Top Stories

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 …

CHICAGO — A partnership between DeBartolo Development and Optima Inc. has started construction on the $114 million, 325-unit Optima Center Chicago, a 42-story, Class A apartment high-rise in the Streeterville submarket of Chicago. The property is located at the northeast corner of Illinois and St. Clair streets, one block east of Michigan Avenue. “It’s an incredible piece of real estate,” says Edward Kobel, president and chief operating officer of DeBartolo Development. “Optima Center Chicago is going to be a world-class apartment building.” The building was designed by David Hovey of Optima to achieve LEED certification. Kobel says Hovey is one of the most unique architects and designers in the world today. Optima Center Chicago will feature one-, two- and three-bedroom apartments with floor-to-ceiling glass, hardwood floors, wood cabinets, stainless steel appliances and granite/cultured marble counters. The building will also have 11,600 square feet of amenities, including a glass-enclosed fitness center with a weight facility, basketball court, cardio areas, a flex studio, indoor lap pool, hot tub and locker rooms with sauna and private massage rooms. Additionally, there will be a resident’s club, business center, multipurpose room and conference room with a game room, lounge, flat screen television, two catering kitchens, …

SHIPPENSBURG, PA. — A partnership between Shippensburg University Student Services Inc. (SUSSI) and Campus Apartments will break ground today on the $70 million first phase of a student housing project at the Shippensburg University of Pennsylvania. The three-phase, $200 million project is the largest in the university’s history. The first phase of the project includes construction of three facilities, which will house 924 students. Two of the buildings will be on the north side of campus, one of which will contain a 13,000-square-foot wellness center. One building will be built on the south side of campus and will be the new location of the University’s Honors Program. Each of the facilities will also include semi-suite and full-suite floor plans, multipurpose programming areas and study/social lounges. SUSSI, an independent non-profit organization that serves as the voice for the student community, owns and is directing the project. A partnership was formed with Campus Apartments to design, develop and finance the development. Campus Apartments then collaborated with RBC Capital to arrange $70 million in bond financing for the first phase. “Through our partnership with Campus Apartments, we were able to secure a highly favorable financing arrangement, which is a testament not only to …

ATLANTA — At the ICSC 2011 Southeast Conference, four retailers discussed their 2012 growth plans and challenges in a panel titled “Growing Pains: A Retailers’ Discussion.” David Kitchens, partner at Atlanta-based Kitchens Kelly Gaines P.C., moderated the discussion between Marianne Creamer McCabe, real estate manager at Chick-Fil-A; Jeff Gray, vice president of real estate at Hibbett Sporting Goods; Carl Jenkins, regional real estate manager at Advance Auto Parts; and Warner Walker, store development manager at Starbucks Coffee Co. All of the panelists said their companies have plans to grow nationwide and more specifically, in the Southeast, during 2012. In the Southeast, Starbucks plans to open 10 stores next year and Chick-Fil-A will add 12 to 15 stores. Hibbett Sporting Goods and Advance Auto Parts both intend to grow their presence in the Southeast as well, although no specific numbers were provided. One of the most extensive topics of discussion was new growth challenges companies are facing. McCabe said that although Chick-Fil-A has kept a consistent growth strategy, it has started to look at more in-town locations as possibilities for growth. The stores are typically about 5,000 square feet and the company prefers for the restaurants to have a drive-through, which …

Appraisals play a critical role in the commercial real estate community. Investors, lenders and special servicers alike look to appraisals for guidance, but how reliable are they in today’s rocky market? Brian Olasov, managing director in the Atlanta and Washington, D.C. offices of law firm McKenna Long & Aldridge LLP, doesn’t mince words. “My research has indicated that they are not reliable at all.” Widely recognized as an expert on commercial mortgage-backed securities (CMBS), troubled mortgages and banking challenges, Olasov believes greater scrutiny of the appraisal process is needed. “When you start talking about global solutions, I think that we need to take a look at the role appraisals are playing in slowing down the real estate recovery,” he says. The provocative comments from Olasov came during a retail panel discussion at the ICSC 2011 Southeast Conference in Atlanta on Tuesday afternoon. The opening day of the two-day conference at Cobb Galleria attracted several hundred industry professionals, including retailers, developers, brokers, lenders and an assortment of exhibitors. Appearing on the panel with Olasov were John Long, senior vice president with the OREO (Other Real Estate Owned) Group for commercial real estate at Atlanta-based SunTrust Banks, and Michael McGregor, vice president …

MIAMI — Resorts World Miami has completed the first stage of the $3.8 billion development by purchasing the Omni Center in Miami. The Omni Center contains a 527-room Hilton Hotel, a 2,500-space car park, 300,000 square feet of office space and 600,00 square feet of decorator ready retail. Additionally, Christian Goode has been selected as president of Resorts World Miami, who will oversee development, construction and operations for the project. He has experience with the Resorts World Group brand, as previously he was the chief financial officer for the $880 million Resorts World New York City. “With over 350 employees, Resorts World Miami is starting to become a reality,” said Goode in a statement. “These employees are the first of the 19,000 employees to be employed if and when the Destination Resort Act is passed and Resorts World Miami secures one of the three destination resort licenses.” A groundbreaking is expected to occur in early 2012, with completion slated for the fall of 2014. Plans for the project, which were announced in September, include four hotels with a total of 5,200 rooms and two residential towers with 1,000 units. Additionally, the towers will sit atop eight stories of commercial uses, …

Fueled by a low interest rate environment and strong investor demand, NorthMarq Capital expects to arrange between $8 billion and $9 billion in commercial real estate financing in 2011, an increase of at least 50 percent from a year earlier. The Bloomington, Minn.-based company arranged approximately $5.2 billion in commercial real estate financing in 2010, according to CEO Edward Padilla, who describes this year’s huge surge as a shocking surprise. “Going back a year, there were some economists talking about a 10-year Treasury yield of about 5 percent, or certainly above 4 percent,” says Padilla. Today, however, the 10-year yield is hovering around 2 percent, near an all-time low. That’s significant because the 10-year yield is a benchmark for long-term financing in commercial real estate. The multifamily sector is a big reason for the boost in volume. When all is said and done, NorthMarq expects to arrange $2.5 billion in multifamily loans through its seller-servicer relationship with Freddie Mac this year, easily beating the company’s previous annual high of $1.5 billion. That’s before factoring its loan origination business through Fannie Mae into the equation. Collectively, Freddie Mac and Fannie Mae will account for $3.3 billion in multifamily financing for all …