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In today’s topsy-turvy real estate market, churches are experiencing their own set of problems. In the heyday of the mid-2000s, many churches expanded their campuses, as the number of people in the congregations swelled. Some bought existing church buildings because their membership space demands grew. Others built, while still others did both. The 2,000-seat megachurches thrived. But like many corporations and organizations, churches are feeling the pinch of the Great Recession. With unemployment increasing to levels not seen in decades, out-of-work church goers are unable to sustain previous levels of giving. These churches are finding a need to consolidate campuses and sell off once needed property to maintain a core of activity and to stave off lenders. There are some churches where the property has limited alternate-use options, and, hence, the value of church buildings is doubly hurt in a down economy. Conversions to alternate uses can be very costly. The Faith Communities Today study performed by the Hartford Institute for Religion Research in 2005 applies the term megachurch to Protestant Christian congregations having an estimated minimum of 2,000 attendees each week, although some churches report weekly attendance as high as 20,000. The development and growth of megachurches was a …

“Be Zen in Ten” should be the motto of the commercial real estate industry throughout 2010 as it comes to grips with the reality of the deepest recession since the 1930s that has seen an estimated 8.4 million jobs disappear from the economy. The impact of those job losses on office and industrial space in Georgia and across the country has been substantial, with vacancy rates at record highs, rents depressed, significant negative absorption rates and virtually no new commercial construction starts. Nationally, commercial property values have fallen more than 40 percent in the past three years. Although initial reports show that the GDP grew at a 5.7 percent annual rate during the fourth quarter of 2009 — the best performance since 2003 — it is unlikely that those numbers will be repeated in the near future. Approximately 3.5 percent of the GDP growth resulted from inventory restocking orders, as companies that held back during the recession rebuilt their reserves. Unless demand for manufactured goods increases, the boost will be a one-time occurrence and growth will remain sluggish. Mark Zandi, an economist with Moody’s Investor Services, says that the federal stimulus added approximately 2 percentage points to fourth quarter growth. …

Commercial real estate transactions are harder to close today than perhaps ever before, but the reasons may not be what you would expect. During the recession of the late 1980s and early 1990s, there was a significant lack of capital that constrained transactions. Lack of capital does not appear to be the case this time around. Real Capital Analytics reports that total commercial transactions are down by 87 percent nationally from peak closing levels in 2007. Because of the availability of agency debt from Fannie Mae and Freddie Mac, the multifamily transaction volume has been thought to be more stable. However, according to the Real Capital Analytics data, the multifamily sector is down by 85 percent nationally. In the Southeast, multifamily markets have been hit harder than at the national level. Atlanta and most tertiary markets in the Southeast have experienced an 88 percent drop in apartment transaction volume. Secondary markets like Birmingham and Memphis have experienced a greater drop at 97 percent. The market in the Southeast with the lowest drop has been Nashville, with an 82 percent drop in volume. Apartment operations have suffered as well. Dale Henson Associates reports that street rents in Atlanta garden-apartment properties have …

A wide variety of loans secured with commercial real estate mortgages are in distress because economic conditions have reduced the tenants' abilityto pay the owner the amount necessary to service those loans, or refinancing of maturing loans has become extremely difficult. This difficulty has been caused by the decline in real estate values and by the dearth of lenders in the market. In this environment, the loanholderis faced with some difficult choices. One option is foreclosure, but this can be a long and expensive process.If the lender does successfully foreclose, it will become the property owner, which for many lenders is not a desirable result. Most lenders do not have the experience necessary to effectively manage commercial real estate. In addition, many lenders do not want to incur ownership liabilities. A lender may choose to market the loan for sale prior to commencing or completing a foreclosure. Because the lender is selling the loan, rather than the property that secures the loan, the lender likely will only buyers after offeringa discount. While this may not seem desirable, if the lender has written off at least a portion of the loan, the sale proceeds may reflect favorably on the lender’s financial …

Excess is taboo, and green is in vogue. These converging trends will alter the office landscape in new and more productive ways combining connectivity, creativity and environmental stewardship. Even owners of such iconic properties as the Empire State Building and Chicago’s Sears Tower are investing aggressively in high-performance renovations to remain competitive in the market. They know everyone from the developer to the tenants benefits. “Doing more with less have become real estate buzzwords for a lot of companies, given that real estate is often the highest overhead, next to employees,” says Greg Kindred, senior vice president with commercial real estate brokerage firm Richard Bowers & Co. Sandwich shops and a small athletic club have been eclipsed by conference areas, LEED certification, wireless Internet connectivity and lavish tenant lounges. A 2008 CodeGreen survey showed 79 percent of respondents would pay 5 percent more rent for a LEED-Silver rated building. Like many current cultural and economic trends, technology enables the mobility and spatial efficiency current work patterns demand. Off-site data and application storage reduces office space needs and energy consumption. Now workers perform effectively wherever they are needed most. John Alston, CEO of ClubDrive Systems, notes servers consume the same energy …

