11/22/08

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National Market Review

Atlanta

Residential

Palatial new mansions are springing up all over Atlanta. The number of houses for sale in the 23-county metro area priced at or above $1 million has more than tripled since 1998, according to an annual homes report by The Atlanta Journal-Constitution. There were just 116 houses for sale for $1 million or more in 1998, but last year there were 392 homes in that price range. The majority of the upscale homes are located in Fulton County, but Northside counties such as Gwinnett, Cherokee, Cobb and Forsyth have seen an increase in the number of houses priced over $1 million as well. In Buckhead, the upscale Atlanta neighborhood, a majority of the homes surpass the $1 million mark.

Commercial

Atlanta's office market may finally be coming out of its slumber. Metro area office users leased 355,400 square feet more space than they gave up in the first half of 2004, according to the Dorey Market Analysis Group. That's a sharp contrast to 2003, when there was 1 million square feet of negative absorption. Class A office space saw the biggest improvement, with companies taking advantage of market conditions to upgrade their space.



Boston

Residential

Home prices in the Boston area have risen 64.4 percent over the past five years, among the steepest increases in the country. Last year, prices rose 8.4 percent. But rising interest rates and a slowing economy could mean prices will flatten or decline, some experts say. That could be offset by recent economic data that shows Massachusetts adding 20,000 jobs in the last three months, after a long period of no growth.

Residential/Commercial

The battle over the Rose Kennedy Greenway - 27 acres of open space Downtown created by the Big Dig-is officially over. Previously feuding parties from the city, the state, and the Massachusetts Turnpike Authority agreed to establish a private, non-profit organization to govern the mile-long strip of largely open space where the Central Artery roadway, now underground, once stood. A few buildings, including a visitor center and cafeacute;, will likely be built on the site.



Chicago

Residential/Commercial

In other park news, Chicago saw the opening last month of a 24.5-acre Downtown park that will give the city's "front yard" a bold makeover. Located on Michigan Avenue between Randolph and Monroe Streets, its designers include star architect Frank Gehry. The park was largely the vision of Mayor Richard Daley, and cost $475 million, more than three times the original estimate. Plans were first announced in 1998.

Commercial

Sam Zell's Equity Office Properties Trust, the nation's largest REIT, was downgraded last month by Moody's Investors Service, which cited recent poor operating performance. Cash positions at the Chicago-based trust have fallen short of levels needed to cover dividend obligations, Moody's said. Despite the downgrade, it said bondholders of the REIT are still in a strong position, because of sound levels of liquidity, unencumbered assets and moderate debt levels.



Detroit

Residential

Overextended credit, job cuts and real estate appraised at higher than market value are driving increased foreclosures in metro Detroit. Foreclosure listings nearly tripled from January 2003 to January 2004 for the five-county area, according to Foreclosure.com, a national subscription database of foreclosed properties.

Commercial

The Detroit Lions will soon be getting a new neighbor. Etkin Equities plans to build a $40-million office building and parking deck adjacent to Ford Field in Detroit, according to globest.com. The 115,000-square-foot office building will house 400 PriceWaterhouseCoopers employees and other tenants. An upscale hotel with 200 rooms is also planned for the area, and both projects are targeted to be completed by 2006, when the stadium will host the Super Bowl.



Los Angelos

Residential/Commercial

With L.A.'s once forsaken downtown returning to favor, more than 3,500 residential units, mostly condominiums and mostly conversions, are now under construction, in addition to the 2,500 units completed since 1999. Several thousand more are in the pipeline, according to theslatinreport.com.

Residential

The number of home sales in Southern California rose by 11.5 percent in June compared to the month before. Prices in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties rose 2.5 percent compared to the previous month, with the median price at $406,000. Brokers say inventory has increased compared to earlier this year, and they expect appreciation rates to ease during the new few months.



Miami

Residential/Commercial

Brooklyn developer Shaya Boymelgreen and the Israeli company Africa-Israel Investments announced last month that they intend to develop six projects within two years as part of a massive $1.5 billion plan for residential, commercial and office development in downtown Miami. The first project will be a 55-story high-rise condo and hotel at Biscayne Boulevard and 11th Street. Future projects include redevelopment of the Miami Arena site, contingent on winning the land during an auction this month. The partnership has already spent $130 million to acquire 25 parcels across the city, they said.



Philadelphia

Commercial

A bill that would give tax breaks to Comcast Corp. as the anchor tenant in a new Center City skyscraper is still under consideration, but is being contested by a group of area landlords in a bitter fight. They have protested by turning off all but the safety lighting in their Downtown buildings at night. Comcast executive vice president David Cohen has called the landlord group "whackos," according to the Philadelphia Business Journal. He said efforts to derail tax-free status for the 17th Street tower are akin to being anti-growth.

Residential

Buyers are flocking to the less congested parts of New Jersey in the south, within commuting distance of Philadelphia. In Cumberland County, one of the state's up-and-coming areas, home prices have risen 5 percent to 10 percent in the last six months and most sales are now in the $150,000 to $175,000 range, local brokers say. Most buyers are coming from outside the area, with rising prices squeezing out local people who'd like to trade up. Houses that sold four years ago for $120,000 are now going for $180,000, according to brokers.



San Francisco

Commercial

San Francisco is the most expensive city in America for corporate headquarters, based on executive salaries, office rents, utilities, and corporate travel, according to corporate consulting firm Boyd Co. The annual cost of operating a San Francisco corporate headquarters with 350 employees and 50,000 square feet of Class A space is about $22.4 million. New York placed second at $22.3 million; Santa Clara County, Calif. was third at $21.8 million; and Stamford, Conn. was listed fourth.

Commercial

Office buildings worth more than $2 billion are for sale in the city, a tenfold increase from a year ago. They include a half-dozen downtown skyscrapers, comprising about 2 million square feet of rentable office space. Among the offerings are three buildings co-owned by developer Hines Properties and CalPERS, the state employee pension fund, and two South of Market office towers built and owned by the Cousins-Myers development group. In one of the biggest buys this year, David Werner, a Brooklyn investor, and his partners agreed to buy half of the landmark Bank of America Center for $400 million last month. The Werner group paid about $444 per square foot for the 1.8-million-square-foot complex.



Seattle

Residential

North of Seattle, a suburban seaside mansion has been sold for $12 million, setting a record for real estate in British Columbia. The four-year-old West Vancouver mansion has a sweeping view of the Lion's Gate Bridge to Vancouver, rests on more than 1.2 acres with about 200 feet of shoreline and has five bedrooms, a swimming pool, media room, wine cellar and boathouse with ramp.

Commercial

Microsoft is buying the Redmond headquarters of Eddie Bauer for $38 million, pending court approval. The sale is part of the Chapter 11 bankruptcy reorganization of Eddie Bauer's parent company. The 20-acre property includes three buildings totaling more than 232,000 square feet.



Washington, D.C.

Commercial

With the nation's top office market, developers are not shying away from Washington D.C. Roughly 5 million square feet of office space is under construction today downtown, and 3.1 million square feet of that is speculative, according to the National Real Estate Investor magazine. The vacancy rate in D.C was 8 percent at the end of 2003, according to Grubb & Ellis.

Residential

Small towns scattered along Maryland's Eastern Shore such as Denton, Cambridge, Easton and Queenstown are gearing up for a real estate explosion that promises to overwhelm them with new residents, doubling their populations in some cases. In the 1990s, retirees discovered the Eastern Shore-within driving distance of family in Washington, Baltimore and Philadelphia. The level of residential development planned for the area, also known as the Delmarva Peninsula, could mean a turnaround in communities that have suffered through years of declining fortunes.