The Real Deal New York

National Market Report

Commercial and residential real estate news briefs from the most active U.S. markets

March 31, 2008

Atlanta

Equity Depot, a firm that tracks foreclosures in Atlanta, concluded that the number of foreclosure notices issued in metro Atlanta from January to February 2008 climbed 45 percent from the year-ago period. Georgia had the third highest home-loan delinquency rate among states in the fourth quarter of 2007, behind Mississippi and Michigan, the Atlanta Journal-Constitution reported. The news came as delinquency rates in the U.S. climbed to the highest recorded levels in 22 years, according to the Mortgage Bankers Association of Washington, D.C.

Boston

Office rents at some of Boston’s most desirable locations have topped $100 a square foot for the first time in nearly a decade, the Boston Globe reported. The average asking rent at the city’s Class A office towers is approximately $67 a square foot, but some owners of top-quality properties are asking $80 to $95 a square foot. That’s up from the low of $38 a square foot at comparable buildings in 2003. According to Jones Lang LaSalle, which represents Boston’s largest office landlord, the Blackstone Group, the last time office rents exceeded $100 a square foot was in 2000.

Chicago

The Chicago metro area’s top 10 homebuilders closed on just 7,200 new homes last year, down from 11,400 in the prior year, the Chicago Sun Times reported. They saw $2.6 billion in revenue in 2007, down from $3.5 billion in 2006. In years past, builders with more than $20 million in revenue didn’t make the top 50 sellers list; in 2007, the 50th-ranked builder on the list had only earned $9.3 million. The No. 1 seller on the list, Pulte Homes, credited its relative success last year to the large amount of business it got from referrals.

With demand for environmentally friendly housing on the rise in Chicago, residential developers are increasing the amount of green features in their buildings, the Chicago Sun-Times reported. Dynaprop Development Corp. is building the eco18, a 12-story, 93-unit condominium tower that will be powered with the largest geothermal energy system in the city. The system is expected to decrease residents’ energy costs by up to 40 percent; units will start at $279,000. Meanwhile, Related Midwest is building 340 on the Park, which could become the first residential building in the Midwest to meet the Leadership in Energy and Environmental Design (LEED) certification guidelines.

Detroit

There were 3,591 single-family home and condo sales in the metro Detroit area in February, up 12.8 percent from the year-ago period, according to Realcomp, a Michigan provider of multiple listing and real property information services. Realcomp president Karen Kage said the rise in sales can be attributed to the increase in foreclosed homes on the market, which has caused home prices to depreciate by as much as 15 percent, the Detroit Free Press reported. The city of Detroit saw the greatest increase in the area, with a 49.4 percent jump in sales in February compared to the previous year.

Las Vegas

Second-home buyers and vacationers from Las Vegas have long found the suburb of Summerlin a desirable destination, even as the region’s real estate market has sagged, the New York Times reported. Developers have created more housing and amenities to accommodate vacationers who enjoy the community’s comfortable distance from Sin City; Summerlin is just 12 miles northwest of downtown Las Vegas. Data from local firm Home Builders Research indicate that new housing units in Clark County have increased 55 percent since 1998, to nearly 257,000. Home prices in Summerlin start in the high $200,000s and exceed $10 million.

Los Angeles

Higher-priced neighborhoods in the San Fernando Valley are starting to show negative signs of the subprime loan debacle, with foreclosures more than tripling in January from the same period last year, the Los Angeles Daily News reported. San Fernando Valley foreclosures jumped 324 percent, which amounted to 534 families losing their homes, according to California State University researchers. In addition, 1,360 homeowners received default notices. The residential market from Glendale through Calabasas also took a hit, with a 50 percent drop in home sales in January from last year; the median home price fell 16.7 percent, to $525,000, in the same period.

Around 300 miles north of Los Angeles, Mammoth Lake-area developers are counting on a pair of luxury hotel and residential developments to revitalize the resort town’s second-home market. The Ritz-Carlton Residences, slated to break ground in May, will feature two- to four-bedroom units of up to 4,000 square feet; prices will range from $1.7 to $6.5 million. The 230-unit Westin Monache Mammoth condo-hotel opened in November after having sold 131 units in an April 2005 pre-sale and the rest four months later, the Los Angeles Times reported. Mammoth Lakes Multiple Listing Service data show that 22 percent fewer condos sold in 2007 than in the previous year.

Philadelphia

Philadelphia’s sagging housing market could finally be improving, with showings in some neighborhoods up substantially since last year’s 50 percent drop-off from August to the end of 2007, the Philadelphia Inquirer reported. First-time homebuyers are taking full advantage of the current economic climate in which sellers are more willing to make a deal. Although the market slowdown has made financing a new home more difficult, the FHA has increased loan limits to $420,000 for metro Philadelphia. In addition, Freddie Mac recently reported that 30-year fixed-interest rates had begun to fall.

Phoenix

Two high-end Scottsdale office towers, the Portales Corporate Center I and II buildings, sold for approximately $383 per square foot, the most ever paid for an office property in the Valley, according to Grubb & Ellis. The majority stake in the properties, located at 4800 and 4900 North Scottsdale Road, sold for $172.7 million to Principal Financial Group of Des Moines, Iowa, the Arizona Republic reported. The seller was a joint venture between locally based Forum Capital and Pacific Coast Capital Partners. The buildings have a combined 450,000 square feet of space. The previous Valley record was held by the $373 per-square-foot sale of the 24th at Camelback I building in Phoenix in 2006.

San Francisco

February was another slow month for Bay Area home sales, with new home sales and resales dropping 36.7 percent from the year-ago period, to 3,989, the San Francisco Chronicle reported. The median sales price also declined 11.6 percent in February from the same period in 2007, to $548,000; the figure also represents a 17.6 percent drop-off from the peak median sales price of $665,000 in June and July 2007. In an effort to boost home sales, the limit on conforming mortgages in high-cost regions like the Bay Area has been raised to more than $700,000 as part of the federal stimulus package. All counties except San Francisco, Marin and Santa Clara recorded double-digit drops in the median sales price in February.

Seattle

Total home sales in King County declined 36 percent in February compared to the same period last year, though house and condo sales increased by 421 from January 2008, the Seattle Times reported. Year-over-year sales in February declined 25 to 38 percent in surrounding counties, according to the Northwest Multiple Listing Service, with the biggest drop coming from Kitsap County and the smallest decline reported in Piece County. Inventory remained high in King County in February: There were 69 percent more houses, condos and townhomes on the market compared to February 2007.

Washington, D.C.

Commercial leasing activity in Washington declined 28.4 percent from 2006 to 2007, to 23.4 million square feet, the Washington Post reported. Cutbacks in federal government leasing activity as well as a looming recession are to blame, according to brokers. The slowdown could be bad news for developers in the area, where 15.8 million square feet of commercial space is currently under construction in 129 buildings. Only 18 percent of office space under construction in the District was pre-leased by the end of 2007, according to CB Richard Ellis. The region’s average vacancy rate shot up to 10.4 percent last year, the first time in three years it reached double digits, data from research firm CoStar show.

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