Corporations Not Investing
Despite the fact that corporate profits are at their
highest level in 40 years, today's chief executive officers are not investing
back into business operations, says Deloitte Research's Chief Economist Carl
Steidtmann. As a share of business investment, cash has risen from 68 percent
in the mid-1990s to more than 145 percent in 2005 and corporate America has
reduced its debt by 5 percent since 2001. But instead of investing in capital
improvements, companies are hoarding their cash, possibly preparing for another
round of expensive takeovers, Steidtmann says. Part of the unwillingness to
invest may be anxiety about the future, he adds. CEO expectations are at the
lowest level in the last four years, according to the Conference Board CEO
survey. Such anxiety could become a self-fulfilling prophecy as corporations
continue to cut back out of fear.
photo credit: The Coffee Office
Road Warriors' Street Club
Look out Starbucks: Not only is Dunkin' Donuts aiming for
your Frappuccino drinkers, but The Coffee Office wants to lure your mobile
office workers into its cozy confines. This Canada-based company has locations
in Windsor and London, Ontario, and is finalizing sites in Calgary and Fort
McMurray, Alberta, and Detroit. Requiring just under 5,000 sf, this franchise
provides both a public café with food service and a members-only section that
is divided into executive offices, mini board rooms, meeting booths, private
workstations, and even sleeping modules, available free or on a per-use basis
with a corporate or individual membership. The high-tech yet casual environment
features plasma screen TVs, wireless access, and teleconferencing, as well as
other business services.
- Charleston, S.C., Jacksonville, Fla.,
Kauai, Hawaii, Mammoth Mountain, Calif., Portland, Ore., Sacramento, Calif.,
Savannah, Ga., and Scottsdale, Ariz., are among the top "hidden gem"
markets for lodging investments, chosen by Jones Lang LaSalle Hotels.
- Institutional investors now account for
almost half of warehouse sales, an increase of more than 30 percent in the last
few years, says Marcus & Millichap.
- Nursing homes are the slowest-growing
seniors-housing segment, with only 227 beds added in the top 30 markets since
4Q04, despite a slight occupancy rise, according to the National Investment
Center for the Seniors Housing & Care Industry.
- The office investment market will continue to
outperform other property markets for total returns over the next five years, with
an expected annual return of 8.1 percent, according to Property & Portfolio
host of buyers are looking for value-added shopping centers, redevelopment
opportunities, and other riskier deals with upside potential. Younger investors
in particular seem willing to get creative," says Michael Dee, senior vice
president, national director of retail at Grubb & Ellis.
The Retail Buzz
Retail landlords voted to choose this year's winners of
the International Council of Shopping Centers' Hot Retailers Awards.
Citi Trends: This chain of 250 apparel and home décor
discount stores wants to add around 45 new locations in predominantly ethnic
minority locations of at least 25,000 people. Justice
Just for Girls: Five stores going on 75, this clothing and accessory chain
targets seven- to 14-year-old girls in malls and power centers.
Massage Envy: Offering massage for the masses for a
monthly membership fee, this chain of 108 stores plans to more than double its
number of locations in open-air centers near restaurants and supermarkets.
Muttropolis: Finding no shortage of consumers willing to
pay $95 for a dog collar, this California-based chain of four 2,000-sf pet
boutiques plans to take its canine couture to 10 new locations, preferring
upscale lifestyle centers.
Teavana: Planning to double its store base to 80 this
year, this tea specialty shop located in malls may expand into open-air centers
and urban storefront locations.
photo credit: Muttropolis
• Units with three or more bedrooms have the highest
median rent growth rates, ranging from 9 percent to 13 percent.
• Seven percent is the average rent growth rate across
• Most student-housing providers surveyed offer 12-month
Source: Student Housing 201: 2004-2006 Rent Growth in 64 College Towns
Top Industrial Investment Markets
1. Fort Lauderdale, Fla.
2. Oakland, Calif.
3. Palm Beach County, Fla.
4. Orange County, Calif.
5. Los Angeles
Source: Marcus & Millichap
Commercial Real Estate Professionals Unprepared
While most commercial real estate professionals surveyed
say they are adequately prepared for disasters, nearly 40 percent never have
tested their disaster plans, making them the lowest-ranked in disaster
preparedness among six private-sector industries surveyed by Texas A&M
University System's National Emergency Response & Rescue Training Center.
Seventy-seven percent of commercial real estate respondents have updated
disaster response and recovery plans within the past year, but 28 percent
reported they do not train employees on their disaster preparedness plans.
Environment Key to Productivity
Office leasing brokers may help tenants find the right
space by educating them about the effects of good workplace design on worker
productivity. While companies give a lot of thought to locating in cities that
attract skilled creative workers, they may be squelching productivity by not
investing in good office design, according to the Gensler 2006 U.S. Workplace
survey. Only 50 percent of workers surveyed say that their current workplace
design encourages innovation and creativity, and office workers say they would
be 21 percent more productive in a better designed working environment. Lack of
space, too few quiet areas, uncomfortable workstations, and bad layout and
design top the list of problematic physical features. Poor productivity due to
workplace design costs U.S. corporations $330 billion annually, the survey
Urban Retail Rents
Annual psf triple net, Summer 2006
San Francisco, Union Square $330
Boston, Newbury St. $165
Philadelphia, Walnut St. $70
San Antonio, Riverwalk $40
Orlando, Fla., Downtown $25
Cleveland, Warehouse District $17
Source: Grubb & Ellis
Strong Words for New Orleans
Normally mild-mannered Urban Land Institute officials had
strong words for New Orleans city leaders as they plan to rebuild after
Hurricane Katrina. Part of a panel of 50 specialists who convened on Katrina's
one-year anniversary, ULI experts decried the lack of organization and
leadership for redevelopment. "Given the extraordinary circumstances that
happened to your city, you cannot solve this incrementally," said ULI
fellow and former Pittsburgh, Pa., mayor Tom Murphy. "You need an agency
or authority that has people who wake up every day and their job is simply to
make development happen." In July the U.S. Department of Housing and Urban
Development awarded Louisiana $4.2 billion in community development and block
grants in addition to a previously awarded $6.2 billion.
photo credit:Federal Emergency Management Association
Net Lease Cap Rates Continue to Rise
"The significant increase in supply has led to rising
cap rates across all three net lease sectors ... The market, which most likely
will be flooded with deals to close by year-end, simply cannot support the
lower yields ... Moreover, a significant majority of the lower cap rate deals
currently on the market have remained available since 2005, with sellers
unwilling to change their pricing expectations.
-Boulder Net Lease Funds, Market Report, 3Q2006