RealStake

The Biggest Gets Bigger

Tom Hanna — Mon, 10 Jul 2006 20:19:26 +0000

The largest U.S. owner of community shopping centers, Hyde Park, New York-based Kimco Realty Corp., is getting even bigger with the agreed $4 billion purchase of Pan Pacific Retail Properties. Pan Pacific owns 138 retail properties, about 22.6 million square feet, in California, Washington, Oregon and Nevada. Kimco already owns 1,117 properties.

The deal is $70/share in cash and stock ($2.9 billion) plus the assumption of $1.1 billion in debt by Kimco. This brings announced REIT acquisitions for 2006 to $44 billion, more than doubling last years pace.

REIT,shopping centers,acquisitions

Kimco to acquire Pan Pacific

Kimco Realty to acquire Pan Pacific Retail

Kimco to Acquire Pan Pacific Retail for $2.9 Billion

Kimco Realty Inks $4Bln Merger Deal With Pan Pacific Retail

Kimco paying $4B for Pan Pacific

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1031 Investment Pressure Raises North Dakota Land Values

Tom Hanna — Mon, 10 Apr 2006 07:45:32 +0000

Pressure from development, investors and farmers exchanging for land outside the path of development has North Dakota cropland prices at an all time high after two years of double digit price growth.

The 10-percent cropland value hike followed increases of 11 percent and 7 percent in previous years, making them the three largest annual increases since 1979, according to a release from NDSU Agriculture Communications.

The hikes have increased land values to roughly $500, $550 and $600 per acre in three successive years, eclipsing the previous high of $430 set in 1981.

Grand Forks Herald | 04/08/2006 | AGRICULTURE: N.D. cropland values continue rise, but not at accelerating rate

1031,investment

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46% of US Millionaires Invest in Real Estate

Tom Hanna — Mon, 03 Apr 2006 05:08:48 +0000

A report by TNS Financial Services found that the number of US households with net worth over $1 million excluding primary residence rose by 8 percent in the last year. Not surprisingly, a large percentage of them invest in real estate.

Although real estate is not their sole source of wealth, it remains a staple for many. Forty-six percent of those surveyed own investment real estate like a second home or rental properties.

Report: Number of U.S. millionaires reaches record - Mar. 29, 2006

millionaires,investing

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Commercial Real Estate Outlook Bright

Tom Hanna — Tue, 21 Mar 2006 07:08:48 +0000

The recently released Commercial Real Estate Outlook from the National Association of Realtors and the Real Estate Industry Outlook from PNC Financial Group both predict a positive year for commercial real estate ahead.

«Investors' love affair with real estate is still very much alive, but the risk is that that, too, can quickly change,» [PNC Financial Group Senior Vice President Nick] Buss said.

The multifamily housing and retail sectors are at greatest risk: multifamily because for the past year the supply of rental units was diminished by a wave of condominium conversions, which may not continue; and retail because consumers may cut back on their spending, much of which has been fueled by home equity loans that are becoming less attractive as interest rates rise.

Bright outlook for commercial real estate

commercial real estate

David Lereah, NARâ€™s chief economist, said the fundamentals are solid. â€œVacancy rates are declining in all of the major commercial sectors, and rents are rising at healthy rates,â€ he said. â€œJob growth and international trade are fueling demand for space and facilities.â€

NAR President Thomas M. Stevens from Vienna, Va., said the flow of funds into commercial real estate is extraordinary. â€œInvestment grade real estate has been changing hands at unprecedented rates, which demonstrates that the value of portfolio diversification into commercial real estate is being embraced strongly in the investment marketplace,â€ said Stevens, senior vice president of NRT Inc.

Commercial Real Estate Improving With Record Investment

WASHINGTON (March 15, 2006) â€« Rising demand for space is improving commercial real estate markets, and investment dollars flowed into commercial sectors at record levels in 2005, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of RealtorsÂ®.

David Lereah, NARâ€™s chief economist, said the fundamentals are solid. â€œVacancy rates are declining in all of the major commercial sectors, and rents are rising at healthy rates,â€ he said. â€œJob growth and international trade are fueling demand for space and facilities.â€

NAR President Thomas M. Stevens from Vienna, Va., said the flow of funds into commercial real estate is extraordinary. â€œInvestment grade real estate has been changing hands at unprecedented rates, which demonstrates that the value of portfolio diversification into commercial real estate is being embraced strongly in the investment marketplace,â€ said Stevens, senior vice president of NRT Inc.

Investment in commercial real estate rose 44 percent in 2005 to a record $268 billion of investment grade real estate, not counting transactions valued at less than $5 million.

â€œMany members of the National Association of RealtorsÂ® underscore this wisdom in their own investments â€« 13 percent hold an ownership interest in at least one commercial structure, and 39 percent own residential properties for investment in addition to their primary residence or vacation home,â€ Stevens said.

The NAR forecast, expanded to five major commercial sectors, includes analysis of year-end data for various tracked metro areas. The sectors include the office, industrial, retail, multifamily and hospitality markets. Metro data were provided by Torto Wheaton Research and Real Capital Analytics.

