Top Stories

The lending community has a much stronger appetite for healthcare facilities located on hospital campuses versus off campus because they are perceived as less risky investments. That’s the consensus of a panel of healthcare finance specialists who assembled Dec. 1 at the InterContinental Hotel in Atlanta for the Interface Medical Office: Southeast conference. Sponsored by France Media, the conference attracted more than 160 industry professionals who gathered to network and attend panel discussions on a range of timely topics. “There’s a meaningful spread of default risk between on- and off-campus deals, and lenders certainly take that into account,” said John Nero, a panel participant based in New York and associate with Hammond Hanlon Camp, an investment banking and financial advisory firm. Despite the lending bias, Jim Barnes, senior vice president of healthcare real estate at Regions bank in Atlanta, said that the finance community has demonstrated a willingness to fund off-campus facilities on a selective basis. For example, NorthMarq Capital arranged $3.75 million in first-mortgage financing for Dean Lakes Medical Office Building, an off-campus property in Minneapolis in October. Bremer Bank-Minnesota provided the loan. Still, the emergence of multi-specialty clinics off campus is a trend that hasn’t yet gained enough …

CHICAGO — Chicago-based Equity Residential (NYSE: NQR) has entered into an agreement to acquire a 26.5 percent ownership interest in Archstone for $1.32 billion. The remaining significant Archstone owner has the right of first offer to acquire the interest from the sellers at the same price. If the owner declines, then the acquisition is expected to close late in the first quarter of 2012. “The Archstone and Equity residential portfolios are highly complementary with concentrations in the same markets and assets of similar quality,” said David Neithercut, president and CEO of Equity Residential, in a statement. As of Sept. 30, 2011, in the United States, Archstone’s portfolio contained 48,922 wholly owned and stabilized apartment units and 9,423 units owned in unconsolidated joint ventures with third parties. Additionally, 1,322 units are under construction, and the company owns land sites that have development potential of approximately 5,279 units. The portfolio also includes 14,000 units in Germany. “Since we believe that none of the current owners of Archstone is likely to be a long-term owner, acquiring this position allows us a role in determining and perhaps even expediting, the ultimate outcome regarding Archstone,” he added. The 26.5 percent interest represents one half of …

Doomsday forecasters continue to be disappointed by a resilient U.S. economy that is generating jobs at a modest clip, says Hessam Nadji, managing director of research and advisory services for Encino, Calif.-based Marcus & Millichap Real Estate Investment Services. Nonfarm payroll employment, an indicator of future demand for commercial real estate space and absorption,rose by 120,000 in November on a seasonally adjusted basis, the Bureau of Labor Statistics reported last Friday. The agency also revised the job figures upward for September and October by a combined 72,000, an indication that employment growth was a bit stronger than first believed. “The November jobsnumbers were more welcome news for commercial real estate, on top of strong post-Thanksgiving holiday sales and recent progress in alleviating the macro global risks,” says Nadji, referring to the sovereign debt crisis in Europe. U.S. retail sales on Black Friday totaled $11.4 billion, up 6.6 percent from a year ago, according to ShopperTrak, a Chicago-based research firm. “[The jobs data] confirms and validates our view that a recession would not re-emerge” says Nadji, “and that the economy and commercial real estate fundamentals would remain in a gradual recovery through 2012 and pick up pace in 2013 after the …

Hospitals and their ancillary businesses need to find avenues to reduce costs and become more efficient. That’s the consensus of the panel of medical office experts at the 2011 Interface Medical Office Conference focusing on the Southeast on Wednesday evening at the InterContinental Hotel Buckhead in Atlanta. The meeting comes amid a time of great change and uncertainty on the national healthcare scene. Adding to the drama are legal challenges to the Patient Protection and Affordable Care Act signed into law by President Barack Obama in March 2010. The panel, led by moderator John Mugford, editor of Healthcare Real Estate Insights, delved into the challenges and opportunities for hospitals and developers to work together to reduce costs and increase efficiency. One example of what developers can do is construct medical office buildings (MOBs) to suit the desires of patients while saving money for healthcare systems. A medical office development housing a primary doctor, a women’s clinic with outpatient care and a pediatric practice with shared staff would be an ideal development for both healthcare systems and developers, according to Tom Kouloris, a former hospital administrator who handles Capital Projects and Infrastructure with PricewaterhouseCoopers. The reason is that it’s convenient for …

How can the depressed metro Atlanta office market, which is reeling from a vacancy rate of approximately 21 percent, benefit the apartment sector in the long run? Office concessions hold the key, says one prominent multifamily executive. To attract new tenants and reduce vacancies, office owners will need to grant more concessions, which in turn will spark job growth and buoy the apartment sector, says Bennett Sands, development director for Wood Partners. The Atlanta-based company is one of the largest multifamily developers in the country. “Couple that with the fact that Atlanta has a very well-educated younger cohort. There are a lot of reasons for businesses to come to Atlanta, and they will. We are just a little behind everyone else,” says Sands. The comments from Sands came Tuesday during a panel discussion focusing on apartment development as part of the Interface Multifamily Southeast Conference. Sponsored by France Media, the event attracted approximately 300 industry professionals who gathered at the InterContinental Buckhead Atlanta. Early stages of recovery Atlanta’s apartment vacancy rate currently stands at 8.4 percent, down from 10.6 percent a year earlier, according to New York-based Reis. Nationally, the vacancy rate is 5.6 percent. On the recovery continuum, Atlanta’s …

