NNN Lease Markets Slowly Improving

NNN Lease Market News

Office, Retail and Industrial Markets Slowly Improving

The commercial real estate market continues to slowly improve, lifting itself out of a slump that hit in 2010.

The overall market has stumbled along the way, but all in all, the industry is heading in the right direction, area brokers say. 

"We're starting to see projects on the radar for the first time in a long time," said Lee Warfield, president of Cushman & Wakefield | Thalhimer, a commercial real estate firm based in Henrico County.

Anchor tenants, for example, are being sought for Fairfield Commons Mall, which could be razed and rebuilt, off Nine Mile Road in eastern Henrico. "This is a healthy sign," Warfield said.

And the long bulldozed Azalea Mall in North Richmond is back on the books for a project, possibly a grocery store, he said. 

"The best indicator of a healthy or improving market is when existing companies take additional space or new companies move into the market," Thalhimer's Magrill said.

New companies from outside the market haven't moved here yet. But Allianz and SunTrust Banks Inc. taking more space speak to an improving market, he said.

The retail market continues to improve, despite large retailers such as Best Buy, Kmart, Gander Mountain, Dillard's and Food Lion closing some of their area locations this year.

Unlike the office sector, which suffered in 2009 and 2010, the retail sector never saw a big spike in vacancies, Magrill said.

Specialty grocer The Fresh Market and pet-supply retailer Petco are scheduled to open stores this year in Carytown Place, a development in the former Verizon building at Nansemond Street and Ellwood Avenue.

Food Lion closed two area stores this year, but the one in the Gleneagles Shopping Center off Ridgefield Parkway in western Henrico reopened as the second location of Libbie Market. At 32,000 square feet, the new Libbie Market Ridgefield is about three times as large as the original market on Libbie Avenue between Grove and Patterson avenues.

http://www2.timesdispatch.com

NNN Lease Market Recovery Hindered by Tight Lending

NNN Lease Market News

NAR Reports U.S. Commercial Real Estate Recovery Hindered by Tight Lending

Based on the National Association of Realtors' (NAR) annual Commercial Real Estate 2012 Lending Survey, U.S. commercial real estate markets showed signs of recovery in 2011; commercial lending standards have tightened in the past year for small businesses and scuttled a major portion of contracted transactions for smaller properties.
Lawrence Yun, NAR chief economist, said there is a significant split in commercial lending depending on value.  "This is very much a tale of two markets.  There have been notable improvements in capital for large commercial transactions valued at $2.5 million or higher, but there remain significant challenges for small business," he said.
NAR's Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR. The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations - CCIM Institute, Institute of Real Estate Management, Realtors Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.


http://www.worldpropertychannel.com

US Commercial Property Market are Showing Signs of Improvement

NNN Lease Market 

The fundamentals of the US commercial property market are showing signs of improvement, with vacancy rates expected to drop over the coming year. According to the National Association of Realtor s’(NAR's) quarterly commercial real estate forecast, a strengthening across all sectors of the market is anticipated. Two-thirds of the professionals questioned stated they believe there will be an improvement during the first quarter of 2012, while rental increases are also on the cards. NAR chief economist Lawrence Yun commented: "Sustained job creation is benefiting commercial real estate sectors by increasing the demand for space. Vacancy rates are steadily falling."

A decline in the empty space available in the office, industrial, retail and multifamily housing sectors is predicted between the first three months of this year and the same period in 2013, with vacancy rates in the retail industry likely to fall the most - dropping from 11.9 per cent at present to 11 per cent in a year's time. Meanwhile, it is the multifamily housing market that has lowest vacancy rate, currently standing at 4.7 per cent. The NAR noted this makes it a "landlord's market, with demand justifying higher rents". Mr. Yun observed that apartments are likely to be a lucrative real estate investment going forward. "Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest," he asserted.

Boston Net Lease Market Heating Up

Invesco Real Estates Institutional Client has Paid $75 Million for 179 Lincoln St. in Boston.

Building owners are seeing their offices fill up, leading to higher rents, which makes their properties more attractive to potential buyers. Many buildings have been the objects of bidding wars in recent months, with pension funds, insurance companies, and overseas investors competing to own a piece of the skyline.

“Boston holds a very desirable spot in global capital markets,’’ said Michael Smith, a managing director at Jones Lang LaSalle. “Many investors believe the city has weathered the recession better than other markets.’’

