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 report issued Wednesday, the Labor Department said that 93 U.S. metro areas had unemployment rates topping 10 percent. Nationally, the official unemployment rate is 8.9 percent (and expected to go up on Friday), not counting the permanently discouraged job-seekers who’ve given up looking for work. El Centro (pop. about 40,000) in the Imperial Valley of Southern California, led the metro-area unemployment table with a true Depression-era level: 26.9 percent. Iowa City, Iowa, had the nation’s lowest unemployment rate, a positively 1990s-like 3.2 percent. Of the larger U.S. metro areas, that is those over 1 million inhabitants, the Detroit area has the highest unemployment rate at 13.6 percent. With the contraction of the Big Three into the Medium Three, no one’s expecting that figure to get any better anytime soon. The National Association of Real Estate Investment Trusts is predicting that U.S-based REITs will be able to raise about $582 billion for acquisitions by 2013. Including debt, REITs might have as much as $728 billion in their war chests over the next four years, according to Bloomberg. It looks like the strongest of the REITs (Simon Properties, say, or Vornado Realty Trust) are getting pumped up to feed on properties that other owners can’t afford any more or must otherwise dispose of. It may not be a good time to be a seller, but various owners are indeed finding that sell they must — and not only in the United States. Hammerson Plc, one of Britain’s largest property trusts, has sold a Paris office building for 210 million euros ($298 million) to MGPA, a fund part-owned by Macquarie Group Ltd. Hammerson needs the dosh to meet its obligations to various banks. The building, called Les Trois Quartiers, has been on the market since last fall. Hammerson is also trying to sell its office property in London, Bishops Square. The housing downturn has spared no one, not even Curtis James Jackson III, the ex-con former drug dealer and multi-platinum-selling rap star best known as 50 Cent. Jackson has reportedly taken his Farmington, Conn., mansion off the market after more than two years of trying to sell it, first for $18.5 million and later for $14.5 million. The Hartford Courant reported that a local real estate broker said that the 50,000-square-foot home would not fetch more than $5 million. That wouldn’t be so bad for 50 Cent, who bought the property in 2003 for $4.1 million, except that the rapper spent about $10 million for upgrades to the 15-acre property, including a 40-person hot tub inside a grotto and a “dancing room” outfitted with stripper poles. There was no word on whether 50 Cent’s next album would be called Get Your Equity Out or Die Tryin’.Wall Street had a down day on Wednesday, but only slightly. The Dow Jones Industrial Average lost 65.63 points, or 0.75 percent, while the S&P 500 was down 1.37 percent and the Nasdaq ended 0.59 percent down.