Uncategorized

The 187 million-square-foot Los Angeles office market is not immune from the recessionary U.S. economy, as vacancy rates continue to inflate. Vacancy rates have continued to increase for four consecutive quarters and reached 11.4 percent by the end of the third quarter, according to a Grubb & Ellis Co. report.Sublease space has flooded the market. Residential real estate firms and mortgage companies are responsible for a good part of that space, but the report found that other companies, such as Amgen Inc. and Yahoo! Inc., are also putting space back on the market.The economic downturn carries with it some positives…

London’s West End remains the world’s most expensive office market with occupancy costs totaling $248.66 per square foot per year, according to CB Richard Ellis Inc.’s semiannual “Global MarketView/Office Occupancy Costs” survey. The report is based on occupancy costs, defined as rent plus local taxes and service charges, for the 12 months ending Sept. 30.The remaining top 10 cost-heavy office markets are Moscow ($234.73), Hong Kong’s central business district ($231.59), Tokyo’s Inner Central ($184.26), Mumbai’s CBD ($170.85), Dubai ($156.53), Tokyo’s Outer Central ($151.69), London’s City ($146.61), Singapore ($135.13) and Hong Kong’s Prime Districts ($132.97).No North American markets cracked the top…

Faced with a global economic recession and evidence that it could deepen, the industrial property market is rife with uncertainty.Since the middle of September, visibility into the credit markets and the outlook for the global economy has deteriorated dramatically. Decisionmaking on many fronts has ceased, and the capital markets are essentially frozen. Recent capital injections by the Department of the Treasury, the Federal Reserve System and other central banks, however, give hope for eventual relief.Tenants are handling new space commitments with greater deliberation, making only time-critical decisions. National industrial absorption data remain negative, and industrial vacancy stands at 10.7 percent,…

Not long ago, some industrial real estate executives had reason to expect that manufacturing in emerging and mature economies around the world just might be strong enough to pick up some slack from the weakening U.S. manufacturing sector. But as 2008 nears its close, it appears that mature or emerging nations both may lack the industrial muscle to prop up global demand for distribution space and manufacturing and other facilities.Confirming this trend, a monthly global survey of purchasing managers found that the manufacturing sector worldwide last month dropped to the lowest level in its nearly 11-year history. The overall benchmark…

Same-property cash net-operating income for industrial REITs rose 3.2 percent in the third quarter, up from a 2 percent gain accrued in the second quarter, according to RBC Capital Markets’ “3Q08 Office/Industrial Earnings Wrap-Up.” But a move toward less leasing activity will probably put enhanced pressure on earnings and cash flow for the remainder of the year. Meanwhile, same-property occupancy is showing signs of downward pressure, according to the report, coming in at 92 percent in the third quarter, down from 92.1 percent in the previous quarter and 94.6 percent during 2007’s third quarter.“The recent weakness in the industrial subsector…

The recent capital-adequacy problems of major financial institutions has increased volatility, decreased liquidity and stalled multi-family property transaction volume, though multi-family volume is clearly ahead of commercial property volumes. This has created significant challenges for multi-family investors gauging expected cap rates and pricing.Now would seem an appropriate time to apply the time-tested principle of triangulation, the process of navigating uncharted waters by measuring the distance to known fixed points, to the difficult questions before investors in commercial real estate.We frame our analysis with three known points compared with the many uncertainties of the marketplace:• current debt and equity return hurdles,…

A large number of empty condominium units is challenging South Florida’s apartment rental market, and apartment owners are looking for more ingenious ways to attract tenants. One company, Altman Development Corp., is offering early leasing residents the opportunity to customize apartments at Satori, a 279-unit luxury complex in Fort Lauderdale.Steven G. Inc.’s flooring, carpet, granite and paint color options will decorate the only rental community in Florida that offers rental-unit customization, the developer said. Phase I of the four-building complex will be completed in March 2009, and construction is slated for completion by the end of 2009.Altman is offering the…

National apartment prices rose 2.3 percent from the second quarter to the third quarter, notching a score of 178.57, according to Moody’s/REAL Commercial Property Price Indices for November 2008. That mark is the highest of all property types examined; in addition to apartments, the report assesses the office, retail and industrial sectors. Apartments’ index is down 7.2 percent from its third-quarter 2007 score but up 2.5 percent from its tally in 2006’s third quarter. The sector’s prices have fallen for longer than the other property types, but its overall decline has been the lowest, according to the report.Meanwhile, a report…

New York City-based Falcon Real Estate Investment Co. has created a new investment fund that has four main sub-funds in three South American countries and the United States. The first phase of Falcon The Americas Real Estate Opportunity Fund is due to close in January 2009. The fund is based in Luxembourg and is aimed at institutions and high-net worth individuals seeking alternatives to the volatile stock and bond markets. Falcon officials said investors can choose which of the four countries they want to invest in, or rely on Falcon’s guidance. The U.S. portion of the fund will seek opportunities…

MGM Mirage Hospitality has formed MGM Mirage Global Gaming Development, a new division that will focus on expanding MGM Mirage Hospitality into new markets internationally with luxury resorts, both with and without gaming. The division’s president will be Lloyd Nathan, who has been with the company since 2002. Nathan most recently held the position of executive vice president & managing director of MGM Mirage International, based in Hong Kong. He is also a practicing attorney specializing in international transactions. Educated at the London School of Economics and the Law Society of England’s College of Law, he is both a California-licensed…