The volume of sales is still far from 2007, when 34 buildings changed hands for total sales of $4.9 billion. But the improvement is unmistakable after a period between 2008 and 2010 in which only 14 office buildings were sold in Boston, the kind of cold streak that causes nightmares for commercial brokers.

Just this past week, CBRE | New England closed on the sale of a five-story office building that drew more than 50 bidders, including several large financial institutions that typically focus on high-rises. The building, at 179 Lincoln St., was sold to Invesco Real Estate for $75 million.

“179 Lincoln St. is a great example of how people are viewing Boston today as one of the most attractive markets in the US,’’ said Chris Angelone, an executive vice president at CBRE | New England. “Five years ago, it might not have been an institutional buyer, but today it is.’’

http://articles.boston.com

NNN Market Loan Prices Rise in October

NNN Lease Market News

Commercial Real Estate Loan Prices Rise in October

In October, DebtX priced 52,806 CRE loans with a $628.4 billion aggregate principal balance. These loans, which collateralize 647 US CMBS trusts, each received a DXMark(R), a price based on 10 years of data from billions of dollars in loan sales executed by DebtX, the largest marketplace for loan sales. Access to individual DXMark prices is available through the BLOOMBERG PROFESSIONAL(R) Service. Type DXMKfor more information.

DebtX's CMBS loan pricing analysis is part of DXMarket Datasm, a subscription service that provides loan buyers with insight about transactions at www.debtx.com . DXMarket Datasm is available to registered DebtX buyers and includes six components: Non-Performing Loan Sale Prices, Bank Watch, Secondary Loan Market Commentary, CMBS Loan Collateral Prices, Secondary Loan Market Liquidity and CRE  Capital Markets Observations.  http://www.marketwatch.com/


Over the last 12 months high quality assets have been in strong demand;drugs store such “Walgreens” being the perfect example. As a result of this strong demand, cap rates for high quality assets have been driven down to the low/mid 6% range. Investors are now looking for higher returns. Washington D.C., New York, Boston, Chicago, Dallas, L.A and San Francisco are all popular locations for acquiring net leased assets and urban infill locations with good demographics are highly sought after. www.calkain.com

European Banks Will Sell More (NNN) Distressed Commercial Properties

NNN Lease Market News

Europe Is Seen as Ripe Market for Distressed Property Loan Sales by Banks

European banks will be forced to sell more distressed commercial property loans in the coming year, as more borrowers default, said panelists at the Bloomberg Commercial Real Estate Summit.

The U.S. commercial real estate market slowed in the third quarter as the sputtering economy and a pullback in debt financing limited deals. A total of $49.8 billion of commercial property changed hands in the period, down from $58.5 billion in the previous three months, according to Real Capital Analytics Inc. in New York. The 15 percent decline is the second-biggest since the first quarter of 2009, the real estate research firm’s data show.

Dune Real Estate Partners LP expects investment opportunities in the U.S. next year, said CEO Daniel Neidich. Most investors are focusing on major coastal cities such as New York, Washington and San Francisco, according to Leslie Wohlman Himmel, managing partner at Himmel & Meringoff Properties, a New York investment firm that owns and operates more than 2 million square feet (186,000 square meters) of office and retail space.

http://www.bloomberg.com/news

NNN Commercial Real Estate Properties Prices Up !!!

NNN Lease Market News


NNN Commercial Real Estate Prices in U.S. Increased 5% in July


U.S. commercial real estate prices rose for a third straight month in July as deals for smaller properties led a rebound that may stall as the economy slows, according to Moody’s Investors Service.

