11/22/08

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National Market Review

Atlanta

Commercial

Cousins Properties is planning a new Buckhead skyscraper, paying what brokers say is the highest price ever for land in the Downtown area. The developer is under contract to buy 10 acres at the corner of Peachtree and Piedmont roads, where it plans to build a 20-story, 500,000-square-foot office building. Cousins will pay an estimated $92 a square foot, or $4 million per acre for the land. The developer recently sold its Pinnacle office building in Buckhead for $145 million, a record $343 per square foot.

Commercial

Wal-Mart is starting to make inroads in urban markets after a decades-long strategy of opening stores in rural areas. But the retailer faces opposition with its plans to open stores in Fulton, Forsyth and DeKalb counties, where residents are concerned about declining property values and traffic. Wal-Mart hopes to open three sites encompassing 613,000 square feet of space at a cost of $30 million, Globest.com reports.

Boston

Residential

The high vacancy rate for old office and industrial buildings in downtown Boston and Cambridge, coupled with the increasing demand for city housing, has given property owners the opportunity to sell their less desirable assets to residential developers for conversion into condominiums. The most recent example is One First Street in Cambridge, which was originally built in 1866 and formerly was the home of the Davenport Furniture Co. The six-story, eight-building complex was purchased by Legatt McCall for $14.4 million, and the company plans to develop 199 condominium units, parking, and retail facilities at the site.

Commercial

Fan Pier, the 21-acre mixed-use project considered the heart of the redevelopment of South Boston's waterfront, was sold to Lennar Corp. last month. The Florida-based, publicly traded home builder said it will build housing, a hotel, a new home for the Institute of Contemporary Art, retail space and public parks on what is now a giant parking lot overlooking Boston Harbor. Lennar, which was something of a surprise buyer, promised to "keep faith" regarding the city's previous vision for the site. The purchase price was reportedly around $125 million.

Chicago

Residential

As mortgage rates have fluctuated this summer, there has been a rush of home buying around Chicago. Sales of new houses in Chicago, for instance, soared 68 percent in the second quarter, while suburban sales edged down 5 percent, but only because there was a shortage of supply, according to real estate consultancy Tracy Cross & Associates Inc. In the second quarter, Chicago-area home prices were running 10 percent ahead of a year ago.

Commercial

One of the city's prime retail buildings was set to fetch a record price last month. Developer Thomas Klutznick was poised to sell 730 North Michigan Ave. to a client of J.P. Morgan Chase for $250 million. At roughly $1,150 a square foot, the deal would make the building one of the most expensive pieces of real estate in the city's history. The seven-year-old building, with only 217,000 square feet of space, includes tenants Tiffany & Co., Polo Ralph Lauren and American Girl Place.

Las Vegas

Residential

Las Vegas is the hottest real estate market in the nation, according to a report last month by the National Association of Realtors. In June, the median price of an existing home in the Las Vegas area was $245,000, a 48.5 percent increase from the previous year. In one example cited by the association, a house in northwest Las Vegas that sold for $236,000 in June 2003 sold for $409,000 a year later. However, industry experts said the market is beginning to show signs of strain, and agents report fewer bidding frenzies for homes, though the market is still active.

Commercial

Donald Trump is going to Las Vegas. The Donald filed plans last month to build a $300 million tower, clad in the developer's signature glass and gold, which will become the Las Vegas Strip's tallest building. Hotelier Ian Schrager is also planning a project in the city.

Los Angelos

Commercial

A surge of spending on luxury goods is sending ripples down Rodeo Drive. Several luxury boutiques have seen business increase since the city of Beverly Hills completed an overhaul of its streets. The revamp, finished a year ago, widened sidewalks and medians on the opulent thoroughfare and added new palm trees, street lights and crosswalks. Prada opened a three-story store last month that reportedly cost $40 million. Clothier Dolce & Gabbana recently doubled its space at 310 and 312 North Rodeo to 12,000 square feet. Across the street, accessories purveyor Coach recently signed a lease. London developer Grosvenor is also erecting a speculative four-story building at 308 North Rodeo that it hopes to lease to a single tenant when it's completed this fall.

