National market report

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


A potential sell-off of state-owned California real estate could be the state’s largest ever.

Boston

The Fed’s Beige Book market report earlier this year described the area’s commercial market as “very weak” and noted that leasing activity was way down during the first months of the year. This was clear from the recent news, reported by the Boston Globe, that chain eatery Qdoba Mexican Grill owes the city of Boston around $81,000 in real estate and personal property taxes. Although Qdoba announced a 30-store New England-area expansion plan in 2005, the chain has downsized over the last year, shuttering restaurants in Brookline and Shrewsbury. Jeff Ackerman, CEO of Chair5 Holdings, which operates Qdoba, cited the financial downturn as the root of the company’s troubles in a statement. “Along with many small businesses, we are currently experiencing cash flow issues as a direct result of these challenging economic times,” Ackerman said.

Chicago

The trial of real estate developer Calvin Boender, who stands accused of bribing an alderman, got underway, with jury selection launched early last month, according to talk radio station Chicago WLS. Boender allegedly paid off a one-time alderman with free home improvements valued at approximately $40,000 in order to facilitate a zoning change. Trouble first arose when Boender pitched plans to develop Galewood Yards, a 50-acre site, into a mixed-use project. This plan flew in the face of city planners’ ideas to transform the plot into a manufacturing center, according to the Chicago Sun-Times, and some officials claim Boender struck a deal with the alderman to turn the situation in his favor. Boender has pleaded not guilty.

Dallas

Residential sales in the greater Dallas-Fort Worth region declined for the third consecutive month in February, according to the Dallas Morning News. The 5 percent decline in home sales volume came as a blow to the market, which had seen some momentum growing in the fall, likely due to the first-time homebuyer tax credit. But while some regional analysts say they’re hopeful that the April deadline extension for the tax credit could have some lingering upward effect on the market, Texas A&M real estate economist James Gaines said last month the situation may be more dire than some expect. “If we don’t see significant pickup starting [soon], then the credit likely isn’t going to have much impact on the housing market at all, and overall recovery will be slower and dependent on general economic improvement,” Gaines said. “If sales numbers continue to slide from last year, we’re in for a very difficult year.”

Los Angeles

Comcast Entertainment Group has renewed its lease for five floors in the Wilshire Courtyard, marking one of the biggest office deals that Southern California has seen so far this year. While it’s unknown what Comcast is paying for the 10-year lease, estimates peg the deal at around $130 million, according to the Los Angeles Times. The space is best known for housing the E! Entertainment Television channel studios, which take up most of the 355,000-square-foot space.

Miami

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The apartment vacancy rate in Miami-Dade County is expected to rise and the rental rate to fall in 2010, a new national housing report from CB Richard Ellis says. The vacancy rate is predicted to rise by 1.5 points to 7.4 percent, while at the same time rental rates in Miami-Dade would decline slightly, the report says. The predictions in Miami-Dade are in contrast to other areas in South Florida. In Palm Beach County and in Broward County, the vacancy rates are projected to drop and rental rates remain steady. In Palm Beach, vacancy rates will fall by 0.6 points to 7.1 percent, and in Broward by 1.5 points to 5.2 percent, CBRE said. “Miami-Dade County continues to be influenced by the large amount of shadow inventory within the market. These factors are having less of an impact in Palm Beach and Broward counties, where vacancy rates are forecast to rebound in 2010,” Robert Given, executive vice president of multifamily investments in the CBRE Miami office, said.

Casino executives from a top Las Vegas resort are making the case for a slew of Nevada-style resorts in Florida. A proposal from Las Vegas Sands includes four to six gambling resorts, each likely to cost more than $2 billion. According to Amy Baker, the Florida Legislature’s chief economist, the state could generate up to $2.3 billion just from up-front fees. The company is particularly interested in Miami-Dade and Broward locations. This is not the first time such a bid has been made, including the more recent lobbying by the developers of the remodeled Fontainebleau in 2008. Questions remain about how such a proposal, if approved, would affect those casinos already operated by the Seminole tribe, and whether any gambling rule liberalization would apply to preexisting facilities in the state.

New Orleans

General Growth Properties’ financial woes extend far beyond South Street Seaport in New York. With the behemoth shopping mall owner’s future in jeopardy, New Orleans residents may soon see two of the city’s malls, Riverwalk and Oakwood, under new ownership. Lucky for shopaholics in the Big Easy, the two assets remain strong performers, according to New Orleans talk radio station WWL. “It’s pretty obvious that both of those properties are going to be around for the foreseeable future,” said Ivan Miestchovich, director of the economic development and real estate market center at the University of New Orleans. “It’s just a matter of who is in control of them.”

Philadelphia

The Pennsylvania Real Estate Investment Trust saw its shares jump to a one-year high last month, according to the Associated Press, after the Philadelphia-based shopping mall REIT made its $670 million credit agreement with lenders, led by Wells Fargo, public. The shares hit $12.03 last month, rebounding from a year earlier, when the stock was valued at $2.82. The REIT is reportedly using the credit pact to refinance its maturing loans, according to Ronald Rubin, the chairman and CEO of the company.

San Francisco

Approximately 1.6 million square feet of state-owned real estate in San Francisco and Oakland may be sold in what could potentially be the largest real estate sell-off in the state government’s history, according to Bloomberg news. With 7.3 million square feet across the state potentially on the block, northern California residents could see the 900,000-square-foot San Francisco Civic Center and a 700,000-square-foot office tower in Oakland under new ownership. The sale is part of an effort to cover a massive state deficit. CB Richard Ellis is marketing the listings. “We are confident that the expansive global marketing campaign we’re launching today will attract strong national and international interest in this generational acquisition opportunity,” said Kevin Shannon, a vice chairman with CBRE.

Washington, D.C.

Commercial real estate could stay solid in the nation’s capital this coming year, according to the most recent National Retail Report from commercial services firm Marcus & Millichap. Although 15,250 jobs were wiped out in 2009, this year could see as many as 35,000 new jobs, according to the report, with retail space expected to grow by approximately 2.5 milllion square feet. Despite this progress, however, little improvement is expected in asking rents. The Marcus & Millichap report projects that retail asking rents will continue to hover around $26.15 per square foot this year, after tumbling 5.2 percent in 2009.

Compiled by Amy Tennery