Office Market

By the end of this year, office vacancy rates are projected to drop to an average of 11.0 percent from 13.6 percent in the fourth quarter of 2005. Office rents are expected to rise 5.0 percent in 2006.

Office vacancies are at the lowest level since 2001. Markets with a wide pool of skilled workers will experience the strongest demand for space in 2006, as will areas with a rapid in-migration of population.

Areas with the lowest office vacancies currently include Ventura County, Calif.; Orange County, Calif.; Riverside, Calif.; New York City; and Miami, all with vacancy rates of 8.5 percent or less.

Net absorption of office space in 56 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is forecast at 93.4 million square feet in 2006, up from 89.1 million last year.

Nearly $100 billion of investment grade office buildings traded hands in 2005. The top suburban office markets for investment are Los Angeles; Northern Virginia; Orange County, Calif.; Dallas; and Northern New Jersey.

Industrial Market

Trade with China continues to stimulate the industrial sector with burgeoning traffic at ports, both traditional and inland. This traffic is causing increased demand for warehouse and distribution facilities, especially for markets near major ports of entry or distribution hubs. Congestion is being reported at major West Coast ports, with some traffic being diverted through the Panama Canal to Florida.

New industrial construction should rise 20 percent this year to accommodate specific distribution requirements and to replace structures that are now obsolete.

Industrial vacancy rates are likely to fall to an average of 8.0 percent in the fourth quarter of 2006 from 9.6 percent in the last quarter of 2005. Industrial rents are expected to grow 3.8 percent this year.

The areas with the lowest industrial vacancies are West Palm Beach, Fla.; Los Angeles; Las Vegas; Riverside, Calif.; and Orange County, Calif., all with vacancy rates of 5.7 percent or less.

Net absorption of industrial space in 54 markets tracked is projected at 270.1 million square feet in 2006, compared with 279.1 million in 2005.

Investment transaction volume increased 65 percent in the industrial sector to $34.5 billion in 2005. The top industrial investment markets are Chicago, Los Angeles, Atlanta, Dallas and Seattle.

Retail Market

The retail sector has undergone significant changes recently with megamergers that will continue to impact markets across the country. This includes mergers of Sears and K-Mart, and May Department Stores with Federated Department stores. In some areas, new space is being built without sufficient demand, but retail space absorption will slightly outpace the amount of new space brought to market this year.

Retail vacancy rates are forecast to decline to an average of 7.8 percent by the end of the year from 8.0 percent in the fourth quarter of 2005, and average rent should rise 4.0 percent in 2006.

Retail markets expected to have the lowest vacancies this year include San Francisco, Las Vegas, San Diego, Seattle and West Palm Beach, which are seen to have year-end vacancies of 3.4 percent or less.

Net absorption of retail space in 54 tracked markets is likely to be 31.4 million square feet in 2006, down from 43.8 million last year.

Investment in retail space increased 16 percent to $46.4 billion in 2005, with strip centers accounting for two-thirds of the total. The top markets for strip center investment include Los Angeles, Phoenix, Houston, Chicago and Atlanta.

Multifamily Market

The apartment rental market â€« multifamily housing â€« is tightening, and vacancy rates are forecast to drop to an average of 4.5 percent this year from 5.2 percent in 2005. Average rent is projected to increase 5.3 percent in 2006.

Conversion of apartments into condos accounted for 34 percent of the multifamily properties that traded hands in 2005. NAR expects condo conversion to slow this year, coinciding with an increased demand for rental housing.

Total investment in multifamily property rose 72 percent in 2005 to $86.9 billion, with $29.4 billion spent by condo converters who took 191,400 units out of the active rental market. The top markets for garden apartment investment are Phoenix, Tampa, Orlando, Los Angeles and Atlanta.

Not surprisingly, areas with the lowest apartment vacancies happen to be markets with a lot of conversion activity. These include Fort Lauderdale, West Palm Beach, Miami, San Jose, Calif., and Northern New Jersey, all with vacancy rates of 2.5 percent or less. These areas also are experiencing rapid in-migration, which is increasing housing demand.

Multifamily net absorption is forecast at 289,100 units in 59 tracked metro areas in 2006, compared with 319,400 absorbed last year.

Hospitality Market

The tourism and hospitality sector slumped severely after September 11, 2001, but began to turn around in 2004. With increased occupancies and higher revenues, new hotel construction is now economically feasible.

Hotel occupancies should reach 68.7 percent by the end of 2006, up from 64.5 percent in the last quarter of 2005, and revenue per available room (RevPAR) is likely to grow to $76.01 this year â€« an increase of 6.3 percent. An additional 31,500 hotel rooms are projected to be added to the inventory in 52 markets tracked this year, up from less than 3,900 in 2005.

Markets with the highest forecast for RevPAR include West Palm Beach, Honolulu, New York City, Miami, Phoenix and Fort Lauderdale, which can see RevPAR in excess of $100.00, far above the national average of $74.39 expected for the first quarter. Areas with the biggest gains in RevPAR, which indicate hot markets for growth, include Honolulu, Houston and Chicago.

