Commercial Real Estate and Real Estate Investment Trusts [REITs]
Merrill Lynch Ends Talks on Moving to Ground Zero. NYC: “Merrill Lynch & Company (MER) , the financially ailing investment brokerage, has terminated talks with the Port Authority and the developer Larry A. Silverstein over moving its headquarters to one of the new office towers planned for ground zero. The company’s decision is a major setback for the Port Authority and Mr. Silverstein, who had hoped to revive commercial interest in the 16-acre site by luring Merrill as an anchor tenant for one of the four office towers to be built there.” (NY Times, July 17th)
Greenberg Traurig to Anchor Miami's Met 2 Office Tower. “International law firm Greenberg Traurig has inked a 15-year, 150,000-square-foot lease at the upcoming Met 2 office tower in Downtown Miami, taking its place as the building's anchor tenant. The new lease averages in the mid-to-high $40/sf over its 15-year-term... The space… featuring wireless mobility and connectivity, moveable walls for varying space needs and a state-of-the-art conference center. Metropolitan Miami is a $1 billion mixed-use development in the core of the Downtown area.” (Commercial Property News, July 16th)
CoStar Group, Inc. Q2 2008 Conference Call Transcript. “[Q2] conditions for the office, retail and investor, real estate sectors [in the U.S.] remained mixed, but many of the most important metrics are well within range of conditions considered healthy... Clearly, it appears that the transaction activity has slowed especially on the sales side. However... Rents are generally at multiyear highs. Construction activity is robust. Vacancy rates have risen, but are generally moderate across the majority of markets and well within the ranges considered healthy… Capital for commercial real estate, both equity and debt remains reasonably available under the terms in 2008, especially compared with the true downturns we had in our early 90’s.” (Seeking Alpha, July 16th)
Chattanooga to Become Home of $1B VW Plant. “After considering locales in Alabama and Michigan, Volkswagen Group of America Inc. has just decided to develop its new U.S. manufacturing facility in Chattanooga, Tenn. As the likes of Ford Motor Co. (NYSE:F) and General Motors Corp. (NYSE:GM) continue to struggle, Volkswagen will shell out $1 billion to complete its new production plant. The 1,350-acre Enterprise South Industrial Park, owned by the City of Chattanooga and Hamilton County, will be the site of the new facility… Environmental sustainability will be a key factor in its design.” (CPN, July 16th)
At Midyear, Office Landlords Feeling the Pain. “High-end office markets from Manhattan to Santa Monica are feeling the sting of job losses and a rise in available sublet space… NYC posted negative net absorption for the second straight quarter -- with an especially sharp decline in the bellwether Midtown Manhattan market -- while asking rents are beginning to flatten and investment sales took a sharp dive in H1’08. The Westside of Los Angeles also saw vacancies rise more than half a percentage point and absorption dipped into negative territory. CoStar Group analysis: More than two-thirds of the nation’s office markets reported positive absorption in the most recent quarter.” (CoStar Group, July 16th)
$50M Parking Garage Kick Starts $400M TOD. Pleasant Hill, California: “Work is set to begin here this week on mixed-use transit-oriented-development on county-owned land surrounding the local Bay Area Rapid Transit station. The $400-million project will replace surface parking lots with 522 residential units, a 270,000-sf office building and 35,000 sf of retail. The developer is a public-private partnership consisting of publicly held AvalonBay Communities (NYSE:AVB), Millennium Partners the San Francisco Bay Area Rapid Transit District and Contra Costa County.” (Globe St., July 16th)
ProLogis Expands Presence in Japan with 458,000SF Project. “Industrial real estate giant ProLogis (NYSE:PLD) is expanding its presence in greater Nagoya, Japan, with the development of a four-story, multi-tenant facility distribution facility totaling about 458,000-sf. The complex, to be called ProLogis Parc Kitanagoya, will be in Kitanagoya City, a suburb of Nagoya, and will be completed next year. Though less-well known outside Japan than the urban centers of Tokyo and Osaka, Nagoya--on the Pacific coast of the main Japanese island of Honshu, roughly between Tokyo and Osaka--is an important domestic and international distribution hub, according to ProLogis.” (Real Talk With CPN, July 16th)
JLL Hotels, HIA Align Teams to Mine Brazil. “Jones Lang LaSalle Hotels (NYSE:JLL) has merged Hotel Investment Advisors, one of Brazil's leading consulting firms, into its operation as its inroad to an emerging market that's now carrying investment-grade ratings by S&P and Fitch. The 25-year name, a mainstay in Brazil, will go away.” (Globe St., July 16th)
Class A Office Nets $200M-Plus. “General Reinsurance Corp. is selling 600 Steamboat Rd. to Heritage Realty Services for an estimated $200 million-plus price tag… Jones Lang LaSalle: The property is being purchased "in excess of $1,000/sf." The Royal Bank of Scotland currently leases the entire building, but plans to move at the end of its lease in 2009 when their new 12-story building on 600 Washington Blvd. is complete… JLL, referring to the size of the space [200,000-sf], explains there isn't anyone in this market that "needs this kind of space." (Globe St., July 16th)
BofA Sells 840,000-SF Portfolio for $152M.
“Affiliates of the Inland Real Estate Group of Cos. purchased a four-building portfolio from Bank of America (NYSE:BAC
) for $152.6 million, or about $182/sf. In conjunction with the sale, Bank of America leased back portions of the 839,808-square-foot portfolio, which includes properties in Albuquerque, NM; Baltimore, MD; Moosic, PA; and Las Vegas.” (CoStar Group, July 16th)
Capital Trust Finalizes $540M Fund. “Capital Trust Inc. announced the final closing of CT Opportunity Partners I LP, a private fund with total equity commitments of $540 million. Capital Trust plans to invest $25M, with the remaining equity coming from third party investors. The fund will seek to exploit immediate and longer term opportunities emanating from the current financial market dislocation and will be managed by CT Investment Management Co. L.L.C.” (CPN, July 16th)
Pops & Drops: Macy's, Hovnanian... Starwood Hotel & Resorts (HOT) dropped 7%. Goldman Sachs added the company to its conviction sell list, saying it expects fundamentals to start deteriorating in both the higher-end segments of the lodging industry, as well as international markets. – It’s down 40% for the year so maybe Goldman is late to the party, says Karen Finerman.” (CNBC, July 14th)
Developer Cuts Back on Plans for Tower to House Baseball’s Cable Network. “A 21-story office building planned in East Harlem for Major League Baseball is shrinking.The tower’s developer, Vornado Realty Trust (NYSE:VNO), had planned to begin construction in April… But, according to real estate executives and city officials, Vornado’s inability to finance the $435 million project, known as Harlem Park, has delayed construction and is doing what critics who had complained about the tower’s size could not: reduce its height by about a third. That is in part because the developer seems to have had problems signing up other tenants for the building.” (NY Times, July 12th)
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