Atlanta — The apartment market is the darling of commercial real estate and will continue to be so for the next few years, says Ryan Severino, senior economist of New York-based Reis. “It is spectacular.” His comments were made on Tuesday at the Interface Multifamily Southeast Conference in Atlanta. Severino, who was the keynote speaker, delivered a report on the economic climate and how it will impact the multifamily market in coming years. Severino says the Southeast is on par with the rest of the nation, but the commercial real estate market is on a slow-growth trajectory. More specifically, the country is not creating enough jobs to drive down the unemployment rate, and he predicts it will be mid-decade before employment reaches previous peak levels. That being said, the multifamily sector is continuing to show signs of strength. Vacancy rates are continuing to tighten and there will be limited supply growth until at least late 2012 or early 2013, which is causing an uptick in rent. For example, Reis reports that in the third quarter of 2011, the apartment vacancy rate in Atlanta was 8.4 percent, down from 10.6 percent a year earlier. Additionally, the average effective rent in Atlanta …

CHICAGO — Parsippany, N.J.-based Prudential Real Estate Investors (PREI) has acquired the 439,434-square-foot 22 West Washington, a Class A office building located in Chicago, from a joint venture between BlackRock and Golub & Co. for $183.5 million. Golub will continue to manage the property. The 17-story building, which is located in downtown Chicago’s Central Loop across the street from Daley Plaza, is fully leased to tenants including the corporate headquarters of Morningstar and the local CBS television affiliate. Catherine Marcus, a managing director and portfolio manager for PREI, said the return profile of the asset compared to the risk profile makes 22 West Washington attractive for returns. “The low risk profile of this Class A property contributes to the attractive risk-adjusted return and fits in nicely with our broader strategy in the current market environment,” she said in a statement. As of June 30, 2011, PREI managed approximately $48.1 billion in gross real estate assets ($30.2 billion net) on behalf of more than 490 clients worldwide. — Savannah Duncan

HOUSTON — Houston has experienced substantial improvement in multifamily fundamentals this year, according to Marcus & Millichap’s Fourth Quarter 2011 Apartment Research Market Report. Employment, vacancy, rents and sales transactions have risen, although the construction market is still lagging. Overall, Houston is poised to enter 2012 in a strong position. Houston led the nation in employment growth through the first three quarters of this year, adding a total of 65,300 jobs. It is projected to add more than 87,000 positions total in 2011. Contributing to hire employment numbers are companies such as Burns & McDonnell Engineering Co., which will hire 100 new employees during the next 18 months. The apartment vacancy rate in Houston dropped to 9.2 percent during the third quarter and it is projected to reach 8.8 percent in the fourth quarter, which would be an improvement of 200 basis points compared to last year. Growing employment in Houston should help vacancy continue to fall during the coming year. Rents are also on the rise. Asking rents in metro Houston in the third quarter rose to $778 per month, an increase of 2.4 percent compared to the third quarter of 2010. During the fourth quarter, asking rents are …

LONG ISLAND CITY, NEW YORK — Rockrose Development has begun construction on a $750 million residential project in the heart of the Court Square area of Long Island City. The four-building project will include the development of more than 1,000 apartments and condominiums, as well as retail space. The first phase, which is known as 43-10 Crescent Street, is under construction and contains a 42-story tower with 709 luxury apartments, as well as a 15,000-square-foot grocery store. Amenities include a basketball court, squash court, double height fitness center, valet service, coffee lounge, screening room, and a roof deck with a lawn, misting pods, barbecue grills and a bar. Additionally, 65 percent of the units will contain a washer and dryer and most will have a balcony. The building will offer studio apartments, as well as one-, two- and three-bedroom units. Justin Elghanayan, principal of Rockrose, says rents will vary between $1,750 per month for a studio and $4,150 for a three-bedroom floor plan. Part of the reason Rockrose chose this site for the development is the proximity to public transportation services. Seven subway lines are located within a three-block radius to the property. “This location is such an amazing transportation …

INDIANAPOLIS — Northbrook, Ill.-based Romanek Properties has sold a three-property, 433,972-square-foot office property, located in Intech Park in Indianapolis, to an institutional investor for $85 million. “Overall, the Indianapolis office market has not been robust, but this property has continued to maintain a much higher occupancy than the rest of the market,” said Gary Nussbaum, managing director of Transwestern’s Investment Services Group. “When a tenant leaves, [the property] tends to fill the vacancy pretty quickly. It’s got a track record of staying well-leased.” The U.S. General Services Administration anchors the portfolio, which is approximately 97 percent leased. The GSA leases approximately 56 prcent on behalf of the Department of Homeland Security. The buildings include: – The 140,231-square-foot Intech I, located at 6325 Digital Way. Major tenants include Indiana Wesleyan University, TriMedx and the GSA. – The 141,466-square-foot Intech II, located at 6650 Telecom Drive. The GSA leases 94.6 percent of the building, which is fully leased. – The 152,230-square-foot Intech III, located at 6600 Telecom Drive. The GSA and Blackboard Inc. anchor the building. Nussbaum, along with Tom Gorman of Transwestern’s Investment Services Group’s Chicago office, along with John Robinson of Jones Lang LaSalle’s Indianapolis office, represented the seller in …