Hospitality markets with the highest occupancy levels include West Palm Beach, Honolulu, Fort Lauderdale, Phoenix and Miami, all with occupancy rates of 82.2 percent or higher. For the United States as a whole, occupancy should be 66.1 percent in the first quarter.

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Scottsdale Retail Center $473/square foot

Tom Hanna — Sun, 12 Feb 2006 07:38:39 +0000

The five year old, 25,575-square-foot, 3.14 acre North Scottsdale Gateway zero vacancy retail center in North Scottsdale, Arizona has sold for $12.1 million or $473/square foot.

Originally built in 2000, the retail center is situated on 3.14 acres and is 100 percent leased to FedEx Kinko's, Quiznos and Cingular Wireless among others. The center is part of a larger, mixed-use development that includes BNC National Bank, Residence Inn Marriott, restaurants and a Class-A office building.

Scottsdale Retail Center Sells for $12M, Part of 1031 Exchange

retail real estate,shopping center,1031 exchange

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Research is Key with Tenant-in-Common Investments

Tom Hanna — Mon, 06 Feb 2006 02:26:07 +0000

With tenant-in-common investments becoming a hot commodity in the commercial and multifamily real estate markets, homework is key. Many 1031 investors rush to purchase within the IRS guidelines, while other investors not involved in a 1031 purchase TICs for the promised management. The problem? High fees and low returns can wipe out any tax savings. For non-1031 investors the extra costs associated with the tax deferral isn't offset by tax savings so there may be more profitable alternatives (such as REITs).

Fees aren't cheap. In a typical deal, sponsors charge a property-acquisition fee of 2% to 6% of the equity they put into the deal. Sales commissions are 5% to 8% of equity collected, and there can be a 2% to 3% fee for organization and marketing expenses, not to mention the ordinary annual property management fees, which run from 2% to 6% of net rental income.

Getting A Slice Of The Commercial Market

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Grubb & Ellis 2006 Forecast Sees Growth in Many Commercial Markets

Tom Hanna — Thu, 26 Jan 2006 07:31:03 +0000

The 2006 Grubb & Ellis commercial real estate forecast is out and they see growth in many North American markets. The Kansas City office market is expected to see positive net absorption, while right up I-70 the St. Louis market is expected to see lots of new space leased with old space vacated - lots of activity but low net absorption. The Wichita market is expected to see growth in medical office space. In Miami and Orlando job growth is expected to fuel the office market through 2006 and into 2007.

The picture varies from market to market and between office, industrial, retail, investment and multifamily properties, but the overall picture is positive. They expect asking rental rates to increase 5 percent for Central Business District office properties and 6 percent for suburban office space. Visit Grubb & Ellis for a clickable map to see the markets you're interested in.

commercial real estate,investment real estate

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Regulators issue warning to banks on commercial real estate loans

Tom Hanna — Tue, 17 Jan 2006 02:01:04 +0000

Commercial mortgage requirements could get tougher as federal banking regulators issued guidance to banks on commercial loans and recommended that banks with high concentrations of certain loans keep a higher capital cushion than required.

The caution focuses on loans where repayment depends mostly on rental income or on the sale, refinancing or permanent financing of the property. That includes loans to real estate investment trusts and unsecured loans to developers. Regulators said lenders with high concentrations should hold more of a capital cushion than the minimum required and enough to match the level of risk.

Buffalo News - Regulators issue warning to banks on commercial real estate loans

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Grubb & Ellis Sees Healthy 2006 in Chicago

Tom Hanna — Thu, 05 Jan 2006 03:10:35 +0000

Grubb & Ellis expect a healthy year in Chicago's commercial and industrial markets. Positive absorption is expected in the suburban office market, though the city will see office construction in an environment of negative absorption. The industrial market is expected to see absorption over 20 million square feet, compared to 15.8 million in 2005 with the fastest growth in the south suburbs.

«Like 2005,» he said, «this year's going to be a Goldilocks year, not too hot, not too cold. There will be a cooling in the housing market and perhaps a slowdown in economic growth toward the second half of the year, but not enough to upset what will be a good year for real estate. Interest rates will remain surprisingly low, and payroll jobs will be created. In most places, absorption will be up and rents firm.»

Chicago Primed for a Healthy 2006, Grubb & Ellis Contends

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Boca Raton Vacancy Rates on the Decline

Tom Hanna — Wed, 28 Dec 2005 00:17:45 +0000

A strong economy combined with heavy residential development taking up the available vacant land translates to declining vacancy rates for commercial and industrial properties in the Boca Raton, Florida market according to CB Richard Ellis. Industrial space leasing at an average rate of $7.96 per square feet has only a 4.1 percent vacancy rate. Office space vacancy rate is 8.8 percent with lease rates of $16.90 per square foot. 47,500 square feet of office space is under construction with more planned, but little if any industrial development is occurring, so expect industrial vacancy rates to remain tight.

«Because the economy is coming back pretty strong, any future developments being planned will be leased rather quickly due to the demand we face here and the remainder of Palm Beach,» Kelly said. «Vacancy rates are destined to stay tight for some time.»

Boca Raton News - The Leader in Local News Online

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