Archive for December, 2011

Technology, Energy Hubs to Outperform Office Market in 2012

Friday, December 30th, 2011

The national office sector is projected to experience a slowed growth in 2012 due to a damper on demand for new space. However, according to the National Real Estate Investor, select office markets that are home to technology firms and energy companies will continue with steady growth in the foreseeable future. The average office vacancy at the end of 2011 will stand at 16.8%, and is only expected to decrease down to 15.7% over the course of 2012. In addition, average rents of all classes of office properties will continue to stagnate.

Due to strong growth in the technology and energy sectors, leasing demands for such properties in cities like San Francisco, Seattle, Houston, Oklahoma City, and Pittsburgh should fall in line with the increasing demands.

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

Posted in Eastern, Economy, Leased, Mid America, Office, Owner Occupied, Real Property, Western | No Comments »

Commercial Property Owners Seek Lower Taxes

Thursday, December 29th, 2011

A group of at least 20 Peoria, Illinois commercial property owners are seeking $100,000 or more reduction in assessed values. According to pjstar.com, some of the requests are larger than Board of Review assessing officials have seen before, with certain businesses seeking anywhere from $1.5-2 million worth of reductions on certain properties. These larger requests have prompted some government bodies to intervene out of concern that their already cash-strapped operations could lose valuable resources.

Cases for the property reductions will be heard in January with the board’s decisions coming in February. Those decisions can be appealed to the state Property Tax Appeals Board in Springfield, Illinois setting up a potentially lengthy process of tax appeals.

To read the full article from pjstar.com, click here.

Posted in Mid America, Real Property | No Comments »

Commercial Property Owners Facing Higher Rates

Wednesday, December 28th, 2011

Interest rates on commercial properties have experienced their lowest levels in decades, but those with intentions to refinance shouldn’t expect the trend to continue. According to The Wall Street Journal, at the height of the boom years, many owners of office buildings, hotels, shopping malls, and other commercial real estate financed their properties using five-year mortgages, most of which are set to mature next year. Now lenders are warning that refinancing won’t be automatic and low mortgage rates likely won’t apply anymore.

The low rates of the last few years have been able to reduce borrowers’ expenses and hide problems with the properties. Those days are numbered as rates on some commercial properties can rise to over 5% when refinanced, a large enough increase to send some properties from being slightly profitable to now being money-losers.

To read the full article from The Wall Street Journal, click here.

Posted in Financial Services, Hospitality, Hotels, Malls, Office, Real Property, Retail | No Comments »

JBG Goes to Court Over Tax Assessments

Tuesday, December 27th, 2011

The JBG Cos. has filed six petitions against the District of Columbia seeking millions of dollars in assessment reductions. According to the Washington Post, taxation of commercial properties has grown more contentious in the economic downturn, with private property owners arguing that the value of their properties has dropped more quickly, and more dramatically, than tax assessors recognized.

JBG has taken the firmest stance against the District’s tax assessments with good reason, as they are exclusively focused in Washington DC. All of JBG’s complaints were brought after they had already exhausted administrative appeals with the Board of Real Property Assessment and Appeals. The developer finds their valuation and real property tax assessments arbitrary, unreasonable, excessive and erroneous.

To read the full article from The Washington Post, click here.

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

Commercial Real Estate Loans Improve in 2011, but Face Headwinds

Friday, December 23rd, 2011

Though the amount of delinquencies on commercial real estate loans overall improved in 2011, they are likely to continue to face tough times due to loan write-offs and a contraction in liquidity. According to HousingWire, the multi-family mortgage segment is performing the best with the sector’s delinquency rate falling to 3.6%, as the sector continues to benefit from favorable rent and occupancy rates as well as strong investor demand.

Delinquency rates on land and construction fell to 16.3% from its peak of 19.6% in the beginning 0f 2010. This is a result of banks shedding $38 billion in nonperforming construction and land loans since the end of 2009. Since before the recession began, loans on commercial real estate have represented about 20% of total charge-offs for banks. It is estimated that banks are about a third of the way through their commercial real estate loss recognition, with another $40-80 billion is losses to be written off in the future.

To read the full article from HousingWire, click here.

