t inspiring confidence in the prospects for recovered consumer spending. Actually, most analysts expected average retail same-store sales to decline in May 2009 when compared with May 2008, but the trouble was they declined more than expected. On average, comps were down 4.8 percent in May at the 30 major retailers tracked by Thomson Reuters; analysts had predicted a 4.1 percent drop. In today’s climate, a decline of more than expected = bad news, while a decline of less than expected = good news. Target Corp., for…
Orinda, Octagon Eye Strong Area Fundamentals for Atlanta Conversion Project
The nationwide downturn in employment is chipping away at demand in the apartment market, but there are still those communities here and there where the call for more rental accommodations remains relatively strong. To that end, Orinda Corp. and Octagon Capital Partners, having found just such a community, have acquired a 350,000-square-foot office building in a college-laden district of Atlanta for a $35 million apartment conversion project.Occupying 2.1 acres downtown at 222 Mitchell St., the property, for which Atlanta-headquartered Orinda and Charlottesville, Va.-based Octagon shelled out all cash, was previously home to the NationsBank/Bank of America Operations Center. At the…
Economic Update – CRE Buyers Looking for Deals
Turns out that the recession is still on, at least if the latest numbers from payroll firm ADP accurately reflect the state of hiring and firing in the nation. According to ADP on Wednesday, U.S. companies cut an estimated 532,000 employees from their payrolls last month, with goods producers laying off 267,000 workers, and service providers shedding 265,000 positions. ADP doesn’t always agree with U.S. Department of Labor figures, however. Labor will be releasing its May unemployment report on Friday. Whatever the April numbers from the government later this week, unemployment is clearly bedeviling the nation’s cities. In a separate…
Lack of Leverage Lends Strength, REIT Week Panel Maintains
The bad news is, the United States is in a Great Recession and the commercial real estate market is likely to feel continued pain during the next two years as corporate cutbacks result in weaker fundamentals. The good news is, the public equity markets have been improving in the past few months, with returns bouncing back substantially and multiples back down to more reasonable levels as the market has responded to REIT success at raising capital through secondary offerings. In fact, the re-equitization of the market—with about $12 billion worth of common stock raised–has been extremely helpful to the market,…
Signs of Life in 2Q as Sales Volume, Capitalization Jump
Despite overall sales figures down double digits from last year, transactions are still move forward, albeit in smaller amounts. Another good sign of real estate activity is the re-equitization of the REIT industry that continued in May as more companies deleveraged their balance sheets with equity capital raised in the public markets. Thus far in the second quarter, Tulsa-based net leased sale broker Stan Johnson Co. closed 13 deals, as compared to nine deals the entire first quarter. The company recently completed the sale of a 5,900-square-foot free-standing medical property leased 100 percent to Fresenius Medical Care, located in West…
GM Filing Affects Industrial Sector, Local Economies
A major part of bankrupt carmaker General Motors’ plans to fast track its reopening as a new, sleeker firm in 60 to 90 days, are a number of real estate-related decisions that could have an effect on commercial property industry, especially the industrial sector. GM plans to close two assembly plants this year. The firm will close its Wilmington, Del., assembly plant in July and its Pontiac, Mich., assembly plant in October. At the end of this year, GM will also close its service and parts operations and warehousing and parts distribution centers in Boston, Jacksonville and Columbus. Stamping plants…
Henderson Eyes London Office Opportunities with $330M Fund
With industry players speculating that Central London’s office market will soon hit bottom, the timing appears to be just right to snap up assets in the revered locale, and London-based Henderson Global Investors is positioning itself to do just that, while taking others from around the globe along for the ride. The independent asset manager has just launched the Henderson Central London Office Fund II, with plans of raising an initial $330 million to invest in assets as the numbers on price tags decrease.”It certainly feels as if we are at or close to the bottom in terms of value,”…
M-F Mortgage Delinquencies Increase in Q1, Says MBA
The weakening economy and continued credit crunch led to increases in commercial/multifamily mortgage delinquencies during the first quarter of 2009, according to the latest Commercial/Multifamily Delinquency Report, released by the Mortgage Bankers Association. “Multifamily mortgage delinquency rates continued to rise in the first quarter,” says Jamie Woodwell, vice president of commercial real estate research at MBA. “Delinquency rates on multifamily mortgages held by banks and thrifts, by Fannie Mae and in commercial mortgage-backed securities (CMBS) are all now at levels higher than at any time since the 2001 recession. First quarter delinquency rates on commercial mortgages held by life insurance…
Economic Update – Pending Home Sales Reach for Unexpected Highs
The National Association of Realtors said Tuesday that its index of signed sales contracts, which is regarded as a harbinger of home sales in the very near future, spiked upward 6.7 percent nationally in April to 90.3. That much of a rise hadn’t been expected by analysts, and represented the quickest upward movement of the index since late 2001. A mixture of factors seemed to be driving buyers. Prices are down, first-time buyers have that $8,000 tax credit to spur them on, and until last week at least, mortgage rates were remarkably low. Regionally, the Northeast saw an enormous increase…
Buildings’ Weak Link: Energy Conservation Through Windows
When it comes to saving energy, windows constitute the weak link for buildings. Despite heavily insulated walls and ceilings and the popularity of low-e glass, 25 to 35 percent of the energy used in buildings and homes is wasted due to inefficient glass. In fact, it should come as no surprise that glass is responsible for greater than 10 percent of the total carbon emissions in the United States annually and is a major contributor to global warming.New technologies, however, can improve this picture—and they are acknowledged in initial revisions to the Department of Energy’s Energy Star® window performance standards,…