Market Data

Market Trends(13)

Briefly Noted

• HOSPITALITY - "Lodging construction - mainly hotels and resorts - jumped 4 percent in November [2006] and was up 71 percent from the November 2005 level," said Ken Simonson, chief economist for the Associated General Contractors of America.
• INDUSTRIAL - A 15 percent increase in new supply this year may push national industrial vacancy rates up slightly by year-end 2007, the first rise since 2003, according to Colliers International.
• MULTIFAMILY - Despite moderate rent and occupancy growth, Midwest markets are clustered at the bottom of Marcus & Millichap's 2007 National Apartment Index because of low economic growth factors when compared to Sun Belt and coastal markets.
• OFFICE - Fresno, Calif.; Albuquerque, N.M.; Seattle; and San Mateo, San Francisco, and Orange County, Calif., can expect double-digit rent increases in class A suburban office properties, says Grubb & Ellis.
• RETAIL - Shadow-anchored centers are moving into the light as investors spent $2 billion for the fourth straight year on unanchored shopping centers located near national retailers, according to Real Capital Analytics.

Trump Seeks CCIM Advice
When the Donald goes looking for real estate advice, it makes sense that he would turn to a CCIM. However Rob A. Zache, CCIM, president of Central Place Real Estate in Madison, Wis., expressed surprise at being tapped to write a chapter in Donald Trump's latest book, Trump: The Best Real Estate Advice I Ever Received. "Originally I thought the request was bogus until I received a second call from the publisher," Zache says. His chapter, "Five Rules for Success of Your Business," covers both residential and commercial real estate. "Make sure you are doing business in the right market," he says, advising readers to match the market, site, and facility with the product. How did Trump find Zache, who specializes in brokerage and development for retail, hospitality, and restaurant clients, as well as developing his own projects? "I have no idea," Zache says, "but it's an honor to be included and associated with someone of the stature and achievement of Mr. Trump."

A Sorry State of Affairs
Surprisingly - at least to taxpayers - a number of state, city, and local governments don't know how many properties they own or lease, according to Governing magazine. Since departments within a government often rent or purchase space individually, no centralized list of assets may exist. But the state of Georgia tackled that problem, creating a centralized state facility management database. Other states may want to follow suit: State officials estimated that Georgia owned 11,000 buildings when in fact it owned more than 19,000. As a result of the asset database, Georgia has renegotiated leases at a savings of $10 million over the next 20 years and sold surplus properties worth $21 million.

An Expansion Curve
Curves International is slowing its U.S. expansion after opening its 10,000th location last year. The 1,500-sf women's fitness club company will concentrate on international expansion, curbing its pace of opening 50 clubs a week to no more than 50 this year in North America.

Cash for Renting
Nothing attracts college students like cold cash, which may be the reasoning behind www.livebycampus.com, co-founded by Eric Wu, who was named one of America's best young entrepreneurs by BusinessWeek magazine. University of Arizona student and rental property owner Wu pays $100 to tenants who sign leases with apartments listed on his site. Apartment owners and managers pay Wu $195 for each lease transaction. As tenant/property matchmaker, Wu works both sides of the room: advertising with social networking sites as well as partnering with local property companies. The Web site also features a link for parents and investors interested in buying properties. Several experienced multifamily professionals have joined the LivebyCampus team as it expands beyond the Scottsdale, Ariz., market to Tucson and Flagstaff, Ariz.

Japan Moves On
Michael Pralle, CEO of GE's $48 billion real estate unit, named Japan as his No.1 global market for this year. Commercial land prices rose for the first time in 16 years in Tokyo, Osaka, and Nagoya, Japan's top three markets. Tokyo's class A office vacancy rates dropped to 1 percent, down from 4 percent to 6 percent a year ago. Overall prices for commercial real estate have recovered 30 percent to 50 percent since 2002-03.

Real Entrepreneurs Speak
Entrepreneurial is a hot business term these days, calling to mind agile, outside-of-the-box thinkers and doers who jump on any new technology and turn it into the next YouTube. Not really, said the actual entrepreneurs who spoke at the 2006 Wharton School of Business Entrepreneurship conference. Often characterized as risk takers, most entrepreneurs "try to manage risk. They outsource it where they can," said Raffi Amit, academic director of Wharton's Goergen Entrepreneurial Management Programs. However, optimism seems to be a common thread. "Opportunities are all around you," said computer programmer Farhad Mohit, who, with two friends put together Shopzilla, an online comparison shopping Web site, which they sold for $525 million. "I had no interest in shopping, I was just solving a problem," he adds. Start-up financing often comes from friends and family, credit cards, small business loans, and second mortgages, most said, not venture capital. And while financially secure business people tend to be the least willing to quit their jobs and start a new company, in some ways, people with money, experience, and connections can recover more easily from a failed start-up. "The traditional corporate job is like a train. There's always another one coming," said John Tedesco, a start-up CEO. Others cautioned against jumping into bed with venture capitalists too quickly, since acquiring VC capital may be more costly in the long run. "It's easy to give equity and very expensive to get it back, and equity is really the only thing you have in your business," said entrepreneur Thomas Knobel.

Certified Crime-Free
The Everett, Wash., police department has developed a crime-free certification program for local property managers. After completing the 12-hour program of management training, police property inspection, and tenant safety meeting, property managers can use the crime-free program logo in their advertising and at their properties. Prior to developing the program, Everett police began notifying landlords and property managers each time they responded to police calls at their rental properties. Eventually they developed a rental housing database that allowed them to follow up with property managers and landlords after criminal incidents. Read more about the program at www.policechiefmagazine.org.

Average vs. Median
What's the best way to measure the economic strength of a potential retail site? Although most site selectors rely on average household income for an area, median figures indicate the true midpoint, argues a Merrill Lynch study of the mall industry. For example the average household income in 2004 was 40 percent higher than the median, according to the U.S. Census Bureau.