New Orleans Markets Rated
New Orleans' apartment market garnered an investment conditions rating
of 7.2 out of 10 points in a recent Real Estate Research Corp. study.
Industrial came in second with a 6.4 rating and hotels third with a 5.6 rating.
On Hurricane Katrina's first anniversary, nearly half of the survey's
respondents rated the New Orleans commercial real estate market better than it
was prior to the storm. "Growth in the commercial markets could easily go
on for 10 years or more," says Kenneth P. Riggs, CCIM, RERC president and
chief executive officer. Riggs pegs the going-in cap rate for New Orleans'
apartment market at 7.6 percent, compared with the national average cap rate of
Log on to Market Trends Online at www.ciremagazine.com to see where your city ranks among the hottest job growth centers.
- U.S.-based hospitality companies are on a building spree
in Asia, developing 188
projects in China, 78 in India, and 39 in Thailand,
says Lodging Econometrics.
- Newly formed niche lender AF
C Self-Storage Finance Group
arranged $94 million in equity and debt financing for Veritas Group's
380,000-sf institutional-grade self-storage portfolio.
- More than seven months' worth of condominiums for sale
nationally and project cancellations in Miami and Las Vegas indicate the condo
boom is over, says Mortgage Bankers Association's Chief Economist Douglas
- Rising oil prices and slowing job growth are lowering office
market expectations, although vacancy rates should fall to about 12.7 percent
and rents should rise 4.4 percent by year-end, according to the National
Association of Realtors.
- Portland, Ore., Minneapolis-St. Paul, and Sacramento, Calif.,
are the three most underdeveloped U.S. retail markets based on current gross
area and projected income and population growth, according to Shopping
Windy City's Taxing Situation
Culturally, Chicago has gained world-class status, but the Windy City's
central business district office market has not followed suit. High taxes and
operating costs may account for Chicago's stubbornly high CBD vacancy rate -
around 18 percent, according to a Building Owners and Managers Association of
Chicago study. Chicago's CBD has the highest commercial property taxes in the
nation: 24 percent higher than New York and 72 percent higher than Los Angeles.
Downtown Chicago office landlords pay $6.98 psf in taxes, compared to Atlanta's
$2.40 psf, Dallas, $2.78 psf, Los Angeles, $1.98 psf, and New York, $5.31 psf.
Chicago also has the second highest operating costs - after New York - $14.95
psf compared to Atlanta and Dallas, both around $9 psf. The study uncovered a
couple of other unsettling facts: Only about 100,000 sf of new-tenant occupied
space has been added in the past five years, and nearly 60 percent of downtown
space is leased to one type of business: law firms.
Branding Through Architecture
As design consciousness enters the mass market, will consumers demand
something other than a big box at which to shop? Maybe. Anyone who's shopped at
one of Austria's 120 MPreis supermarkets certainly would. It's probably the
only supermarket chain in the world chosen to represent its country at the
prestigious Venice Architecture Biennale. The family-owned chain uses
up-and-coming architects to design each of its stores individually to suit the
site. The result is a distinctive brand based on unconformity and a tagline
that garners even more attention: "The Seriously Sexy Supermarket."
photo credit: MPreis
New Retail Tenant Is Born
Renting out changing-room space to diaper manufacturers might be the
next useful shopping-center service tenant. Turkey's well-known Evy Baby diaper
brand has installed changing rooms in 12 shopping malls and expects to add
more. The rooms are outfitted with sinks, changing tables, comfortable chairs
for nursing mothers, and of course, samples of Evy Baby's products. It's the
kind of brand opportunity a parent Luvs.
State Legislative Trends
Log on to Market Trends Online at www.ciremagazine.com for more state
legislative updates and a link to the CCIM Institute's legislative database.
In response to the U.S. Supreme Court's Kelo decision a year ago, many
states have introduced legislation prohibiting eminent domain takings for
commercial use, economic development, or tax revenue enhancement. To find out
what your state legislators are doing about issues that affect the commercial
real estate industry, check the CCIM Institute's database of state legislation
Required Retail Reading
If there's a retail mall redevelopment in your future, Urban Land
Institute has a reading list for you. In "10 Principles for Rethinking the
Mall," the first principle - grab your opportunities before they pass you
by - recommends the following books to help mall redevelopers get a handle on
changing consumer habits:
The Tipping Point: How Little Things Can Make a Big Difference
The Influentials: One American in Ten Tells the Other Nine How to
Vote, Where to Eat, and What to Buy
The Great Good Place: Cafes, Coffee Shops, Bookstores, Bars, Hair
Salons, and Other Hangouts at the Heart of a Community
The Mom Factor: What Really Drives Where We Shop, Eat, and Play
The Experience Economy: Work Is Theater and Every Business a Stage
A Whole New Mind: Moving from
the Information Age to the Conceptual Age
Trading Up: The New American Luxury
Log on to Market Trends Online at www.ciremagazine.com to access the
other nine principles of mall redevelopment.
Why We Buy: The Science of Shopping
Energy Prices Quell Optimism
Rising energy costs caused senior business execs to reconsider their
capital improvement plans during 1Q06, according to a PricewaterhouseCoopers
Management Barometer survey. Forty-nine percent said they are planning new
investments, down from 55 percent in 4Q05. And they expect to spend less: 6.8
percent of revenues down from 9.5 percent. While expectations of facilities
expansion decreased only 1 percent, plans for business acquisitions and
geographic expansion each fell 9 percent.
Convention Center Earns Honors
The only building ever to win both the Urban Land Institute's Award of
Excellence and the American Institute of Architect's national Honor Award for
Architecture, the Convention Center in Washington, D.C., celebrates the economy
of design, putting 2.3 million sf of convention and exhibit space on a
600,000-sf footprint. Located about a mile from the White House, the
three-block-long center includes 703,000 sf of exhibit space and 150,000 sf of
meeting rooms on multiple levels topped by a 52,000-sf ballroom. About 40
percent of its space is located below ground.
photo credit: Washington Convention Center
Student Housing Gets an A+
For growth potential, few niche properties match student housing
demographics, according to Michael H. Zaransky, author of Profit by Investing
in Student Housing: Cash in on the Campus Housing Shortage. The book looks at
the convergence of factors contributing to campus housing's performance.
Zaransky offers the following investment tips:
Look for schools with at least 10,000 full-time students in a high
college-enrollment state that has a low
Avoid big-city schools. While the ratio of beds to students may be
low, commuter and part-time students comprise most of the student population.
Think public, not private. Private institutions tend to restrict
housing options and cap enrollment.
Don't underestimate students' unwillingness to walk: Properties
located within a two-block radius of campus often perform better.