Retail properties in Miami-Dade County recorded negative net absorption in the first quarter as accumulating job losses stymied retail spending and forced merchants to vacate the market. Additional increases in vacancy are expected through the end of 2009 as more tenants close and others reduce planned store openings. Higher vacancy will induce a further decline in rents, which dropped for the second successive quarter in the first 3 months of this year, and a slowdown in new store openings will undermine support for marketwide rent growth in the months ahead. In addition, tenants seem to be gaining the upper hand in negotiations on lease extensions or renewals. As a result, concessions will rise over the remainder of the year as owners attempt to retain traffic-generating merchants. While the demand side is decidedly weaker than it has been recently, a decrease in construction will mitigate the extent of the projected rise in vacancy and set the stage for a steady recovery in property fundamentals. A look at the numbers indicates that employment in Dade County will decrease by 43,000 jobs (4.2 percent) in 2009, compared with a loss of 36,400 positions last year. Due to the decline in employment, retail spending …
HAYWARD AND TRACY, CALIF. — Colliers International has completed the transactions of two industrial properties in California. In the first transaction, Mill Valley, Calif.-based GSI Realty has acquired an 113,000-square-foot distribution building in North Hayward for an undisclosed price. Sean Sabarese and Joe Yamin of Colliers’ Oakland, Calif., office represented the buyer; Greig Lagomarsino, also of Colliers Oakland, represented the undisclosed seller in the transaction. In the second transaction, San Francisco-based Lowenberg Corp. purchased a 264,687-square-foot, three-building industrial park in Tracy. A Denver-based REIT sold the Class A multi-tenant property sold for an undisclosed price. Lagomarsino, along with Michael Goldstein and Greg O’Leary of Colliers’ Stockton, Calif., office, brokered the transaction.
Michael S. Schimmel Although, historically investors view real estate investment trusts (“REITs”) as relatively constant, the downward trend of the real estate market and the decimation of nearly 50 percent of the value of the stock exchange over the past year has drastically impacted even fundamentally sound companies. The combination of market uncertainty and lack of consumer confidence, coupled with the fact that some believe the United States has officially been in a recession since December of 2007, helps to demonstrate the vulnerability of every aspect of the real estate sector. This article briefly explores certain basic fiduciary duties that directors and trustees of public REITs owe to the company. While many consider the concept of fiduciary duties straightforward and simple, it is quite the contrary. In fact, this aspect of corporate governance has an extensive body of case law, countless volumes of secondary sources and treatises, and most notably, a highly complex intricate web of both federal and state statutory laws. Since REITs acquire, manage and/or invest in real estate assets or loans that are secured by real estate and simultaneously issue shares in these investments to shareholders, various duties and responsibilities attach to the individuals managing and overseeing …
INDIANAPOLIS — Indianapolis-based shopping center owner Simon Property Group has announced plans for a public offering of 20 million shares of its common stock. The offering will be priced at $50 per share, and proceeds will be contributed to Simon Property Group LP, the company’s majority-owned operating partnership subsidy, which will use it for general corporate purposes. Merrill Lynch & Co. and J.P. Morgan Securities are the joint book-running managers for the offering. In addition, Simon Property Group LP has agreed to sell $600 million of its 6.75 percent senior unsecured notes, which are due in 2014, in an underwritten public offering through Citigroup Global Markets. The notes are priced at 98.96 percent of the principal amount to yield 7 percent at maturity. The offering is expected to close on May 15. Deutsche Bank Securities, UBS Securities, and Goldman, Sachs & Co. are the joint book-running managers.
STOCKBRIDGE, GA. — Embassy Group has purchased the 128-unit Cobblestone Village apartment complex from Brad Bradford Realty for $4.56 million. The property, which was built in 1989, is located at 5220 N. Henry Blvd. in Stockbridge. Cobblestone Village features a swimming pool, tennis courts and a fitness center spread across its 12.79 acres. David Gutting, Mike Kemether, Larry Orr, Chris Spain, Nathan Swenson, David Wagner, Steve West and David Whitesell of Cushman & Wakefield’s Atlanta office represented both parties in the transaction.
BELLEFONTAINE, OHIO — Sidney, Ohio-based Industrial Property Brokers has arranged the purchase of the former Stock Lumber facility, located at 1100 S. Detroit St. in Bellefontaine. The 4.5-acre property contains an approximately 27,000-square-foot main building, as well as a 14,000-square-foot storage building. It was acquired by the Logan County Solid Waste Management District, which plans to relocate its offices to the facility. In addition, the site will be used as a central processing location for the county’s 20 recycling centers. The new facility is expected to double the county’s ability to process recyclable waste. The acquisition price was not disclosed.
