Market Data

Market Trends Online(6)

October 2006

New Hotel Income Streams

Private offices are the newest business amenity offered by hotels, at least in England. Business travelers stuck in London for a day with no place to work can go to the Hoxton Urban Lodge, which rents private offices for as a little as £19, or about $36 a day. That price includes a desk, private bathroom, Wi-Fi, and telephone use between 10 a.m. and 4 p.m. on weekdays. The hotel also has two small private dining rooms that serve up to 18 people for power lunches or dinners.

U.S. hotels are finding spa treatments the new business amenity. Forty percent of luxury and upscale hotels under development include spa facilities, compared with 27 percent of existing luxury properties that have spas according to a PricewatererhouseCoopers survey. Driving the trend is men’s growing interest in spas: 31 percent of spa visitors are men, according to the International Spa Association. Spas are the second-highest income generator for hotels, according to PWC hospitality consultant Bjorn Hanson, and hotels in top business locations are trying to boost that figure by offering in-room treatments and a range of mini spa services that fit more easily into business schedules.


The Fire House, along Harrisburg’s Restaurant Row, always draws a crowd.
photo credit: The Fire House

Hip Lessons from Harrisburg

Harrisburg, Pa., is the state capital, but the city is not exactly synonymous with nightlife. Still, in the past few years, Harrisburg’s Restaurant Row has succeeded in creating an after-hours playground that draws up to 7,000 patrons on summer nights. How did this less-than-hip town create a slice of South Beach nightlife in its own back yard?

It’s not a master-planned developer dream come true but a series of small changes that created a serendipitous synergy. These are lessons that all small cities can learn from:

1. Parking attracts suburban people to urban destinations. In 2001, the city built an 850-space parking garage in what was becoming Restaurant Row.

2. People come to watch people. Street café Fisaga installed roll-up garage-style windows, which opened the indoors to the outdoors. Other restaurants followed suit.

3. Recognize a good thing. The city licensed cafés for sidewalk dining and provided policemen on horseback to help control crowds attracted by the mix of bars, nightclubs, and cafés.

4. Change is good. While Restaurant Row attracts primarily a young adult crowd, after four years, the interest is waning, so clubs and restaurants are retooling prices, menus, and atmosphere to attract a more stable family crowd.

5. Look to the future. Current club and bar owners are eyeing nearby facilities that could be renovated into eateries and entertainment venues to attract more customers.

Working Toward Zero Energy Consumption

Buildings account for 40 percent of today’s energy consumption in developed countries, according to the Organisation for Economic Cooperation and Development. The World Business Council for Sustainable Development has initiated a project to reduce that consumption to zero by 2050. U.S. companies DuPont Corp. and ITT have joined seven other multinational firms in an effort to transform how office buildings are conceived, constructed, operated, and dismantled so they will consume no net energy from outside power sources and produce no carbon dioxide emissions while still remaining economically viable to build and operate. The three-year project will examine current green buildings success and setbacks, identify opportunities and technologies such as onsite power generation and ultra-efficient building materials, and create a strategy for realizing its goal in the U.S., China, India, Brazil, and Europe. Project leaders include buildings-material producer LaFarge Group and United Technologies Corp., which supplies elevators, heating and cooling, and power systems to commercial buildings.


Despite its No. l-rated banking Web site, Washington Mutual still has more than 2,600 branch locations nationwide.
photo credit: Washington Mutual

Online Banking Grows

Even though bricks and mortar banking centers continue to grow, online banking is outpacing other e-services, according to the 2005-06 National Technology Readiness Survey. The number of adults who have moved or withdrawn funds online jumped from 11 percent in 2000 to 43 percent in 2005-06. The number of online adults checking balances has tripled to more than 65 percent. In addition, almost 50 percent of online consumers have paid bills online.

Eastern Seaboard Submarkets

In sf, as of 2Q06

Silver Spring, Md.(Washington, D.C., submarket)

Waltham, Mass. (Boston submarket)

Stamford, Conn. (New York submarket)

Total inventory

5,246,074

8,553,803

12,556,535

Available space

246,927

1,109,608

2,925,201

2006 YTD absorption

-41,266

429,485

-50,641

Vacancy rate

4.7%

13%

23.3%

Sources: GVA Advantis, Grubb & Ellis, Jones Lang LaSalle

Retail Property Interest Slows

The average price per square foot of retail properties dropped from $208 psf in 1Q06 to $194 psf in 2Q06 according to RERC/CCIM Investment Trends Quarterly. Overall interest in shopping centers and malls is waning, with availability rates at 8.5 percent up from 7.6 percent in 1Q06. The sector rated 4.6 on a 10-point scale, with neighborhood community centers garnering the best market conditions at 5.6 and regional malls showing the poorest market conditions at 4.6.

Commercial Mortgage Origination Volume

Percent change from 2Q05 to 2Q06

By property type

% Change

By investor

% Change

Multifamily

8.8

Conduits

-3.3

Office

12.7

Commercial banks

8.8

Retail

6.9

Life insurance cos.

18.3

Industrial

33.7

Pension funds

16.0

Hotel

32.4

Credit cos.

331.2

Healthcare

177.4

Other

295.0

Source: Mortgage Bankers Association

Recommended

Building Progress

Fall 2020

Moody's Analytics Reis Chief Economist Victor Calanog, Phd, CRE, outlines how construction in many sectors will fail to meet expectations for 2020.

Read More

This Is the Altered Normal

Fall 2020

Esri’s data on consumer behavior, demographics, and employment can help real estate adapt in the COVID-19 world.

Read More

The CMBS Stress Test

Summer 2020

The commercial mortgage-backed securities market is particularly vulnerable amid the COVID-19 pandemic, with borrowers and lenders looking for creative solutions to unprecedented problems.

Read More

Market Trends in Commercial Real Estate

Summer 2020

Office Renters Change Priorities in Wake of Pandemic | Recreational Real Estate on the Rise | Case Study: COVID-19's Impact on Eastern PA Big-Box Market | Hospitality Owners Have Reservations as Occupancy Drop | Seniors Housing Responds to Mounting Pressure from Pandemic | Mixed-Use Developments Can Keep It Local | Supply Chain Reacts to Social Distancing | Self-Storage Weathers Early COVID-19 Storm

Read More