Is Lending Back
Lenders are ready to loosen the purse strings, according to Jones Lang LaSalle's 1Q10 survey of 60 of the industry's top loan originators. In a survey of life companies, CMBS originators, private equity, commercial banks, and government agencies, 43 percent responded that their loan production would range from $1 billion to $3 billion this year. The number of lenders expecting to lend more than $4 billion jumped from 9.3 percent in 2009 to 15.2 percent in 2010. Expected loan-to-value ratios averaged between 50 percent and 70 percent and estimated debt coverage ratios ranged from a high of 2.25 on hotels from life companies to 1.15 on multifamily from private equity.
Their preferred asset? Twenty-seven percent voted for multifamily, followed by 22 percent for retail, 21 percent office, 15 percent industrial, 11 percent hotels, and 4 percent other.
Hospitality — The number of major hotel sales fell 83 percent in 2009 from the market's peak in 2007, the largest decline in 20 years, according to an HVS survey. The majority of 2009 assets sold between $10 million and $50 million.
Industrial – Texas, Ohio, Illinois, California, and Pennsylvania top the list of U.S. states that saw the most new logistics and warehouse distribution facilities built in the past two years, says Site Selection Online.
Multifamily — Local buyers will drive sales activity among smaller private investment deals because lenders continue to favor investors with experience managing apartments in their home markets, says Marcus & Millichap.
Office – In 16 of 18 office markets surveyed, all participants said they offered a free rent concession, according to the 1Q10 Korpacz Real Estate Investor Survey. Average amount of free rent topped out at 7.8 months in Atlanta and Manhattan and 7.6 in Chicago. The lowest amount was 3.7 months in Los Angeles.
Retail – Retail development will reach just 70 million sf this year, the lowest amount on record, according to Marcus & Millichap. On top of 2009's 107 million sf of completions, the restricted supply may help fundamentals to start recovering in 2011.
"In 2010, the United States should see significant foreign capital coming from Asia (especially China and Korea), German investment funds, and the Middle East.... Industry organizations have been working to assure that U.S. tax policy does not discourage foreign investment."
— Deloitte 2010 Real Estate Outlook
The decline in global trade hit the nation's industrial markets hard, but not equally hard, according to a Colliers International report. During the global slowdown of the past two years, vacancy rates in port city industrial markets climbed faster than in the overall industrial market. This points up the clear correlation between trade and industrial demand. For every 1 percent change in port TEUs, the standard measure of shipping trade, industrial demand changes 0.33 percent. So the recent 15 percent decrease in TEUs resulted in a 5 percent decline in port city industrial occupancy. But not all port cities experienced the decline equally. In fact, those focusing on exports fared better than those concentrating on imports, as exports to foreign countries remained fairly stable throughout the recession.
Funds Target Hotel Buys
From Magna Hospitality's $75 million to Blackstone Equity's $10.9 billion, some 38 equity groups are devoting dollars to picking up hotel assets this year. To access the complete list of fund names and target property types go to www.hotelnewsnow.com.
pretty much describes the commercial real estate deal-making process — continually rearranging the deal until it works for all parties. It's the deal-making mechanism for the future, says author and Harvard professor Guhan Subramanian, who adds: "Sophisticated deal makers...engage in a carefully thought-through sequencing strategy: Get all the pieces lined up to the point where, when you go in the room, it's basically a done deal."
Dallas-Fort Worth is poised to become a world capital in the well-populated future due to available land for development and pro-business attitudes, says Joel Kotkin, author of The Next Hundred Million: America in 2050. The growing U.S. population — estimated to reach 400 million by 2050 — may be just the engine that keeps the U.S. economy chugging along. Kotkin sees the demographic diversity of New York and other major gateway cities spreading throughout the country.