Archive for July, 2011

Absence of Personal Property Tax Benefits Minnesota Businesses

Friday, July 29th, 2011

Business owners in the state of Minnesota hold a distinct advantage as it is one of only 15 states across the nation that doesn’t levy property taxes on equipment, inventory and other on-site personal property. While the state is the 8th highest in terms of property taxes on commercial property, the savings from having no personal property taxes can result in hundreds of thousands of dollars per year for larger manufacturers.

According to Finance & Commerce, The absence of these taxes should help to lure large data centers to the state. Property taxes are not the only thing companies look for however when choosing location. More tend to be concerned about the quality of available workforce, infrastructure, and educational and research institutions, while taxes usually come into play when all of those things are equal with competing states.

To read the full article from Finance & Commerce, click here.

Posted in Mid America, Personal Property, Real Property | No Comments »

No Construction Recovery Expected Until 2012

Thursday, July 28th, 2011

Overall nonresidential construction is expected to decline by 5.6% this year, but forecasters are projecting a 6.4% increase in spending in 2012. According to the American Institute of Architects, consumer and business confidence is poor, and the overall economy has yet to pull out of the downturn that began in 2008, which both add to the general sense of anxiety and uncertainty in the commercial real estate market.

Spending on renovations of existing buildings has remained strong, but the depressed demand for new construction isn’t likely to improve until 2012, led by the commercial sector. More specifically construction of offices, retail and hotels is expected to take the forefront with hotel construction being forecasted to grow as much as 18% in 2012. Every segment in the commercial real estate market is expected to decline throughout the remainder of 2011 except for healthcare construction, which is projected to grow by 1.8%.

Posted in Economy, Personal Property, Real Property | No Comments »

Middle Tennessee Sees Surge in Hotel Construction

Wednesday, July 27th, 2011

Nashville, Tennessee is experiencing an increase in hotel construction with around 1,400 rooms being built and 2,100 in the planning stages. According to The Tennessean, the surge of construction, which could increase the regions supply by 10%, comes as no surprise to industry experts as Middle Tennessee has been a top destination for hotel developers because of its market dynamics, improved travel demand and greater availability of capital.

Many of the new hotels are near downtown Nashville, Vanderbilt University or the airport, all of which have many qualities developers look for, such as good demand generators, underserved areas and strong trends in occupancy and room rates. The business/leisure travel mix of Middle Tennessee paired with the diverse economy and strong business climate also fuel hotel development in the region. The development trend is expected to be long term and steady.

To read the full article from The Tennessean, click here.

Posted in Hospitality, Hotels, Mid America, Real Property | No Comments »

Commercial Real Estate Outlook Improving

Tuesday, July 26th, 2011

With steady demand for apartments leading the way, the commercial real estate market is increasing its stability. According to Bloomberg Businessweek, a Moody’s review of commercial property trends in the first quarter shows modest market improvement, with the projected rate at which commercial space is being leased edging out the rate of increase in the supply of commercial space. Moody’s customized scales showed central business district and suburban office markets rising moderately, while multi-family, retail and industrial markets were consistent with the previous quarter.

On a scale of 100, the U.S. apartment market registered a review high 88; retail across the nation remained steady at 64; office space in cities and suburban markets each had an increase of four points from 66 to 70 and 48 to 52 respectively; improving demand bumped industrial up to a 61; and hotels had the highest increase of 8 points from a 55 to a 63.

To read the full article from Bloomberg Businessweek, click here.

Posted in Apartments, Hospitality, Hotels, Industrial, Multi Family, Office, Personal Property, Retail | No Comments »

Las Vegas Commercial Real Estate: How Low Can It Go?

Monday, July 25th, 2011

Las Vegas, Nevada commercial real estate has been one of the hardest hit sectors by the economy, as the market was already flooded with unused space from overbuilding during its boom prior to the recession. According to VEGAS INC, it has become the norm to see Las Vegas businesses close or relocate for cheaper rent, leading landlords of office, industrial and retail properties to lose tenants, not be able to make loan payments, and have their properties foreclosed on by banks.

The foreclosures of many of these properties are allowing a guessing game of sorts for investors willing to pick them up. If they guess right, they stand to make millions, but if they are wrong, they lose their investment and face the same fate as the previous owners. The fact still stands, however, that while commercial development was a driving factor of the Las Vegas economy during the boom, it’s now at a standstill with millions of square feet of oversupply and a complete lack of demand as businesses continue to cut back. Commercial real estate will likely be one of the last sectors to rebound in Las Vegas once the economy improves and space is needed.

To read the full article from VEGAS INC, click here.

