Market Trends Online(15)

Briefly Noted

Walgreen Co. in Deerfield, Ill., plans to open 550 new drugstores by September 2008, according to Progressive Grocer magazine. … The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.12 percent of all loans outstanding in 2Q07, up 28 basis points from 1Q07, and up 73 basis points from one year ago, according to Mortgage Bankers Association's National Delinquency Survey. … Apartment companies posted a still-high 42.8 percent employee turnover rate down from last year’s 59.2 percent, according to the National Multi-Housing Council’s National Apartment Survey.

Orlando Works to Attract Conventions

Orlando, Fla., known for its family-centered attractions, is devoting some of its tourist dollars to wooing the mostly adults-only convention-going crowd. More than $3 million of the city’s $68 million tourism budget is going toward measures to introduce meeting planners in cities such as Chicago, New York, and Washington, D.C., to the upscale side of Orlando, especially the new hotels near the convention center. Hilton is building an 18-story, 1,400-room hotel next to the Orange County. Fla., convention center that is scheduled to open in 2009. The hotel will include 130,000 sf of meeting space and six restaurants.

Corporate on the Cheap

10 least expensive cities in which to operate corporate headquarters

City Annual Operating Cost
Las Vegas $21.97 million
Atlanta $22.42 million
Phoenix $22.44 million
Dallas $22.82 million
Miami/Ft. Lauderdale, Fla. $22.84 million
Baltimore $22.93 million
Cincinnati $22.94 million
St. Louis $23.01 million
Cleveland $23.26 million
Wilmington, Del. $23.42 million

Source: The Boyd Co.

Motown Heads South

Old stereotypes die hard, and while the Big Three automakers still rule Detroit, the South may be the Motown of the 21st century. About 950 automotive-related companies are located in the Middle Tennessee area, include Nissan’s North American corporate headquarters in Cool Springs. In total, the South is home to more than 3,000 automotive suppliers and 10 major auto assembly plants, making it the second-largest U.S. car manufacturing region, according to the Automotive Research Alliance. ARA is a recent collaboration among seven southern universities and three national laboratories that will provide research resources to southern automotive companies, hoping to loosen Michigan’s tight grip on the research-and-development end of car production.

Interior Trends: Luxury on the Rise

What’s Hot What’s Not
Handcrafted pieces French country accents
Open space Galley space
Concealed appliances Exposed appliances
Double-duty appliances Stainless steel
Quartz, resin, glass Marble, granite
Spa-like spaces Traditional space
Oversized showers Bathtubs
Recycled and green materials Stone
Extra-large, deep single sinks Double sinks

Source: The Real Deal

Worth Quoting

“Rental housing [in New York] has an extraordinary future. The last several years have seen the focus on the development of condos, almost to the exclusion of rental housing, and the rental market has now begun to reflect an enormous shortage of supply.” – Larry Silverstein, chief executive officer and president, Silverstein Properties, New York

Reviving Dead Space

The transformation of the former Dubuque Casket Co. in Dubuque, Iowa, into the Washington Court rental housing and community health clinic has been named a finalist in the National Housing & Rehabilitation Association’s 2007 J. Timothy Anderson Awards for Excellence in Historic Rehabilitation in the affordable-housing category. The awards honor outstanding U.S. real estate projects that involve rehabilitation of older, historic buildings using the federal historic rehabilitation tax credits.

Gronen Restoration

Brownfields Information Source

Commercial real estate professionals considering brownfields rehabilitation projects can access free brownfields tax incentive guidelines on the Institute of Brownfield Professionals Web site at Information included in the Frequently Asked Questions section includes

  • meeting the contamination criteria;
  • determining eligible expenses;
  • meeting the ownership criteria; and
  • securing state property eligibility statements.

Worth Quoting

“What would I do if I were a home builder? … I would really start thinking about how I can prosper from the distress. … In the early 1990s, the home builders that had the strongest balance sheets were able to buy the land on which they made such great profits over the last decade at very, very low rates/low prices. And I think that they are going to try to do that again. And that will be the next big play -- to try to buy cheap land amidst all of the distress.” -- Joseph Gyourko, director of the Samuel Zell and Robert Lurie Real Estate Center, at the University of Pennsylvania Wharton School of Business

TDRs a Tool for Preservation

As more cities and communities undertake the redevelopment of their urban cores, developers and preservationists should look carefully at transfer of development rights as a way to raise capital for preserving historic structures, according to a PreservationOnline article. Used successfully for years in larger cities such as San Francisco and New York, TDRs essentially allow historic buildings to sell their air space to nearby buildings. In one of the most famous examples, Penn Central Railroad wanted to build a 53-story structure on top of New York’s Grand Central Station, which it owns, but couldn’t because of the property’s historic nature. Since it was in an area zoned for taller buildings, the railroad transferred its development rights to nearby buildings and still has more than 1 million sf of development rights in inventory.

A Captivating Renovation

Boston’s Charles Street Jail, a national historic landmark at the foot of Beacon Hill, has been transformed into the 300-room Liberty Hotel, after a $120 million restoration and renovation process.

Investment Conditions Ratings

Averages based on survey responses from CCIM designees and candidates; on a scale of 1 to 10 with 10 being high

Sector 1Q07 2Q07
Office 6.5 6.0
Industrial 6.8 6.4
Retail 6.9 6.5
Apartment 7.1 6.8
Hotel 7.0 6.7

Source: RERC/CCIM Investment Trends Quarterly