National Market Review
ATLANTA
Commercial
The largest retail project to come online in 2004 is the 1 million sf retail and entertainment component of Atlantic Station, part of a $2 billion, 138-acre development in Midtown. Marcus & Millichap predicts existing retail vacancies of 9.5 percent in Atlanta will drop to 9 percent by year-end.
Plans were recently announced for Perimeter Place, a 1.1 million sf mini-city encompassing retail, restaurants and residences on 42 acres at Perimeter Center Parkway. Demolition of two former BellSouth office towers totaling 600,000 sf on the site begins in April.
Residential
Buyers of high-end homes in the Greater Atlanta market have been particularly active in the last two quarters, according to Metrostudy Inc. Demand is strong for new homes priced $300,000 to $400,000. As for the region's highest-priced homes, at $800,000-plus, demand also remains strong, the study said.
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BOSTON
Residential
Massachusetts experienced the nation's largest overall percentage increase in housing prices between 1980 and 2003, according to a new study by the University of Massachusetts Donahue Institute. In the decade leading up to 2000, the number of Massachusetts households that spent more than 30 percent of their income on housing rose from 11,000 to more than 600,000, a rate of increase that far surpasses all other states.
Commercial
A shaky local economy and delivery of over 1 million sf of new office supply in 2004 will push vacancy close to the 20 percent level and depress rents tremendously, according to a report by Wachovia Bank released last month. But the report said retail remains strong. "Due to high barriers of entry, heavy population density, and high household incomes, Boston has one of the healthiest retail markets in the United States," the report said. Wachovia predicts 3 percent to 4 percent growth in the retail sector over the next 24 months.
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CHICAGO
Commercial
Insurance firm MetLife Inc. last month agreed to sell the 110-story Sears Tower in Chicago, the tallest building in North America. World Trade Center equity investors Lloyd Goldman and Joseph Cayre, as well as Joseph Chetrit and Stanley Chera, were among the buyers, according to theslatinreport.com. The sales price was reported as $835 million, and will result in a $90 million after-tax gain for MetLife. The 3.7 million sf tower is 90 percent occupied.
Residential
Construction is underway on the 29-story Michigan Avenue Tower, the first new condominium high-rise to be built on Michigan Avenue in more than a decade. North Side condo veterans Jacob Bletnitsky and Alex Vaisman of Russland Capital Group are developing the building, and 85 percent of the units have already been sold. One-bedroom units range in price from $259,800 to $282,000. Four-bedroom penthouses with 3,339 to 3,716 sf are priced from $1.5 million.
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DETROIT
Commercial
Downtown's first brand new hotel in more than a decade was opened last month by Crestline Hotels & Resorts, the 198-room Hilton Garden Inn in Harmonie Park. While some observers have said the city can't keep another hotel busy, it is already sold out for the Super Bowl in 2006, the Ryder Cup this September, and Major League Baseball's All-Star Game in 2005. The average daily rate is expected to be $118.
Residential/Commercial
A huge metamorphosis is transforming Midtown, a part of Detroit known for blight and despair, according to a series of stories in the Detroit Free Press. Projects along the Cass, Woodward and Brush corridors are bringing upscale apartments and more retail stores to the area.
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LOS ANGELES
Residential
Residential property prices in Southern California posted double-digit gains in January as the statewide supply of for-sale existing homes shrunk to two months. The median price skyrocketed 27 percent to $390,830 in Los Angeles last month and 18.7 percent to $523,380 in Orange County, versus a modest 5 percent jump in the national median to $168,700. Buyers are engaging in bidding wars and losing even after reportedly offering $50,000 to $100,000 more than the asking price. With a significant decline in listings, many of the region's real estate practitioners have been forced out of business, according to reports.
A median-priced home in California was out of financial reach for more than three-quarters of the state's residents in January, according to a report by the California Association of Realtors. Only 23 percent of Californians residents earned the $94,020 or higher annual income needed to purchase a property at the median price of $405,720 in January, down from 29 percent the year before.
