Baltimore's Big Deal
Corporate Office Properties Trust saw a good thing when it put down $121 million for Baltimore's Transamerica Tower, the most money paid for a Baltimore building in 10 years. However, Wall Street did not agree, according to the Baltimore Sun; the purchase announcement sent COPT's stock price down 2.4 percent. Investors' reaction reflects Charm City's current image problem: Riots after the death of Freddie Gray, on top of six years of HBO's TV series “The Wire,” set in Baltimore, have tarnished the city's national profile. COPT, however, is investing in Baltimore in a big way. Earlier in March it purchased another Pratt Street office property for $63.5 million. The city's office market is improving, as vacancy dropped from 17.1 to 15.4 percent YOY as of 2Q15.
Washington, D.C., Retail Development
Twelve grocery-anchored shopping centers are under construction in the Washington, D.C., market, totaling 1.3 msf of new retail space, according to Delta Associates. Four of the centers will open in the district proper, two each anchored by Whole Foods and Walmart respectively, while the rest are in suburban Maryland and Virginia with Harris Teeter, Wegman's, and Whole Foods as anchors. “Investment sales of grocery-anchored shopping centers for the first half of 2015 totaled $483 million ($285 psf) compared to $323 million ($353 psf) in all of 2014,” according to Delta report.
Los Angeles Office Investment, 2Q15
“Sales activity outpaced first quarter and pushed into even higher price territory. Approximately 72 transactions totaling $1.4 billion were completed. Foreign investors continued to focus on core, trophy, and multifamily assets, while domestic investors concentrated on creative office conversions across Los Angeles.” - Cushman & Wakefield, MarketBeat
Red Roof to Open in Canada
Red Roof Inn is taking its new “upscale economy” brand to Canada, signing a 20-year deal to build and brand 40 hotels, the majority of which will be Red Roof Plus properties. Canadian developer Pacrim Hospitality Services is partnering with Chinese investors to fund the development. The first four properties are scheduled to open next year in the Eastern and Atlantic regions. The Plus brand will feature amenities based on TripAdvisor consumer comments, replacing carpeting with laminate wood flooring and adding flat screen TVs and granite countertops to appeal to millennial travelers. Red Roof has also expanded into Brazil, signing a 25-year deal to develop 35 to 40 properties. A majority stake in a portfolio of 89 corporate-owned Red Roof properties recently sold for $600 million to a Singapore-based investor.
CBD Population Returns in Secondary Cities
Midwestern markets have certainly repopulated their CBDs in the last 10 years, according to a CBRE report. Through a mixture of tax credits, incentives, and the attraction of historic architecture, many cities have turned former CBD office buildings into multifamily, condominium, and mixed-use properties, attracting an educated workforce who want to live in an urban environment at a reasonable price.