Demand had increased for real estate outside of major cities such as New York before a recent slowdown in CMBS lending. The CMBS slump may hurt demand for non-distressed building sales of less than $10 million in metro areas outside U.S. cities where real estate is most sought after, Tad Philipp, director of commercial real estate research at Moody’s, said in a telephone interview. These deals accounted for 60 percent of July repeat sales, Moody’s said.
“The CMBS market largely is a main source of financing for the middle market,” Philipp said.
A gain in commercial-property values may be held back by buyers making more conservative estimates for rent increases and leasing amid slow job growth, according to the report.
“Price increases in the near term are likely to be earned the old-fashioned way, by rent growth, rather than through higher leverage or financial engineering,” Moody’s said.
Green Street Advisors Inc., a real estate research company in Newport Beach, California, reported commercial property values rose 1 percent in August from the previous month and advanced 18 percent from a year earlier.

http://www.bloomberg.com/news

Demand for Distressed Commercial Property Markets Across the Globe Soars

NNN Lease Market News

 Distressed Commercial Property Markets on Demand Soars

Global demand for distressed commercial property increased dramatically in the second quarter of 2011 and is expected to outstrip supply in the next three months, according to the latest report from the Royal Institution of Chartered Surveyors.
The survey does, however, suggest that the supply of distressed property continues to outstrip demand in some countries, most noticeably in the Republic of Ireland, Italy and the UK.
The RICS Global Distressed Property Monitor is a quarterly report that reveals trends in 25 commercial property markets across the globe. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value.
 An increased rate of distressed properties entering a country's market can be seen as a negative economic indicator while a decrease may signal recovery. However, it needs to be borne in mind that the results are very country specific with generally negative numbers coming from those markets where the economic pain is most intense,’ he added.
Investor demand fell in Brazil this quarter, from a net balance of 0 to one of -23. Looking ahead, agents expect the supply of distressed property to fall dramatically in the coming quarter as well, in contrast to last quarter's expectations for increased listings. That said, the real estate market still remains firm with capital values generally thought likely to rise further over the coming months.
Levels of distressed property coming to market in China are still expected to decline in the third quarter, although somewhat less so than the previous quarter, with net balance scores moving from -34 to -20. Looking ahead demand for distressed property is still expected to far outstrip supply in this country which is consistent with the projection for further price gains in the commercial market.

The Market Swings Made it Harder for Wall Street Firms to Sell New Issues

 Tremors in the market for commercial-mortgage-backed securities

Tremors in the market for commercial-mortgage-backed securities are hindering the recovery of the commercial-property sector. But the new-issue market for these securities has hit a speed bump amid turmoil in the capital markets, causing a key set of lenders to back off from making new loans. The result is that deal activity has fallen, putting the brakes on the rise in values.
Earlier this year, some analysts were predicting banks would issue as much as $50 billion in new commercial-mortgage securities this year. Now, they are saying volume may be as low as $30 billion to $35 billion.
A test for the sector is slated for later this week, when Deutsche Bank AG and UBS AG intend to sell a pool of $1.4 billion in commercial mortgages. In response to the skittish market, the deal will offer investors 30% in so-called credit protection, nearly double the levels they offered in their last issuance in June. The market swings made it harder for Wall Street firms to sell new issues. It also posed risks for the underwriters who were having a harder time hedging against price declines as they made and accumulated commercial mortgages to prepare them for securitizations. But the changes in the market have caused some smaller firms to back out of the commercial-mortgage-security sector entirely, including hedge fund Citadel LLC, which is pulling out of issuing loans intended for securitization given the drop in demand, according to people familiar with the matter.

http://online.wsj.com/article

Commercial Real Estate Investors are Optimistic U.S. Recovery Will Continue

NNN Lease Market News

Commercial real estate investors are optimistic that a U.S. industry recovery will continue even as the economy shows signs of slowing.
A lack of new supply and low interest rates are helping to drive investor interest in commercial properties. Capitalization rates, which decline when real estate prices increase, fell in 27 of 31 markets surveyed.
Office properties led cap-rate declines in the second quarter, the report showed. The average cap rate for office buildings in central business districts was 6.95 percent, down 1.2 percent from a year earlier. Cap rates, a measure of yield, are net income divided by the sales price
Buyers are pursuing deals as the market improves, and concern that that the economic recovery will falter has deterred “very few” investors from acquiring assets.
There will be “very few additions” to the commercial- property supply in the near term, which will help absorb existing space and drive up rents as tenant demand increases, according to the report. Lease rates remain below peak levels for most property types and increased in 25 of 31 markets surveyed.
The Northeast is the strongest office market, with nine out of 10 regions surveyed in recovery or expansion this year.
Two-thirds of investors view current market conditions as favorable to sellers, and all 81 multifamily markets surveyed are expected to be out of recession by the end of the year.