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MIAMI
Commercial
Developers are looking to secure waterfront property in South Florida by purchasing and demolishing aging condominium complexes. The Trump Group, for instance, recently purchased the 30-unit Villa Del Mar in Boca Raton for $20 million, with plans to replace the structure with another 30 units priced from $3 million each. Most developers are focusing on structures with fewer than 100 units because they must work out deals with individual owners and condominium associations.
Residential
While Los Angeles, Houston, and San Diego are traditional favorites of wealthy Mexican homebuyers, the past two years has seen more of these customers purchasing high-end condominiums in South Florida locations such as Miami, Key Biscayne, and Aventura. According to one broker in Miami, about 50 percent of Mexican clients buying homes in South Florida are seeking a vacation property while the other half consists of young families and professionals who are relocating to the region for work or business-oriented reasons. The shift has influenced marketing efforts for developments, including more direct advertising in Mexico.
The statewide median sales price in Florida rose 15 percent to $168,100 in January, up from $146,500 a year ago. In the Miami metro area, the median sales price rose 24 percent to $246,200 compared to $197,900 a year ago.
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PHILADELPHIA
Commercial
A team known for having a lock on investment sales in the city left Cushman & Wakefield to join CB Richard Ellis. Robert Fahey, Michael Hines, Michael Blunt and Lizann McGowan have become part of the firm's investment properties group in a surprise move that stunned Cushman and the local real estate community. The group has had a hand in just about every major office sale in Philadelphia, from One Liberty Place to the Meridian site to 1700 and 1818 Market and others. Fahey has been among C&W's highest-ranking national producers, completing transactions valued at more than $6 billion over the past decade. Hines has closed transactions in excess of $3 billion.
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SAN FRANCISCO
Residential
Fresno, 175 miles south of San Francisco, had the highest housing price increases in the country in 2003, according to a new federal report. Fresno and Riverside-San Bernardino ranked first and fifth nationally in home price appreciation rates at 20.6 percent and 18.2 percent respectively. Home prices throughout much of Central and Southern California have surged in the last several years, buoyed by a stronger, more diverse economy.
Commercial
A Market Street building in the heart of downtown San Francisco, Pacific Place, sold last month for $185 million, fanning hopes that the city's distressed commercial real estate market may be on the road to recovery. But many observers say it will take at least five years to bring the vacancy rate down to 10 percent. There are about 16 million square feet of empty space in the city, a record high, according to BT Commercial. Overall rental rates are about $28 per square foot.
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SEATTLE
Residential
The median price in western Washington jumped 7.7 percent to $225,000 this February, up from $209,000 the year before. San Juan County had the highest median price for February with $367,750, followed by King County at $275,000. Homes sat on the market an average of 71 days in both King and Pierce counties.
Commercial
Five new retailers are leasing space from Vulcan Inc. and will open in the South Lake Union neighborhood being redeveloped by Paul Allen's company over the next few months. The owners of Irish Emigrant in the University District will launch another restaurant, Paddy Coyne's Irish Pub, in May. A bistro called Henry's will open that same month, started by the owners of Still Life Bistro in Fremont, among other ventures. Vulcan's office buildings will soon take in about 600 employees from the Seattle Biomedical Research Institute, Children's Hospital and Regional Medical Center and Rosetta Inpharmatics/Merck. That number of office workers will more than double later this year when Tommy Bahama's headquarters and University of Washington medical labs move into the area. A new 162-unit apartment complex is also set to open on Vulcan property in May.
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WASHINGTON, D.C.
Commercial/Residential
Due to an overbuilt apartment market in Washington, D.C., the number of homes going up in the city and inner-ring counties is winding down, according to the Washington Post. At the same time, homebuilders are cranking out more product in Prince George's County and outer Virginia suburbs as low interest rates and other factors boost residential prices. A total of 38,696 housing permits were issued in the metro area last year, off 5 percent from 2002 but still solid by historical norms.
Residential
Home-price appreciation in the D.C. area outperformed the national average last year, based on new federal statistics. Housing prices in the nation's capital shot up 13.6 percent in 2003, according to the report, and practically doubled over the past five years. D.C.'s 90.1 percent rate of growth from 1998 to 2003 was the highest in the country.
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