CHICAGO — Jones Lang LaSalle (JLL) has negotiated four leases totaling approximately 200,000 square feet within One Financial Plaza in downtown Chicago. JLL’s Michael Curran and Mark Gunderson represented building owner Behringer Harvard, which owns the property via its Behringer Harvard REIT I Inc. investment program, in the lease transactions. Chicago Trading Company signed a new 87,400-square-foot lease within the 40-story, approximately 1 million-square-foot tower. The tenant is relocating from the Chicago Board of Trade Building in May 2010, and will be moving into One Financial Place’s trading floors, as well as the fourth and fifth floors of the office tower. Mark Keebler and Brad Serot of CB Richard Ellis negotiated the deal on behalf of Chicago Trading Company The Chicago Stock Exchange has renegotiated its lease within One Financial Place, ceding the fourth and fifth floors of the building’s 440 South LaSalle complex and moving to the seventh floor of the office tower. The tenant will occupy approximately 50,000 square feet, reducing its footprint by approximately 60,000 square feet. Lisa Davidson and Rich Schuham of Studley represented Thee Chicago Stock Exchange. The Comptroller of the Currency renewed its 40,000-square-foot lease, represented by Schuham and Joe Learner of Studley. MF …
Evan P. Kristol is senior vice president of Investments and Still Hunter, III, is first vice president of Investments for Marcus & Millichap Real Estate Investment Services in Fort Lauderdale, Florida. 1. What area is your expertise South Florida Apartments and Distressed Multifamily Properties (Broward County) 2. What trends do you see presently in multifamily development in your area? In recent years, strong population growth and an expanding job market drove demand for apartments in South Florida. Economic uncertainty involving the residential market has created an unstable situation for local developers causing them to become guardedly optimistic regarding their future construction plans. There is not much new development taking place. Unsold condos continue to compete with apartments. The positive aspect of supply-side fundamentals is an ongoing reduction in permit issuance. In Broward County 1,400 multifamily units were issued last year, an amount that is expected to fall to fewer than 1,000 units in 2009. 3. Who are the active multifamily developers in your area? Minto Group Inc, Altman Development Corporation, Gables Residential and ZOM are a few active developers in South Florida. 4. Please name one or two significant multifamily developments in your area. What impact will these projects have …
Apartment conditions in St. Louis will soften this year due to job losses and localized oversupply; however, some submarkets in the metro area will record a relatively strong performance. The local labor market is projected to be weighed down by the manufacturing sector and the trade, transportation and utilities segment, resulting in approximately 12,000 job cuts in 2009, which will ease apartment demand. Vacancy is projected to climb 100 basis points this year to 8.6 percent, the highest rate since early 2006. As a result, owners will reduce rents in an effort to maintain occupancy levels. The average asking rent is forecast to end the year at $722 per month, a contraction of 1 percent, following a 1.7 percent advance in 2008. In the near term, fundamentals will firm in the Airport/Interstate 70 and Clayton/Mid-County submarkets, as their proximity to arterial routes will continue to generate healthy tenant demand. As such, vacancy is forecast to retreat approximately 60 basis points to 9.5 percent this year in the Airport/I-70 submarket, while vacancy in the Clayton/Mid-County area is expected to fall roughly 30 basis points to 7 percent. Class A properties near interstates 270 and 170 are projected to outperform as a …
Clearly, the demand for office space has significantly diminished since the end of last year. Office leasing is directly related to jobs and the expectation of future employment and, therefore, over-reliant on Wall Street. However, it does lag behind the stock market somewhat. Having said that, it is important to look at the Manhattan office space market with a broader perspective. The unique advantages of New York City include the diversity of businesses residing here and the transportation infrastructure that makes it easy for people to get to work. Other cities such as London, Seattle and Silicon Valley, California, are far more reliant on specific industries and their market tends to suffer more dramatically when those industries are in decline. Although the financial services and banking industry represents a large portion of the overall inventory of office space in Manhattan, industries such as healthcare, legal (with strong bankruptcy and litigation departments) and accounting have shown resilience — and in some cases growth — of their businesses. The subleasing of excess office space, although predominantly in the financial services sector, also includes retailers, law firms and pharmaceutical companies. Recent major leases include: Deutsche Bank, which renewed 150,000 square feet at 345 …