Hospitality companies face complex tax issues that can strain resources and drain profits. Grant Thornton's tax professionals offer 10 tips to help manage a tax burden. Extend bonus depreciation. Bonus depreciation is available for qualified properties placed in service in 2008 or 2009. It allows taxpayers to expense half the cost of the eligible property while depreciating the remaining half using normal rules. For 5-year equipment, this will result in a first-year deduction of 60 percent of the asset’s cost. Qualified leasehold improvement property also qualifies for bonus depreciation as long as the property was placed in service before Jan. 1. Qualified restaurant property is specifically excluded from the bonus depreciation rules. Consider maintenance opportunities. Taxpayers often capitalize costs to repair, refresh and maintain store locations. Under Section 162, taxpayers may deduct certain costs incurred to repair and maintain locations, rather than capitalizing and recovering costs through depreciation. An accounting method change to deduct repair and maintenance costs can accelerate expenses and improve cash flow. Determine unclaimed property. Many states are looking to unclaimed/abandoned property as a potential source of revenue, so it's important for companies to be in compliance with state reporting requirements. This is tangible or intangible property …

REBusiness Online recently spoke with Ryan Chapman, vice president of Johnson Capital in Irvine, Calif., about the current state of the commercial lending market. Johnson discussed the rise of multifamily assets, the narrowing bid-ask gap and the lending sweet spot. REBusiness Online: How do you see the commercial lending/financial market in 2010? Ryan Chapman: It certainly does seem as though someone hit the switch after the first of the year. People are tired of banging their head against the wall and are eager to get back to work. A few recent single-borrower securitizations were well received in the marketplace. Some conduit lenders are announcing that they are dipping their toes back into the market to originate loans designed for multi-borrower securitizations. The agencies continue to provide liquidity to the multifamily space, and just recently, Congress reconfirmed its support. In the existing portfolio of commercial real estate across California and throughout the country, we have essentially three types of existing transactions. There are those that work. These properties are cash flowing, have little expectation of erosion of the existing cash flow and are appropriately leveraged given the property’s current value. These properties will refinance or can be sold on the open …

On May 5, the Institute of Real Estate Management (IREM) and the CCIM Institute will be going jointly to Capitol Hill to talk with members of Congress about capital markets and federal tax issues that can potentially solve the current economic crisis in commercial real estate. IREM and CCIM support ways to increase short-term business lending, moderate-term capital improvement loans and longer-term financing or refinancing of commercial property. Having a proper “commercial property toolbox of options” is important when addressing today’s needs in the area of capital markets. Positive commercial property cash flow is always important and is especially important in addressing troubled properties. One way to generate a positive cash flow is to accelerate the properties’ depreciation. By shortening the recovery period and, at the same time, providing passive loss relief, an important incentive would be provided to those owning or managing commercial real estate. Another way to provide additional financing is through the use of funds from credit unions. Existing law limits credit union business' lending to 12.25 percent of total assets. By moving the limit to 25 percent of total assets (a current proposal in the U.S. Congress) additional funds could be provided for commercial property lending. …

The Great Recession of 2009 wasn’t especially kind to the owners of commercial real estate assets. However, in hindsight, it was a breakthrough year for senior housing and healthcare properties, as the extent that senior housing demand is sustainable during different economic environments began to more fully sink in with lenders and investors. Last year, senior housing/healthcare properties were the strongest real estate asset class in most lender and investor portfolios. The recession obviously negatively affected some aspects of the senior housing industry. Weakness in the residential housing market and the overall decline in consumer confidence forced many seniors to delay moves into independent living properties. The impact on occupancy in skilled nursing homes, where the majority of residents are funded by Medicaid, Medicare and private insurance, has been less apparent. The federal government’s stimulus program, coupled with the willingness and ability of states to meet their responsibilities to the Medicaid population, has enabled nursing home operators to perform at a high level. As a result, the industry has proven to be remarkably recession-proof in the current downturn. The pace of the economic recovery, coupled with how well state governments are able to resolve budgetary woes, will dictate how smoothly …