Market Data

Market Trends Online(3)

Yum! Brands is looking for 35,000-sf lots in small towns to purchase or ground lease for KFC/Taco Bell co-branded outlets.
Photo credit: Yum! Brands

Co-Branding Challenges
No one does co-branding better than Yum! Brands, which operates 3,400 multibrand units worldwide, nearly 95 percent of which are in the U.S. In comparison, the next largest co-branding company is Carl’s Jr., which has 300 units combining the namesake hamburger outlet with the Green Burrito brand. Yum hopes to expand its most popular multibrand franchise, KFC/Taco Bell, in small towns, according to the company’s franchise Web site, Of the 700 chicken and taco outlets it operates, 285 are in U.S. towns of less than 10,000 people. But Yum has identified nearly 500 towns of fewer than 15,000 residents that have neither a Taco Bell nor KFC. The company’s Web site lists by state the small-town markets where it hopes to open a multibrand unit in the near future.

Branding Disconnect
If you’re breathing, you’ve heard about the concept of branding as a must-have marketing tool. But brands are developed by marketing people, not salespeople, says sales guru Jeffrey Gitomer, in Bizjournals. And marketing people “know everything about exposure and branding but nothing about making the sale,” he says.

To carry off a successful branding concept, you “better be able to back it up once the customer decides to reach out and touch you,” Gitomer says. He cites Apple as a branding success story. “Apple Inc. has a brand. You've seen its ads -- funny, compelling, authentic. Its retail stores match the marketing. They're attractive and compelling, with smart, helpful people who make it easy for you to buy.”

Strip Center Sales Review
Greatest Increase in Sales Volume, Year-end 2006


Volume (in billions)

Percentage increase

from 2005

San Jose, Calif.



Charlotte, N.C.



Austin, Texas









Source: Staubach East Coast Retail Investment Team

Midscale Hospitality Properties Close Gap
This year it probably will cost more to stay at a midpriced hospitality chain without food and beverage than to stay at one with food and beverage, according to Mark V. Lomanno, president of Smith Travel Research. The average daily rate differential between the two property types has shrunk from $14 premium for F&B properties in 1Q01 to less than $1 by 4Q06. The most fundamental difference between the two property types is supply, Lomanno adds.

In the past decade the number of midpriced rooms with F&B has dropped by 100,000 to about 570,000. During the same time the number of midscale rooms without F&B has increased from less than 100,000 in the early 1990s to nearly 700,000 today. Based on pipeline projections, midscale properties without F&B will be the largest hospitality brand segment by the end of the decade.

America’s Favorite Building

The Empire State Building tops the list of America’s favorite architecture, which is a public poll of the 150 best works of architecture conducted by the American Institute of Architects. The approximately 2.7 million-sf, 102-story New York City icon surpassed the White House, which came in second. Washington National Cathedral, Jefferson Memorial, and Golden Gate Bridge rounded out the top five. And the Chrysler Building, also in this photo, came in ninth.

Properties such as this five-unit apartment building on Chicago’s North Side are being snapped up by investors who see the Windy City’s multifamily market as a good deal.
photo credit:
Meridian Capital

Apartment Buy/Sell Signals
Chicago, Columbia, S.C., Jackson, Miss., Madison, Wis., and Roanoke, Va., are top apartment acquisition markets, according to the Center for Real Estate Studies Winter 2007 “Market Cycles” newsletter. Albuquerque, N.M., Knoxville, Tenn., Baltimore, Louisville, Ky., and Shreveport, La., represent markets at the top of the investment cycle, offering the highest return to property owners who sell now. The number of markets that moved in to the sell phase from 4Q06 to 1Q07 increased 11 percent and those moving into the buy column increased 18 percent, based on 150 apartment markets tracked, the report says.

Luxury Hospitality Expands to U.S.

The Villa Mangiacane in Tuscany, Italy, is one of 17 luxury properties Stein Hotels and Resorts owns throughout Europe.
photo credit: Stein Hotels

Stein Hotels and Resorts, which owns and operates 17 luxury hotels in Europe, is entering the U.S. market looking for “characterful properties in great locations with excellent restaurants and warm attentive service” with 200 rooms or less, according to Tanya Franco, head of Stein’s North American operations. Key markets under consideration include New York, Chicago, Washington, D.C., Los Angeles, and Miami, as well as resort locations such as Laguna Niguel, Calif., South Beach, Fla., and Scottsdale, Ariz.

Industrial Goes Condo
Industrial condominiums, common in Florida, California, and Texas markets, now are spreading to the Midwest. Outside of Chicago in suburban Lake Zurich, Ill., Rose Industrial Center is offering 2,500- to 3,000-sf industrial condos with 18-foot ceiling heights for $105 psf. On Chicago’s near north side, the Aetna Plywood warehouse is being developed into six industrial condos that will be leased or sold. Residential condo developer Jim Moller of Urbanscape Development bought the 85,000-sf building for $3.9 million and invested $2 million to renovate it into industrial condos along with 22,000 sf of retail space. In St. Paul, Minn., small family businesses such as auto repair and plumbing supply companies have purchased industrial warehouse condos that range from 3,000 to 10,000 sf and sell for about $100 psf. Business Condos USA, which has successfully developed small office, industrial, and retail condos in Florida, is expanding its product nationally through franchise operations and expects to have developments nationwide within three years.

Top 5 Office Markets Forecast




Asking rents

1. New York




2. Washington, D.C.




3. Los Angeles




4. Seattle




5. Boston




Marcus & Millichap 2007 National Office Report


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