National Market Report

Atlanta

Atlanta is developing the Beltline, the largest urban renewal project in the city’s history. Atlanta Beltline Inc., the development organization behind the project, is planning a 22-mile loop with trails, parks, offices and retail. The estimated cost is $2.7 billion over 25 years. However, much of the money for the project remains on hold because of legal challenges to the special tax district created to fund it, so the city is buying land with other sources of revenue, the Atlanta Journal-Constitution reported.

Boston

Rising home sales and slowing price declines have many hopeful that Massachusetts’ residential market is on the road to recovery after the state’s worst slump in more than a decade. According to the Massachusetts Association of Realtors, the number of single-family homes sold in the state rose almost 13 percent in January compared to a year earlier. Sales were strongest on Boston’s South Shore and on Cape Cod, the Boston Globe reported. The median price of a single-family home was $340,000, 2.4 percent lower than a year ago but virtually unchanged for the past four months. Analysts say the improving affordability of homes in this market has fueled demand. Massachusetts experienced record price appreciation during the state’s housing boom of 2002 through 2005.

Chicago

While office buildings in downtown Chicago have had relatively flat rental rates for several years, new office space is generating higher asking rents and lower vacancy rates, the Chicago Tribune reported. According to a report by Jones Lang LaSalle, the overall average asking rent for the downtown office market at the end of 2006 was $26.83 a square foot, close to the peak of $27.27 a square foot achieved four years earlier. In 51 newer towers, which were built or renovated since 1985, leases are on average 30 percent higher than in older buildings.

Hotel-condos for part-time residents are hitting the market in Chicago. Elysian Worldwide LLC and Donald Trump are among the developers creating these hybrid residences, the Chicago Daily Herald reported. The Trump Tower, set to open in 2008, has sold 76 percent of its units, which range in price from $850,000 to $3 million. Developers for the Elysian say wealthy buyers who want part-time second homes in the city are driving demand for hotel-condos. The Mandarin Oriental Hotel Group also has hotel-condo projects in the works in the city.

Las Vegas

Despite a glut of luxury condo units in Las Vegas, even more are in the works. Market analysts say approximately 98,400 luxury condo units are in the long-term pipeline for the city. Currently there are 3,900 units of existing housing stock and 11,100 under construction. Meanwhile, 12,600 units have been canceled or are suspended. According to Applied Analysis, this points to a severe glut. Another 3,500 units will be added to the inventory before 2010, for a total of 18,500 units, GlobeSt.com reported.

Los Angeles

Rates for medical office space have spiked by up to 40 percent in Los Angeles over the last five years. Rents for medical office space have hit $5 per square foot for space in West Los Angeles. A lack of new construction has pushed rents to $4 per square foot in other areas of Los Angeles, GlobeSt.com reported. According to Ramsey-Shilling Commercial Real Estate Services, demand for medical space in Los Angeles has driven vacancy to 5 percent or lower in most markets. Analysts say the tight market is a result of growing demand and relatively little new construction.

Philadelphia

Old Philadelphia office buildings are getting makeovers as developers renovate run-down properties. Buildings over 25 years old are now nearly obsolete, the Philadelphia Business Journal reported. Renovating and repositioning an office building in Philadelphia typically costs $145 a square foot, compared with $190 or more a square foot for new construction, the paper reported. In one example, BPG Properties of Philadelphia and Brandywine Realty Trust spent an estimated $28 million redoing 555 Lancaster Avenue in St. David’s, a suburb of Philadelphia.

A Philadelphia developer plans to take the next step beyond Levittown, the suburb created from scratch in the 1940s. Arcadia Land Co. is developing a town called Bryn Eyre on 3,200 acres off the Morgantown exit of the Pennsylvania Turnpike, the Philadelphia Business Journal reported. The community, which is Welsh for “Eagle Hill,” would have 12,000 residences and 5 million square feet of commercial space. Bryn Eyre will eventually have a population of 25,000 as the town develops over the course of the next 25 years. Developers plan to sell off portions of the site to other developers or to create joint ventures during the buildout of Bryn Eyre.

Phoenix

Home building activity in Phoenix reached a five-month high in January, a sign the residential market is rebounding. According to RL Brown’s Phoenix Housing Market Letter, permits for single-family houses climbed to 2,876. This marks the highest number of permits issued since August 2006, when builders had more than 3,000 new home permits, the Arizona Republic reported. Analysts say the uptick in housing construction comes as builders are cutting prices on homes and buyers are heading for outlying communities.

Downtown Phoenix is getting its first high-end commercial office tower in eight years. A 26-story office tower is in the works and will fill demand for Class A space in downtown Phoenix, the Arizona Republic reported. Analysts say the $160 million project will increase high-end office space downtown, where vacancy rates are about 5.5 percent. One Central Park East, a 700,000 square foot tower with 475,000 square feet of office space, will open in 2009. Rents for One Central Park East will likely run between $35 and $40 a square foot.

San Francisco

Condo developer Nat Bosa is moving into San Francisco. Bosa Development, which has built 22,000 units on the West Coast over the past 25 years, is beginning work on a group of projects that will bring 1,700 condos and total $1.2 billion in construction. The first residential development, Radiance at Mission Bay, will have 99 units in one tower and another 317 units in a second tower, the San Francisco Business Times reported. Bosa has built high-rises in Vancouver, Hawaii, Calgary and San Diego.

Washington, D.C.

Washington, D.C.’s K Street will see several office space expansions and renovations this year. New York City-based ING Clarion is developing 52,000 square feet of office space at 2121 K Street, GlobeSt.com reported. Several other properties on K Street have added space — and boosted asking rents — to meet growing demand. Class B buildings located on K Street are being renovated and repositioned as high-end Class A rental space. Three buildings — 2021 K Street, 2175 K Street and 1129 20th Street — have all announced renovations and added space. Recent changes to zoning laws have made the expansions possible.

Residential price growth in Washington, D.C. has slowed. The Washington, D.C. area has fallen out of the top 10 in a ranking of regional appreciation rates, the Washington Business Journal reported. According to a quarterly report from the Office of Federal Housing Enterprise Oversight, home prices in Maryland were up 9 percent from a year ago last quarter, putting it in 12th place among states for price appreciation. With an appreciation rate of 7.54 percent, D.C. ranked 18th, and Virginia ranked 19th with an appreciation rate of 7.46 percent.