Posted in Industrial, Office, Real Property, Retail, Western | No Comments »

CMBS 2.0 Far Healthier Than Volatile 2007 Loans

Friday, July 22nd, 2011

Commercial Mortgage Backed Securities (CMBS) analyst, Fitch Ratings, contends that the post-recession crop of loans is less risky than those securitized in 2007, the most volatile year for CMBS. According to the National Real Estate Investor, Fitch agrees with many people’s fear that underwriting standards of CMBS loans have deteriorated in recent months, but contests that the decline is from CMBS lending standards adopted immediately after the last recession which produced some of the most stringent criteria in the sectors history.

Since underwriting standards were bound to drop from their previous unusually high level, Fitch has already raised credit enhancement levels for new CMBS to ensure ample credit risk protection. Debt-service coverage ratios, loan-to-value and other metrics from 2010 and 2011 are similar to the metrics from 2003 and 2004, a period which was substantially more conservative than the 2007 metrics.

To read the full article from the National Real Estate Investor, click here.

Posted in Economy, Financial Services, Real Property | No Comments »

Seattle’s Office Vacancy Rate Expected to Fall

Thursday, July 21st, 2011

Despite differing reports from the second quarter, commercial real estate experts all expect office vacancies to fall in Seattle, Washington for the remainder of 2011. According to The Seattle Business Times, all three major brokerages conducting vacancy reports in the Seattle area found positive “absorption” last quarter – a measure of how total office-space occupancy has changed, regardless of changes in supply.

Proven technology companies along with startups are growing and driving office demand. The average asking rental rate for Class A office space last quarter in downtown-Seattle was $31.36 per square foot per year, the highest in two years, where Class B and C rents showed little change. While the overall vacancy decrease was minimal, the trend is very positive for substantial new leasing and landlords are moving away from the desperation deals of the past couple years.

To read the full article from The Seattle Times, click here.

Posted in Leased, Office, Real Property, Western | No Comments »

U.S. Commercial Property Prices Increased 6.3% in May

Wednesday, July 20th, 2011

With a boost in value from the rebound in distressed real estate, U.S. commercial property prices increased for the first time in six months this May. According to Bloomberg, The Moody’s/REAL Commercial Property Price Index (CPPI) rose 6.3% from April, the largest gain since the measure began in 2000. It will take more big jumps to get things back to the way they were as the index is still down 11% from a year earlier and 46% below the peak of October 2007.

The main factor towards the recent and predicted ongoing spike in the CPPI will be post-peak repeat sales. This is supported by the May numbers, as many of the transactions that occurred in that time frame had their most recent sales in 2009 as the market was beginning to bottom which subsequently caused them to trade for substantial returns. The number of repeat sales in May totaled 174 with the dollar volume of repeat sales of all properties jumping 33%.

To read the full article from Bloomberg, click here.

Posted in Economy, Real Property | No Comments »

Will Borders Closings Add to Retail Real Estate Woes?

Tuesday, July 19th, 2011

With the announcement by Borders that they have asked a bankruptcy judge to let it cease operations and liquidate its remaining 399 locations, the real estate implications it will cause are coming to the forefront. According to businessjournalism.org, with an already grim looking national retail real estate landscape from empty hulks of default chains like circuit city, as well as closed car dealerships and selectively shuttered locations of still-going concerns like Kmart, the addition of these 45,000 square-foot behemoths won’t bode well for local real estate markets across the country.

The sheer size of the locations will make them very hard to re-lease, especially with recent reports of healthy retailers downsizing their floorplans for a more express version of their stores. Nearby landlords of malls and shopping centers, who are already reporting rising vacancy space, will start to feel a ripple effect of tenants losing business because of the decreased foot-traffic caused by the liquidation of the anchor-chain.

To read the full article from businessjournalism.org, click here.

Posted in Big Box, Economy, Real Property, Retail, Store Chains | No Comments »

Is Now the Time to Invest in REITs?

Friday, July 15th, 2011

Compared with the residential real estate market, commercial real estate has made some strides in recovery, but progress is likely to remain slow due to employers reluctance to hire and expand amid a still shaky economy. According to FOX Business, REITs allow consumers to invest in a professionally-managed portfolio made up of income-producing properties. For the past thirty years they have been a solid investment, outperforming stocks and bonds.

While REITs were affected by the recession just like all other forms of property, they are up 200% since the market recovery began back in March 2009. In terms of an investment, REITs are up 9.93% through the second quarter of 2011 compared to 6.02% for the S&P 500 Index. The more rapid improvement of REITs can be attributed to the benefit of continually generated income flow from multiple tenants and properties around the country.

To read the full article from FOX Business, click here.

Posted in Economy, Real Property | No Comments »

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