http://www.bloomberg.com/news

Willis Tower in Chicago Looking to Recapitalize or Sell The Property

NNN Lease Market News

The owners of the Willis Tower in Chicago, North America's tallest building, are looking to recapitalize or sell the property, in the latest sign of rising commercial-real-estate values in the country's top markets.
Office-building values have been rebounding strongly in markets like New York, Washington, D.C., and Chicago. Last summer, a Chicago office tower at 300 North LaSalle St. sold for $655 million, which came to about $500 a square foot, a record footage price for a Chicago office building. By comparison, the Willis Tower sold for about $244 a square foot in 2004.
Designed by the architectural firm Skidmore, Owings & Merrill for Sears, Roebuck & Company, the world’s largest retailer at the time, the 3.8 million RSF building is the preeminent office address in Chicago and one of the premier properties in the world. The Willis Tower provides an exceptional West Loop location, unparalleled views from all of the property’s highly efficient floors and unmatched prestige.

Sears Holdings Corporation (NASDAQ: SHLD) is the nation's fourth largest broadline retailer with over 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance.


http://online.wsj.com/article

Irish Banks PLC Has Struck a Deal to Sell U.S. Commercial Real Estate Portfolio

NNN Lease Market News

Allied Irish Banks PLC has struck a deal to sell a portfolio of roughly $1 billion in U.S.

"We certainly have a portion of our loan book that we need to delever," said Paul McDonnell, head of real estate for corporate banking at the Bank of Ireland. "It's a pretty good quality book; the market is reasonably strong for this type of asset."
Anglo Irish Bank Corp., which is being wound down by Ireland, also is being pressed by regulators to sell its $10 billion U.S. commercial real-estate portfolio. While decisions have yet to be made about how much of the portfolio to sell, Anglo's U.S. holdings have been closely watched given its size. Numerous U.S. investors have made trips to Ireland to discuss possible purchases, according to people familiar with the matter.
The price paid by Blackstone and Wells Fargo for the Allied Irish loans is higher than other recent deals, partly because commercial real-estate values have been rising in many of the top U.S. markets. Also, competition for distressed real-estate assets is intense among the funds that raised money when the downturn hit.

http://online.wsj.com/article

Transition From a Recovery Phase to Expansion in the Commercial Real Estate Market

Industry leaders discussed the transition from a recovery phase to expansion in the commercial real estate market during a panel at the Real Estate Luminaries Series event on May 3 at Georgetown University. The event was sponsored by NAREIT and Georgetown’s McDonough School of Business.

Cohen emphasized that while the federal government helped in recovery efforts, the public market ultimately came to the industry’s rescue.

“The public market saved the industry, and the same thing happened in other cycles,” said Cohen, adding that the public market’s securitization of capital and development of new companies was a boon to the industry.

http://www.reit.com/

Commercial Real Estate Markets Improvement in the Fourth Quarter

NNN Lease Market News

U.S. commercial real estate markets continued to exhibit stability or mild improvement in the fourth quarter, Moody's Investors Service said Wednesday.
The overall composite score rose a point to 65 compared with the prior quarter, based on a range of 1 at the weakest end and 100 at the strongest. That puts it within two points of the highest scoring bloc, which Moody's calls "green."
Across all sectors, measures of market strength either improved slightly or stayed the same, the agency reported. The multifamily composite sector remains the only one with a green score, which held steady at 88. Retail also held steady at 64 during the fourth quarter.
The biggest improvement was for offices in central business districts, which gained four points to 66, which is the highest score before entering green territory. Suburban offices, the industrial sector and hotels also improved to a lesser degree in the last quarter of 2010.
According to Moody's, the five best metropolitan markets in the U.S. are: Honolulu, which lost a few points; New York, which held steady; Los Angeles 76, which gained one point; Orange County, Calif., which gained a point; and Washington D.C., which lost two.


http://online.wsj.com/

The Strength of Washington, D.C.'s Office Market

NNN Lease Market News

The strength of Washington, D.C.'s office market, which has lifted the values of some properties to boom-era levels, also has helped busted developments in the nation's capital.

"Where does the development derive its value? It's generally from its lease," says Joseph Fuszard, head of commercial real-estate workouts for Bank of America.

