The Real Deal New York

National Market Report

October 31, 2007 05:00PM

Continent’s tallest tower moves forward in Chicago

What would be the tallest building in North America is moving forward in Chicago. An Irish developer, Garrett Kelleher of Shelbourne Development, acquired for $64 million the 2.2-acre site for the 124-story luxury hotel and condominium skyscraper in mid-July from the LR Development Company, according to published reports. Chicago’s planning commission already signed off on the proposal in the spring, and construction is set to begin next spring and be finished by 2010. The tower will include a five-star hotel and 300 luxury condos starting at $600,000. The cost of the tower is now at $1.2 billion.


Atlanta

Commercial
The highest price ever paid for an Atlanta office property closed recently when Bentley Forbes bought the Bank of America Plaza, the landmark 55-story office tower, for $436 million, Commercial Property News reported. The 1.25-million-square-foot building also set the Atlanta record for highest sales price per square foot, at $348.

Residential
Home owners in Atlanta are the most likely in the United States to sell their own homes without the aid of brokers. Of all the homes listed on ForSaleByOwner.com in 2005, 3.8 percent came from Atlanta, according to Inman News. The Atlanta housing market, in fact, saw a 71 percent increase last year in home owners selling their own homes.

Austin

Commercial
A local developer will build three hotels near the Austin Convention Center for $185 million, adding 1,000 rooms to downtown by the summer of 2009. Construction will begin next summer on a 650-room, full-service Marriott hotel; a 200-room boutique Renaissance Hotel; and a 150-room Springhill Suites. The hotels are expected to generate over $2 million a year in property taxes and over $4 million annually in bed taxes for Austin.

Boston

Residential
Boston home prices are dropping at a fast clip. Median sale prices in Boston dropped to $454,000 in the second quarter of 2006, down 4.3 percent from a year earlier, the Boston Herald reported. That’s the biggest year-over-year drop since the third quarter of 2001. The biggest second-quarter drop came in the city’s Leather District, where median prices fell 23.5 percent year-over-year to $449,000. Prices in tony Beacon Hill fell 8.5 percent to $480,550, the Herald reported.

Commercial
Smaller-scale tenants are helping drive a quiet resurgence in the Boston office market. The city’s overall commercial vacancy rate dropped to 10.4 percent in the second quarter of 2006 from 13.3 percent a year earlier, Reuters reported based on an analysis by Cushman & Wakefield. This vacancy drop, analysts said, was due more to smaller- and mid-sized tenants hunting for lower-priced office space than to larger companies.

Houston

Commercial
Demand for space in the Houston office market reached an eight-year high in the second quarter of 2006, according to a report from Grubb & Ellis. The overall commercial vacancy rate in the nation’s fourth-largest city fell 0.8 percent during the quarter to 16.5 percent, its lowest level in nearly four years. The rate in Houston’s central business district, in particular, fell 1.6 percent in the second quarter to 19.6 percent.

Las Vegas

Commercial
The last hurdle has been cleared for the development of the Great Mall of Las Vegas, with the City Council in late July giving the go-ahead for the project, Commercial Property News reported. The mall, which will include 800 condos in two towers and 100,000 square feet of office space, has an estimated $750 million price tag and will unfold on nearly 50 acres at the intersection of Deer Springs Way and Grand Montecito Parkway. Construction will start in early 2008, with the mall scheduled to open in by 2010.

Residential
Fueled by a population growth rate of 7,000 new residents a month, the apartment market in the Las Vegas area posted a 96 percent occupancy rate in the second quarter of 2006, the Las Vegas Business Press reported. Average asking rents for apartments increased 5.3 percent year-over-year in the second quarter to $848 a month.

Los Angeles

Commercial
The Los Angeles County office market continues to tighten, particularly in the Westside market, as it moves through 2006. Average asking rents rose 7 percent from the second quarter of 2005 through the second quarter of this year to $2.21 a square foot, the Los Angeles Times reported based on Cushman & Wakefield data, while the vacancy rate overall dropped from 13.4 percent during the same time period to 11 percent. On the Westside, the vacancy rate in the second quarter fell below 8 percent, down from more than 11 percent at the same time last year.

Residential
The first high-rise condo development in San Pedro, just south of Los Angeles, is in the works. A Beverly Hills-based developer has imploded the 12-story former Pacific Trade Center building to make way for the $175-million, 16-story, 318-unit project called the Vue, GlobeSt.com reported. The Vue is slated to break ground this fall, with units available for occupancy in early 2008. The Vue is taking shape at a site just a short drive across the Vincent Thomas Bridge from Long Beach, at Fifth and Palos Verdes streets.

Philadelphia

Commercial
At least seven new hotels are planned for Philadelphia’s Center City and airport areas in the next two to four years, a building surge fueled by an increasingly stronger hotel industry in the city. The new hotels will be small to medium-size and huddle around the soon-to-be-expanded Convention Center, according to the Philadelphia Inquirer. Among the newer hotels will be a W, which will open in the lower floors of a 30-story condo tower at the southwest corner of 12th and Arch streets.

Phoenix

Residential
The home building surge in the once booming Phoenix Valley has peaked and begun to recede, according to analysts. Home building in the Valley during the first half of 2006 was down 19 percent from the same time period in 2005, the Arizona Republic reported. Meanwhile, resales of Valley homes dropped 25 percent between the two time periods.

San Francisco

Residential
Plunging home sales this summer have signaled the end of the San Francisco housing boom, once one of the hottest in the nation. Sales of single-family homes in the city dropped 21 percent in June, USA Today reported, and the number of homes listed for sale has nearly doubled since the start of 2006. The median sales price of a San Francisco home, however, has continued to rise, though more slowly than for California overall. The median price in the city was up 3.6 percent in June from June 2005 to $760,930, while for the state overall, the price rose 6.2 percent to $575,800.

Commercial
The San Francisco office market is so strong that some analysts are saying that the city may soon see its first speculative development project since the dot-com boom. The commercial vacancy rate in San Francisco dropped from 14.8 percent in the first quarter of this year to 13.9 percent by the end of the second — down also from 17.3 percent in the second quarter of 2005. Meanwhile, the direct average asking rent for the city’s top office space rose to $39.36 a square foot in the second quarter from $32.28 a foot during the same period last year.

Washington, D.C.

Commercial
Despite a slowly rising vacancy rate during the first half of the year, the D.C. commercial market, analysts say, should finish 2006 strongly. The vacancy rate rose from around 7 percent in the first quarter of the year to 7.7 percent by the end of the second quarter, Cushman & Wakefield reported. Still, that’s below equilibrium (10 percent), and demand for commercial space remains strong. The average asking rent for commercial space in Washington was, in fact, at a near-record of $42.81 a square foot in the second quarter. It hit a record of $42.98 in the first quarter.

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