Residential

The median price for a home in Orange County was $525,000 in July, compared to $400,000 for all of Southern California. Many buyers are seeking more affordable alternatives in areas such as the Inland Empire, north and east of the boom market. The median prices in San Bernardino and Riverside counties in July were just $257,000 and $327,000, respectively.

Commercial

The Related Companies, which developed the Time Warner Center, was chosen as the prospective developer for 3.2 million square feet along downtown's Grand Avenue by Los Angeles city and county government. The New York company beat out several rivals to win the right to negotiate on an estimated $1.2 billion of new development.

Miami

Commercial

The Miami Arena, a facility with a long history of troubles, has a new owner with a controversial reputation, according to The Miami Herald. Palm Beach County investor Glenn Straub won an auction to buy the arena for roughly $28 million. Straub, who once publicly described himself as a "dictator," has drawn strenuous criticism from former neighbors and was once sued by his own brother, according to the newspaper. He said he intends to keep the 14,696-seat venue going, despite the fact that it has lost money in recent years. Staub, who owns Broward Yacht, plans to hold conventions, boat, car and horse shows, and other events in the arena.

Philadelphia

Residential

Foreclosures have reached stunning levels in the Pocono Mountains, especially among home buyers new to the area, according to The New York Times. A report by two state agencies found that nearly one in five households in the region are in foreclosure proceedings. Many owners in foreclosure are former renters from Brooklyn, Queens and the Bronx who were drawn by marketing campaigns. The newspaper said many paid more than market value for their homes.

Commercial

Brandywine Realty Trust, the largest owner of prime Philadelphia-area office space, announced last month it was buying the real estate assets of the Rubenstein Co., a veteran player in the region. The $600 million, 3.5 million-square foot deal includes trophy buildings in Center City One and Two Logan Square and a near monopoly in the suburban Radnor office market. Brandywine owns nearly 30 percent of the Philadelphia region's Class A office space, and will have around 23.8 million square feet of office space with the new purchase.

San Francisco

Residential

A listless labor market has pushed thousands into real estate jobs in San Francisco but there are too many agents and not nearly enough listings. Since 1999, the number of Bay Area Realtors has surged 44 percent, from 21,700 in 1999 to the current 31,200. In the same period, the number of home sales has increased only about 10 percent meaning there are about four transactions annually for every agent in the region, compared with nearly 5.5 deals per agent in 1999.

Commercial

Marsh & McLennan Cos. agreed last month to the biggest office lease in San Francisco since 2000. The world's largest insurance brokerage struck a deal to take 250,000 square feet at One Front Street. The new digs will consolidate 1,000 employees now housed at three city locations. Rent rates were more than $30 a square foot. Cushman & Wakefield represented both the insurance company and landlord Morgan Stanley in the deal.

Seattle

Residential

Sales of King County homes priced over $1 million nearly doubled from July 2003 to last month, according to the Northwest Multiple Listing Service. In all of western Washington last month, pending sales of $1 million homes offers that have been accepted but have not closed rose to 95, one of the highest numbers in five years. Sales of multimillion-dollar homes have risen partly because more are for sale and partly because sellers have reduced prices from Internet boom levels, agents say.

Commercial

The leasing pace for industrial space south of Seattle is on track to quadruple by the end of the year, according to a story in the Puget Sound Business Journal. Already during the first two quarters of this year, 3.2 million square feet of industrial space has been absorbed in the Kent Valley. That's twice the average annual net absorption rate for that region during the past 10 years. Brokers said the industrial sector is at the early stage of a new growth cycle.

Washington, D.C.

Residential

Many people who can't afford the prices in the Washington area are moving to Baltimore and commuting, according to the Greater Baltimore Board of Realtors. The average home price for Baltimore and its five surrounding counties was $262,000 in June, up 20 percent from $218,000 the year before. Total units sold were up 14 percent compared to the year before.

Residential

Two years ago, the corner of 13th and U streets NW was a commuter parking lot for the Green Line of the Metro. Now, it is home to one of the city's newest apartment buildings, the Ellington (named for jazz composer Duke Ellington), which is selling itself as a cool place in a hot neighborhood. There has been a wave of condo and apartment construction near U Street, in addition to new bars and boutiques. Many brokers are promoting the area as up-and-coming, active and safe, though the neighborhood is still not as densely populated as some other D.C. areas popular with renters.