Workout experts say that in strong commercial markets such as Washington, as well as New York, Miami and San Francisco, banks increasingly are making the decision to commit to seeing commercial projects through to the end, even if that means increasing funding.
"I'd imagine we're going to see more sponsors making decisions where they might put capital into the asset in order to continue to improve it, to enhance value because they see the market coming back," says Peter Nicoletti, head of special asset services for global real-estate brokerage Jones Lang LaSalle Inc.
In addition to having a guaranteed end user and solid prospects for strong future cash flows, the NOAA project got a push from the fact that it was the pet project of U.S. Sen. Barbara Mikulski, a Democrat from Maryland, who has long championed NOAA's weather research and earmarked federal funds for the agency.
The Washington office market is one of the country's healthiest, in part due to demand from government agencies and contractors. According to researcher Reis Inc., demand is slowing, but tenants are expected to occupy one million square feet more of office space this year.

http://online.wsj.com/article

Government Cuts Clip Office Market

NNN Lease Market News

Smaller government means less demand for office space, and that is acting as a drag on the recovery of the commercial-real-estate market.
In Washington and elsewhere, government leasing has helped prop up demand in tough times. But now cash-strapped governments are moving to cut back on office space, even as commercial real estate struggles to recover.
After the financial crisis first hit, buildings with government tenants were a safer bet. Washington emerged as the healthiest office market in the country, with rents falling much less than other cities.
Rents have been rising in some prime markets since the depths of the downturn. In Washington's Georgetown market, effective rents were up 2.2% in 2010, according to Reis. In Midtown Manhattan, rents rose 0.2% during the year.
But in many markets rents actually fell last year, with net effective rents down 1.5% nationally, according to Reis. If government agencies contract without the private sector expanding more, downward pressure will continue, some predict.
http://online.wsj.com/

New Rules For California Commercial Real Estate Market

NNN Lease Market News

Just as the California commercial real-estate market begins to stir from its postcrisis lows, many property developers fear they are about to lose a financing tool needed for hundreds of projects across the state.
Builders are lashing out against a provision in Gov. Jerry Brown's proposed budget that would eliminate the state's 425 redevelopment agencies, local authorities that pay for low-income housing as well as roads, sidewalks and other infrastructure.
The developments cover everything from a proposed $2.2 billion project with houses, shops and transit access across the river from downtown Sacramento to a planned affordable and senior housing development and child-care center near downtown San Diego.

http://online.wsj.com/

U.S. Commercial Property Prices Slipped For The Second Straight Month

NNN Lease Market News

U.S. commercial property prices slipped for the second straight month in January, as distressed real estate sales weighed on values, according to Moody’s Investors Service.
The Moody’s/REAL Commercial Property Price Index slumped 1.2 percent from the previous month and 4.3 percent from a year earlier. It’s up 4.2 percent from an eight-year low in August, Moody’s said in a statement today.
The U.S. economy grew at a 2.8 percent annual rate in the fourth quarter, helping boost demand for office, retail and industrial space and apartments. Price increases are being held back by the number of distressed properties on the market, said Christopher Cornell, an economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.
http://www.bloomberg.com/

Free Rent As Away To Attract Tenants in Denver

Commercial property landlords in Denver and the 17 other office markets included in a new study are using free rent as a way to attract tenants.
The Real Estate Investor Survey released Monday by PriceWaterhouseCoopers reveals tenants are getting the biggest break in Atlanta, with an average 10.3 months of free rent.


Read more: Denver commercial landlords offering free rent | Denver Business Journal

Rochester Area's NNN Lease Commercial Real Estate Market Slowly Regaining its feet

NNN Lease Market News

NNN Lease Commercial Real Estate Market Slowly Regaining its feet


The Rochester area's commercial real estate market, which has had all the vitality of an empty strip mall the past two years, is slowly regaining its feet, local brokers and property owners say.
There is a noticeable thaw in banks' and other lenders' attitudes toward credit for both commercial and residential borrowers, and businesses have built up cash reserves to begin addressing their facility needs.
It will take time for the commercial market to return to the aggressively confident days of 2006 or 2007, the industry experts said. But the leasing of retail and industrial space and the sale of commercial properties are picking up.
"People are talking again. And when people talk, positive things happen," said Michael Frame, managing broker of CB Richard Ellis/Rochester, a major global player in the commercial field. CB Richard Ellis has been working with Eastman Kodak Co.

http://www.democratandchronicle.com/