The Real Deal New York

National market report

December 14, 2010
By The Real Deal

Boston

Bain Capital, a private equity firm based in Boston, has signed a 15-year lease for 208,000 square feet of office space in Beantown’s tallest building, the John Hancock Tower, according to GlobeSt. The Hancock Tower contains 1.8 million square feet, spread out over 62 stories, and Bain’s lease brings the building, considered by many to be Boston’s most iconic tower, to 95 percent capacity. Cushman & Wakefield represented both tenant and landlord — a partnership between Normandy Real Estate Partners and Five Mile Capital — in the transaction. While the cost of the lease was not immediately clear, an anonymous source told the Boston Globe that Bain is likely to pay in the “low-$50s-per-square-foot range.” Industry experts say that Bain’s transaction reflects an overall stabilization in the Boston office market, which, like other major metropolitan regions, has taken a beating. “I’d say now we’re seeing the first signs of a stabilizing market,” Paul Leonard of Jones Lang LaSalle told the Globe. “A lot of firms are considering taking action on new space.”


Chicago

Radisson Hotels’ parent company, Carlson Hotels, has made a $125 million deal to build one of its luxury franchises, Blu, on the first 18 floors of a Chicago skyscraper, according to the Associated Press. This will mark the first North American outpost for the Blu line, the Radisson’s upscale chain. Magellan Development will manage the other 63 floors of the high-rise on East Waterside Drive, which was completed this year. Carlson’s purchase is one of the most expensive nationwide so far this year, according to the AP, with other top deals including the $200 million Tropicana Casino and Resort in Atlantic City, and the $112 million Hyatt Regency in Boston.

Dallas-Fort Worth

Home sales in the Dallas-Fort Worth area saw a powerful surge in April, according to statistics from the Real Estate Center at Texas A & M University released last month. The number of homes sold during April — 7,017 — was 27 percent higher than the same month a year earlier, according to the Dallas Morning News, while condo sales were up 49 percent. While most industry experts have pegged the surge to the first-time homebuyer tax credit, which expired April 30, the results remain encouraging, according to David Brown, head of the Dallas office for real estate research firm Metrostudy. “A big problem for the economy over much of the last year has been that the consumer has been on the sideline,” Brown said. “The home [purchases] will continue to have a positive impact on the economy over the next several months.”

Honolulu

Famed Studio 54 co-owner and New York City hotelier Ian Schrager has set his sights on Hawaii, with plans to open the Edition hotel in Waikiki. The Edition, which Schrager is developing through a partnership with Marriott International, is the first of what will be a global brand, according to the Honolulu Advertiser. The 353-unit hotel will sit directly across from the ocean. Luckily for Schrager, the Hawaii hotel market is getting back on track, according to research firm Hospitality Advisors, just in time for the summer vacation season. March marked the first time in two years that hotels in the state showed a profit, with occupancy at 70.6 percent, up from 65.2 percent during the same month a year earlier, according to Pacific Business News. Of course, it isn’t all good news — Hospitality Advisors CEO Joseph Toy said that the market still has a long way to go. “While the trend is positive, the recovery will be a long process,” Toy said in a written statement. “The uneven pace of recovery is typical in this early phase of the cycle.”

Los Angeles

After a heated debate, the Los Angeles City Council voted last month to block a proposed 3 percent increase on rent-controlled apartments, according to the Los Angeles Times. The rent increase moratorium applies to buildings constructed before 1978 with six or more units. A last-minute caveat will allow so-called mom-and-pop landlords — those who own buildings with five or fewer units — to enact the 3 percent increase. The vote was considered a major victory for tenants’ rights advocates, who argued that a rent increase was unfair to the 630,000 tenants in rent-controlled apartments.

Former Vice President Al Gore raised eyebrows last month when news emerged that he and his wife, Tipper, purchased a lavish $8.875 million villa in the Los Angeles suburb of Montecito, according to the Real Estate Channel. The over-the-top amenities at the one-and-a-half-acre property — including a spa, pool, fountains and six fireplaces — struck some in the real estate industry as out of whack with the activist’s green persona. But it might be too soon to scold Gore, who has a knack for making green home improvements. The former veep installed solar panels at his massive Tennessee home in 2007 after environmental activists criticized the amount of energy the 10,000-square-foot home consumed.

Miami

North Miami ski enthusiasts may soon be able to hit the slopes without traveling far — the buyers of the Biscayne Landings development have plans to transform the 193-acre site into an indoor snow sports center, according to the Miami New Times. The new owner of the failed development site, Solar Park Management, has plans to build a 550-foot-tall ski slope, 163-meter ski jump, snowboarding half-pipe and ice skating rink at the former landfill. But despite their grand plans, the developers encountered more than a few skeptics during a recent City Council meeting, when nearby residents expressed trepidation about the development, citing a lack of transparency.

Philadelphia

State politicians and the Philadelphia Regional Port Authority have begun soliciting bids from developers for a 239-acre site in South Philadelphia, which has been slated to become a marine terminal, according to the Philadelphia Inquirer. Governor Edward Rendell has set aside $25 million for land preparation, including environmental analysis and clearing of existing vacant housing stock. Although there is no clear front-runner yet, local officials said they’re looking for investors who can design and operate the space.

West Palm Beach

CityPlace, the retail hub of West Palm Beach, is in danger of defaulting on a $150 million loan, according to Fitch Ratings Service. The default complicates matters for Related Companies, which has an ownership stake in the site, according to the Palm Beach Post. Related is now in the process of developing a convention center hotel across the street from CityPlace. CityPlace said that no payments have been missed, but Fitch ratings believes that it will have difficulty meeting its yearly $9.6 million debt payments. According to Related chairman and CEO Stephen Ross, the company could spend $26 million of its own funds on the project and finance $39 million to help CityPlace.


Compiled by Amy Tennery

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