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

Industrial Property Delinquencies Reach 22-Year High

Thursday, December 22nd, 2011

Declined rental income from warehouses has led to a 22-year high in delinquencies on industrial property loans that were packaged into commercial mortgage-backed securities. According to Standard and Poor’s, the delinquency rate for U.S. industrial CMBS as of the end of the third quarter was 12.05%. In addition, net operating income has fallen at 47% of the properties used as collateral for industrial CMBS since the securities were issued.

U.S. gross domestic product has contracted for four consecutive quarters as industrial delinquencies began rising in 2008 when the recession hit. The S&P claims that only the industrial property segment of CMBS is experiencing historic highs in delinquencies. Many believe that the growing number of maturing loans, paired with declining net operating income or many properties, will prevent industrial delinquencies from improving any time soon.

Posted in CMBS, Distribution Centers, Economy, Financial Services, Industrial, Real Property, Warehouse | No Comments »

Pay Your Michigan Industrial Personal Property Taxes Before 2012

Wednesday, December 21st, 2011

The Michigan Business Tax has been repealed effective January 1, 2012. With that repeal, the 35% refundable industrial personal property tax credit has also been repealed. Since the credit is based on industrial personal property taxes paid during the tax year, the credit will only apply to taxes paid on or before December 31, 2011.

It is imperative that property owners pay their Michigan 2011 Industrial Personal Property Taxes by December 31, 2011 in order to have the tax payments qualify for the credit. Payment in 2012 means the 35% refundable credit is lost.

Please contact Bob Fuchs out of Paradigm Tax Group’s Detroit, Michigan office for more information. He can be reached at (810) 844-0922 or bfuchs@paradigmtax.com.

Posted in Industrial & Manufacturing, Mid America, Personal Property | No Comments »

CRE Investors Turn Bullish on Office Acquisitions

Tuesday, December 20th, 2011

Despite inconclusive evidence of improving commercial real estate fundamentals, investors are continuing to look for buying opportunities in the office sector as 2011 comes to a close. According to PR Newswire, a fourth quarter PwC Real Estate Investor Survey shows that investors are bullish in the office sector regarding their prospects for tenant retention and expect office rent growth in many markets in the coming year.

With rents poised to increase, fewer tenants will be leaving their current situations as other landlords won’t be able to offer better terms than what they currently pay. According to the survey, the average cap rate, the initial return anticipated on an acquisition and a reflection of an investment’s anticipated ownership risk, decreased in 22 of the 31 surveyed markets and marks the sixth consecutive quarter of decreasing average overall cap rates.

To read the full article from PR Newswire, click here.

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

High-End Hotels Forecasted to Excel in 2012

Monday, December 19th, 2011

Hotel revenue per available room is expected to increase 6.1% in 2012 with rising room rates for high-end hotels leading the way. In a report issued by PKF Hospitality Research, it states that the rise in high-end hotels will more than offset the effect of stagnant occupancy at midscale and economy properties. Overall, room rates will rise 4.7% in 2012 due to increases in business travel and the lack of new hotel supply in most markets.

High-end hotels are expected to see occupancy rates above 70% in 2012, while midscale and economy hotels will have about a 55% occupancy rate. Market conditions over the next few years are positioned to help owners and operators focus on more aggressive pricing policies, which will translate into increased profits. Not to be lost in the excitement on the future of the hotel industry is the strides made in 2011. PKF expects overall revenue per available room in 2011 to rise 8.1% from last year.

To read the full article from Travel Weekly, click here.

Posted in Economy, Hospitality, Hotels, Real Property | No Comments »

Max Penalty Increased for Failure to Report Change in Ownership in CA

Friday, December 16th, 2011

The maximum penalty for failure to report to the Assessor a change in ownership of a commercial property in the state of California has been increased for 2012. Existing law requires that a Change in Ownership Statement must be filed at the time of recording or within 45 days of the date of the change. Failure to file a statement within that timeframe results in a penalty of $100 or 10% of the taxes applicable to the new base year value, but not to exceed $2,500.

However, effective January 1st, Senate Bill 507 increases the time for filing to 90 days, and increases the maximum penalty for failure to file the statement to $20,000 for property not eligible for the homeowners’ exemption, such as commercial real estate.

To read the full announcement from the California State Board of Equalization, click here.

Posted in Real Property, Western | No Comments »

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