Condo Conversion Sales Double
Apartment sales to condominium converters doubled in 2005, from $11.6
billion in 2004 to $23.9 billion in 2005, according to Real Capital Analytics.
Of the top 20 conversion markets, Phoenix recorded the highest yearly increase:
1,384 percent. Phoenix converters spent $1.3 billion for 11,862 units in 2005,
compared with $91.9 million in 2004 for 961 units. While Florida markets of
Broward County, Orlando, Tampa, and Palm Beach posted triple-digit percentage
increases in conversion sales, Miami saw a 29 percent drop from $1.7 billion to
$1.2 billion. Other cooling markets include San Diego down 32 percent, Boston
down 24 percent, and Las Vegas down 2 percent.
Co-Location Benefits Economy Hotel
Economy hotels located near luxury hotels have higher revenues per
available room, according to a Cornell University Center for Hospitality Research
report. A study of nearly 15,000 U.S. hotels found that economy and budget
hotels benefit from locating near high concentrations of upscale and luxury
hotels. However, luxury hotels located near midmarket hotels suffer reduced
What Do Workers Want?
Equitable treatment, including fair pay, benefits, and job security; a
sense of achievement and organizational pride; and camaraderie are three
universal employee wants that traverse age, nationality, gender, and work
environment, says researcher David Sirota, co-author of The Enthusiastic
Employee: How Companies Profit by Giving Workers What They Want. And it pays
off for organizations that treat their employees accordingly, his research of
9,240 companies shows. In a comparison of similar companies within an industry
sector, high-morale companies' share prices increased 10 percent more than
their industry's average increase. Low-morale companies' share prices were 13
percent below their industry's average increase.
Industrial Boom Hits Midwest
After Los Angeles and Chicago, Indianapolis posted the largest increase
in new industrial construction, with 4 million square feet coming online in
3Q05, according to CB Richard Ellis. Columbus, Ohio, and Cincinnati each
reported 2 million sf of new industrial product and all three markets have 4
million sf to 5 million sf in the development pipeline through 2Q06. At 38.5
million sf, 3Q05 national industrial construction showed the largest
single-quarter new construction gain in six years.
- 45 percent of all current condominium-hotel developments
arelocated oceanside, with another 10 percent near theme parks and 9
percent near casinos; Florida is the most active condominium-hotel market with
46 percent of current projects, according to Lodging Econometrics.
Orlando and Jacksonville, Fla., Austin, Texas, and
Columbia, S.C., will post 15 percent to 20 percent rental increases this year,
along with other secondary and tertiary markets, according to Grubb & Ellis.
- The transfer of investment cash from major to secondary
markets by investors seeking higher capitalization rates and less
condominium-conversion competition is benefiting Raleigh-Durham, N.C., Memphis,
Tenn., Richmond and Norfolk, Va., and Atlanta, says Multifamily Executive.
- Financial, health-care, and professional services will fuel
this year's office market, with call and data centers making a comeback,
according to Colliers top office trends.
- High-quality restaurants may replace department stores as
mall anchors as some eateries pull in $4 million to $5 million per year in
business-as much as department stores- and increase consumers' shopping time by
30 minutes, according to Shopping Centers Today.
Houses Yes, Big Boxes No
Americans vote "yes" for single-family homes and grocery
stores but oppose every other type of new real estate development in their
communities, according to the Saint Consulting Group's land-use survey. One out
of five families has taken action against new development projects with traffic
and quality of life their main concerns.
Image credit: USDA NRCS
Property Values All Shook Up
Local historic designation of neighborhoods increases residential
property values from 14 percent to 23 percent over properties in non-designated
neighborhoods according to "Gracing the Land of Elvis and Beale Street:
Historic Designation and Property Values in Memphis" in Real Estate
Economics. The study of Memphis neighborhoods also found that new properties
benefit as much or even more than older properties from being in a historic
Image: Graceland Mansion, Memphis
Office Condo Development May Slow
Nearly 60 percent of brokers surveyed gave future office condominium
development a yellow light - proceed with caution - while more than 30 percent
green-lighted future construction, according to a Grubb & Ellis/PNC Real
Estate Finance report. Low interest rates and business owners' desire to
control operating costs have fueled the recent office condominium boom. The
uptick has followed the growth of service and small businesses and has been
more active in small markets such as Grand Rapids, Mich., than in big cities.
The niche sector also has been active in high-growth areas such as Phoenix and
cities with an influx of foreign owners such as Miami. Other buyers see office
condominiums as a way to invest in the booming real estate market. Another
trend the report uncovered is creating office and retail condominiums on the
first few floors of mixed-use projects.
Mexican Retail Offers Hot Opportunities
While the U.S. retail market may cool this year, Mexico's economic
stability and underserved markets are spicing up prospects for U.S. real estate
investors looking to diversify their retail portfolios. With nearly 106 million
people, Mexico has about 1 sf of shopping center space per person compared with
the U.S. rate of 20 sf per capita.
U.S. Retail Investment in Mexico
REAL ESTATE FUND
EXPECTED SHOPPING CENTER INVESTMENT
Chelsea Property Group
$300 million through 2007
$200 million through 2007
Kimco Realty Corp.
$350 million through 2005
| Mexico Retail Properties
$600 million through 2010
O'Connor Capital Partners
$150 million through 2007
Equity International Properties
$300 million through 2010
Source: International Council of Shopping Centers Research Review