Finance

The U.S. Department of Commerce reported that retail sales dropped by 0.4 percent in April, compared with the previous month. The decline was a little more than expected, but less than the revised March drop of 1.3 percent. The recent two months of decline followed unexpected increases in consumer spending in January and February. Gasoline sales, which sagged 2.3 percent in April as gas prices rose somewhat (and reminded drivers of the gas-price bubble of last summer), accounted for a fair chunk of the total decline. But for gas sales, the overall decline in retail sales would have been 0.2…

Commercial property prices sank by 5.8 percent in 1Q09, according to the MIT Center for Real Estate’s Transactions-Based Index, which saw its fourth quarterly drop in a row during the quarter. The index is now 21 percent lower than in 1Q08, and fully 26 percent below its peak in mid-2007. According to MIT, that drop is similar to the index’s 27 percent drop during the commercial property slump of the early 1990s. “It’s possible that the first quarter of 2009 was the nadir in market sentiment,” said David Geltner, director of research at the MIT Center for Real Estate, in…

American International Group is finally in the news for something other than being a multibillion-dollar black hole for the U.S. Treasury; namely, a property sale. The beleaguered insurer has inked a deal to sell the AIG Otemachi Building and a one-acre site in Tokyo to Nippon Life Insurance Co. AIG will receive about $1.2 billion in cash for the property–a drop in the vast AIG bucket, perhaps, but still a tidy sum. It is a choice bit of real estate. Not only is it in the traditionally expensive Tokyo market, the building overlooks the Imperial Palace, one of the few…

Data centers offer a digital-age wrinkle to the net lease industry. By most accounts, demand will grow steadily for the highly sophisticated facilities, which host mission-critical servers. Meanwhile, specialized technical elements and heavy capital investment create high hurdles to development. “Given the cost of adding new capacity—$1,200 to $1,800 per square foot—the lack of construction lending and an 18- to 24-month construction cycle, the data center sector will likely continue to enjoy high occupancy levels and rising rents during the next several years,” CapLease Inc. reported last month.Judging by their first-quarter activities, the two REITs specializing in data centers are…

The number of distressed assets continues to grow and lenders across the country have been debuting new programs and establishing funds to provide loans for owners and buyers of these troubled assets in a climate where securing financing has become a monumental challenge. Now, Boise, Idaho-based A10 Capital has jumped on the bandwagon with $100 million in capital for the origination of first mortgage commercial real estate loans and the supplying of financing for commercial real estate-secured distressed debt acquisitions through its new Lending Group. According to A10, it’s all about foresight. Seeing the credit crunch on the horizon, A10…

Friday’s unemployment numbers from the U.S. Department of Labor, while hard to characterize as good, aren’t quite as bad as they have been in previous months. Unemployment is still going up, but not quite as quickly as before. That kind of thing is beginning to be called “green shoots,” to use an up-and-coming economic buzzword. Shoots or not, the U.S. economy lost 539,00 jobs in April, driving the unemployment rate up to 8.9 percent, the highest since 1983. In March, the loss was 663,000, but much of the difference between the two month is attributable to the fact that the…

Whatever else is happening in the economy, U.S. consumers seem to have returned to the nation’s stores in somewhat greater numbers now that spring is here. According to consultancy Retail Forward, the 35 major retailers that it surveys saw a 0.9 percent increase in same-store sales in April compared with March, when sales had dropped 1.9 percent. Average same-store sales compared with April 2008, however, were down 3.7 percent. “The retail sales declines are finding a bottom, but it’s a bumpy bottom,” said Frank Badillo, senior economist at Retail Forward. Bumpy, and maybe murky like the sea bottom, so it…

At least two-thirds of the American CMBS loans maturing in the coming decade could be at risk of default, according to a new report by Deutsche Bank. However, a recent change to the Federal Reserve’s TALF program could act as a safety valve for the market.The numbers get scarier as the Deutsche Bank report states that 80 percent of loans made in 2007 are also unlikely to qualify according to Reuters, which reported on the study. CMBS loans make up only about 20 to 25 percent of the entire commercial real estate market, yet other sources of financing, such as…

While the federal government has unveiled an array of programs to unfreeze the credit markets, significant issues remain to be addressed in commercial real estate financing, according to a roundtable hosted this morning by the New York Metro CCIM Chapter. The federal government has had to invent new ways to unlock credit markets, as conditions exist today that are unprecedented, according to David Dubrow, partner in the law firm of Arent Fox L.L.P. In the savings & loan crisis of the early 1990s, the government found the remedy was to put troubled savings & loan institutions into receivership and sell…

On Wednesday, the eve of the stress test results, observers were wondering just how much trouble sour commercial real estate loans are going to cause those banks that hold them. Knee deep, waist deep, or up to their eyeballs?It depends on just how much a bank believed rising prices weren’t really a bubble back in the mid-2000s. The Wall Street Journal reported that, according to a document it obtained, the largest 19 U.S. banks are expecting losses of as much as 12 percent for the next two years on commercial real estate loans–a fair amount of believing in the durability…