Market Data

Regional Outlook(19)

WEST

Portland’s Big Deal

Out-of-town institutional investors have been cherry-picking assets in the City of Roses to the tune of 52 commercial transactions in the last six months, according to the Portland Business Journal. In March, American Assets Trust of San Diego set a $354 psf record with the $129.4 million purchase of the newly built, 100-percent-leased First & Main property shown here. The REIT returned to Portland in May to pick up a three-office portfolio for $92 million. In addition, investors have traded about $135 million in Portland multifamily assets in 1H11, a 936 percent improvement over 1H10, according to Real Capital Analytics.

Land Sale: 8 Cents on the Dollar

Back at the height of the boom in 2006, the joint venture MW Housing Partners III, which included Calpers and Weyerhaeuser Co. as investors, bought a 10,200-acre site in the Arizona desert, about 60 miles southwest of Phoenix, for $400 million. In 2009, lenders foreclosed on the property when the planned housing development went bust. In May, private equity fund Arcus Property Solutions purchased the land for $32.5 million, as a buy and hold strategy.

Source: Bloomberg News

SOUTH

Atlanta Industrial Snapshot

Two consecutive quarters of positive absorption sounds like the beginning of a recovery in Atlanta’s industrial market, but the numbers are slightly misleading, says Jones Lang LaSalle’s 1Q11 report. Clorox’s 1.1 million-sf build-to-suit distribution center didn’t take any inventory off the market. In fact, the company is consolidating and will give back space through coming move-outs. The city’s 1Q11 industrial vacancy rate was 14.1 percent.

EAST

Latte with that Footlong? Subway has opened 15 Subway Café restaurants and plans to add 10 more as it tests a new format slightly larger than 1,200 sf. Hoping to appeal to office buildings and other high-end venues, Subway Cafés offer an expanded menu of coffee drinks and baked goods. In addition Subway is looking for 2,000 locations nationwide for its regular sub shops, which range from 100 sf to 5,000 sf. Along with typical shopping center and free-standing locations, the company is seeking nontraditional spaces such as hospitals, sports arenas, and colleges.

“Overall, pricing for commercial real estate in the Northeast remains 15 percent lower than its pre-recession pricing levels. The West, Midwest, and Southeast regions remain down 38 percent, 37 percent, and 35 percent respectively.”

— CoStar Group

MIDWEST

Chicago Condo Count Tumbles

Developers of Chicago’s downtown condos are resorting to fire sales to rid themselves of unsold units and pay off construction loans, according to ChicagoRealEstateDaily.com. Recently an investor paid $5.2 million for 52 unsold units in a downtown project with the plan to cut prices to individual sellers and still make a profit. Conversions to rentals to meet a strong demand and lack of construction during the downturn have brought Chicago’s unsold condo count to its lowest point since 1997.

“Urban net-leased properties in top-tier metros remain in high demand for passive real estate investors. Save-A-Lot is one of the most aggressively expanding tenants and this transaction represents the demand for grocery tenanted properties.”

— Randy Blankstein, president of The Boulder Group, which sold a NNN Save-A-Lot property in Chicago for nearly $2.3 million.

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