London's Commercial Property Market Up, NYC Down [Housing Tracker]

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Includes: AVB, CRBC
by: Judy Weil

Commercial Real Estate and Real Estate Investment Trusts [REITs]

Sales Of Investment Properties Slows. “PropertyShark.com: The sale of investment properties has slowed dramatically in NYC in Q1. According to the research firm's Investment Properties Report, there were 2,991 sales in Q1’08, down 41.41% from last year. The number of sales has been declining since Q4’06. Manhattan had the largest decline in sales, down 49%, followed by the Bronx, where sales fell by 47%. Brooklyn had the smallest drop at 37%. The city's median sale price fell .79% from Q1’07 to $625,000. The median price per square foot was $242, down 5.6% compared to last year.” (The Real Deal, May 29th)

Leading Commercial Index Contracts in First Quarter. “The National Association of Realtors’ Commercial Leading Indicator for Brokerage Activity edged down 0.7% to an index of 119.0 in Q1 from a downwardly revised reading of 119.9 in Q4, and is 0.8% below Q1’07 when it stood at 120.0. This is the third consecutive quarterly dip since… Q2’07. Before that, the index showed generally positive expansion from the middle of 2003… Lawrence Yun, NAR chief economist: “The index suggests that commercial activity, as measured by net absorption and the completion of new commercial buildings, will be positive but somewhat weaker over the next six to nine months.” (Originator Times, May 28th)

AvalonBay Joins Somerset’s $500M MXD. NJ: “AvalonBay Communities (NYSE:AVB) has signed on as a JV partner in Somerset Development’s Wesmont Station mixed-use project here… The 70-acre transit-oriented development has been selected as a pilot project in the US Green Building Council’s LEED Neighborhood Development Initiative. Specifically, AvalonBay will develop 400 high-end rental apartments… Carrying a reported price tag of $500 million, Wesmont Station will also include 130,000 sf of retail and office space, a public square, community center, a new middle school, athletic fields and other recreational facilities, and a new commuter train station on NJ Transit’s Bergen Line.” (Globe St., May 28th)

Report: Europe, Asia Dominate Office Markets. “CB Richard Ellis Group’s Global Market Rents report… tracks world markets with the highest and fastest-growing occupancy costs for the past year… Raymond Torto, CBRE’s global chief economist: “Office occupancy costs… rise faster than global inflation.” No US city made it to the top 10 of either most expensive markets or the fastest growing. The cities of London, New Delhi, India, Paris, Singapore and Dubai finished out the top 10 for most expensive, in order, and Tel Aviv, Dubai, Mumbai, Manila and Perth, Australia rounded out the top 10 for fastest growing occupancy costs. NY City was ranked at number 13 for most expensive.” (Globe St., May 28th)

Citizens Republic Bancorp Restructures Commercial Real Estate Lending, Cuts 8. “Citizens Republic Bancorp (NASDAQ:CRBC) cut eight employees… as part of a restructuring of its commercial real estate lending operations. Spokesman Brian Smith: CRBC has suffered an increase in nonperforming commercial real estate loans... The restructuring will help the company stay in the commercial lending business with more confidence… According to its Q1’08 earnings report, Citizens saw its total nonperforming commercial real estate loans jump to $167.8 million from $110.1M in Q4’07. The Q1’07 figure was only $40.6M. The company earned a net income of $11.1M in Q1’08, compared with $31.5M in Q1’07.” (MLIve, May 28th)

Pacific Office Properties Takes Phoenix Tower. “On the heels of a major office building acquisition yesterday in Honolulu… Pacific Office Properties Trust Inc. has bought the 370,400-square-foot U.S. Bank Center complex in Phoenix. The 31-story office structure is the second-tallest building in Arizona, after the Chase Tower, and the deal also includes a separate seven-level structure with additional parking and ground-floor retail space… No price was released for the building, but in 2006 the Shidler Group bought it for about $66.3 million.” (Commercial Property News, May 28th)

Saito to Continue Mitsui Fudosan's U.S. Expansion as New CEO. “Hiroki Saito, who played a key role in establishing Japan’s first REIT as an executive with Mitsui Fudosan Co., has been named CEO of Mitsui Fudosan America as the subsidiary continues with its expansion efforts in the U.S. Saito, with more than 20 years of commercial real estate leasing and investment experience, takes over from Kosei Murakamo, who has been promoted to head of international operations at corporate headquarters in Japan.” (Commercial Property News, May 28th)

Commercial-Real-Estate Research Group To Open Orlando Office. “Hendricks & Partners, a Phoenix-based company that ranks as one of the leading commercial real estate advisers and economic research groups specializing in multi-family properties, is opening an office in Orlando. Don Hendricks, chairman and CEO, said longtime Orlando-area commercial real estate broker Cole Whitaker has joined as a partner in the firm. Whitaker will open Hendricks and Partner's first office in the southeast region in downtown Orlando, Hendricks said.” (Orlando Sentinel, May 27th)

Prime Office Property In London Remains Attractive. “Kuwait's offer to purchase the Willis Building last week has given the prime office market in London a lift, but it is not the beginning of the end for Britain's property downturn. By agreeing to buy the building for £400 million, or about $792M, from British Land, Kuwait, through its investment arm St Martins Property, is betting on the ability of London's financial center to ride out the credit crunch. Martin Lay, director of City investments at DTZ, a property services company: "It shows London is still an attractive place to invest for long-term investors." (Int’l Herald Tribune, May 26th)

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