Market Trends Online

Best Retail Buy

A recent survey of retail market participants revealed that the grocery-anchored center is the most favored product type assuming the property:

• contains the area’s dominant grocer;
• has good demographics and not too much competition;
• is not too large; and
• is in an area with high barriers to entry.

Source: New Market Real Estate Group

Worth Quoting

“Many companies erroneously make dispositions the first step in their post-merger portfolio optimization, making costly decisions purely on market rates, lease terms, or utilization ratios rather than holistically evaluating each location for its best use.”
-    “When Companies Combine: Optimizing Physical and Human Capital Post Merger,” CB Richard Ellis special report

Markets Moving On

Capitalization rates in industrial and multifamily properties are already 90 basis points and 80 bps respectively above mid-2007 levels, according the CB Richard Ellis/TWR Investment Outlook, Spring 2009. This suggests that the industrial market is 30 percent to 60 percent through its correction and the multifamily market is 40 percent to 60 percent through its correction, the report says.

Lowest Industrial Vacancy Rates, 1Q09 Estimate

Los Angeles    5.7%
Tucson, Ariz.    7.4%
Salt Lake City    7.4%
San Francisco    8.0%
Kansas City, Mo.    8.0%
National average    11.4%
Source: National Association of Realtors/TWR

Top 5 Suburban Office Markets, 2008

 
Market    Volume (in billions)      
Los Angeles    $2.6      
Atlanta    $1.5      
Dallas    $1.4      
San Jose, Calif.    $1.2      
Northern New Jersey    $1.2     
Source: National Association of Realtors

[photo: 3mtonlinesears]

Chicago’s iconic Sears Tower is being renamed the Willis Tower after London-based insurance broker Willis Holdings leased more than 140,000 sf for about $14.50 psf. The 110-story property, once the world’s tallest building, suffered a status fall after the Sept. 11 attacks made companies wary of occupying potential terrorist targets. Star tenants such as Ernst & Young have departed since. Purchased in 2004 for about $840 million, the building’s vacancy is about 18 percent.

Ready to Go Green?

Leadership in Energy and Environmental Design project registration and accreditation for LEED-AP professionals will transfer to the Green Building Certification Institute on April 27, according to the U.S. Green Building Council. In addition, the new LEED 2009 rating system will go into effect that day.

With the transition, the LEED accreditation program has undergone significant changes, including the creation of multiple credentials with tiered requirements. Click here for more information: http://www.gbci.org/.

Fastest Growing Metros, July 2007-July 2008

 
MSA    Population growth    Percent growth    2008 population      
Raleigh-Cary, N.C.    44,804    4.3    1,088,765      
Austin-Round Rock, Texas    60,012    3.8    1,652,602      
Kennewick-Pasco-Richland, Wash.    7,936    3.5    235,841      
Palm Coast, Fla.    3,069    3.5    91,247      
Gainesville, Ga.    6,194    3.5    184,814     
Source: U.S. Census

U.S. Real Estate Value Cycle Forecast

Office: Majority of national office stock in recession by 2009 and remains there until 2012, followed by expansion phase
Retail: Majority of national retail stock in recession in 2009, declines slightly in 2010 and begins recovery by 2011.
Industrial: Most industrial stock in recession through 2010 and 2011, coming into recovery in 2012.
Multifamily: Multifamily stock in recession in 2009 is only slightly above the amount in recovery. Most national multifamily stock will pull out of recession in 2010 and continue to recover through 2012.
Source: Korpacz Real Estate Investor Survey, 1Q09

[3mtonline-simon]

Expert Opinion

"Where it used to take years for ... a bad mall to go out of business, I think it's going to happen more quickly. For us, we know the winners and losers already. But the time [the losers] are going to be around [will] shorten." – David Simon, chairman and CEO of Simon Property Group

Expansion Opportunity

Retailers Likely to Expand This Year

 
Apparel    Food    Grocery    Service    Value-oriented    Misc.      
Forever 21
Rainbow Shops
Ross Stores Rue 21
    Au Bon Pain
Five Guys
Noodles & Co.
Panera Bread    Fresh & Easy
Smart & Final
Sprouts Farmers Market
Sunflower Farmers Market    AT&T Mobility
O’Reilly Auto Parts    Costco
Dollar Tree
Family Dollar
Goodwill Industries
    Best Buy
CVS
Gold’s Gym
Party City
Urban Active Fitness     
Source: Colliers International

Market Trends Online is written by Sara Drummond, managing editor of Commercial Investment Real Estate.