Washington area capital of a condo boom
The Washington metro area is about to be flooded with freshly built condos, creating new neighborhoods and bolstering already bustling suburbs. More than 47,000 new condos in 322 different development projects are expected to come onto the Washington area market in the next three years, according to real estate information firm Delta Associates. There were 18,872 new condo units for sale in the area at the end of September, up from 3,083 in September 2003. New high- and mid-rise condos are being built, according to the Washington Post, in suburbs Tysons Corner, Reston, Alexandria, Shirlington, Arlington, Rockville, and Bethesda. Condos will also carve new residential neighborhoods, the Post reported, out of areas like the 14th Street corridor, Columbia Heights, the Chinatown area, and the streets around the New York Avenue Metro station in northeastern Washington.
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Atlanta
Commercial
The Atlanta office market improved slightly in the third quarter of 2005. The market had a positive market absorption of 473,433 square feet and an average asking rent of $20.46, Commercial Property News reported, up from $20.11 at the end of 2004. Much of the third quarter leasing activity reportedly sprung from smaller and mid-size businesses signing new and expanded space contracts.
Residential
Unlike in several major U.S. cities, Atlanta’s housing market had a strong start in the final months of 2005. Home sales in the metro area increased 6.3 percent and the average sales price rose 7.1 percent during the third quarter, according to the Georgia Multiple Listing Service. The average sales price was $210,860 for the third quarter.
Boston
Residential
Houses in the Boston area are sitting on the market longer and prices have dropped toward the year’s end, the Boston Globe reported. Houses priced from $300,000 to $699,000 both saw big increases in inventory and in the time it took to sell them, compared to the autumn of 2004, according to the Massachusetts Association of Realtors. As of late October, around 27,000 single-family homes were listed on the market across the state, about 40 percent more than were listed during the same time last year.
Residential
At the same time house sales slow, the condo market in Boston has also cooled. For the first nine months of 2005, according to the Boston Globe, condo sales fell 12.3 percent over the same period in 2004 from 3,573 to 3,132 condos. The median downtown condo price increased 10 percent over the same period to $462,000. One reason for the ebbing in sales was a downtown building boom that has pushed increasingly expensive new condos onto the market.
Charlotte
Residential
Unprecedented condo development is happening in downtown Charlotte. At least eight high-rises are planned or under construction in the mostly suburban city, including 210 Trade considered by some the bellwether for whether this sort of development will succeed in the city, according to the Charlotte Observer. The 53-story 210 Trade will have 419 luxury units, plus an in-house cigar bar and spa. The first units should be ready by 2007.
Chicago
Commercial
The downtown Chicago office market emerged from the third quarter of 2005 with a high vacancy rate and negative absorption. Downtown’s vacancy rate for the quarter was 15.7 percent, up from 15.5 percent the previous quarter, according to a report from CB Richard Ellis. When sublease space was included, the vacancy rate jumped to nearly 20 percent. Absorption rates for the downtown Chicago office market remained negative at the end of the quarter, with 254,000 additional square feet becoming vacant. That’s still lower than the same period last year, when it was negative 390,720 feet.
Residential
Chicago’s Southwest Side is seeing some of the city’s briskest residential development as 2005 closes. New projects include the 36-home McKinley Park Manor and the 69-townhouse McKinley Park, the Chicago Tribune reported. Other projects announced this year include a development of 140 townhouses and 96 condos at 36th Street and Western Avenue in Brighton Park and a 250-unit development at 51st Street and Lawndale Avenue in West Eldon.
Las Vegas
Commercial/Residential
Developers broke ground in late October on the $1.8 billion Cosmopolitan Resort & Casino, a mammoth two-tower condo-hotel-casino hybrid on the Strip between the Bellagio and the planned MGM Mirage CityCenter. The Cosmopolitan will include a 75,000-square-foot casino, 300,000 square feet of retail and restaurants, and a 5-acre pool, the Las Vegas Sun reported. A tower of 1,300 luxury condos sold out in 120 days, according to the Sun, and the Cosmopolitan is not expected to open until 2008.
Los Angeles
Residential/Commercial
One of the tallest condo projects ever in downtown Los Angeles highlights that city’s ongoing attempt at urban infill. KB Home and the Lennar Corporation announced plans in late October for two high-rises one 40 stories, the other 27 with 700 condos and 25,000 square feet of retail space, just across South Figueroa Street from the Staples Center, the L.A. Times reported. Condos have been going up in downtown L.A. at a brisk pace since 1999, the Times reported, with nearly 8,000 units in 84 buildings either planned or built.
Miami
Commercial/Residential
The aftershocks of Hurricane Wilma may reverberate for a long time across South Florida real estate. In downtown Fort Lauderdale, 35 percent of office space was initially left “not functional for use,” according to the Broward County Economic Development agency, and, in downtown Miami, several offices had to be cordoned off with police tape following the October hurricane. On the residential side, new developments were slowed because of Wilma, the Miami Herald reported, and some speculate that buyers may be dissuaded from South Florida because of future hurricanes.
Philadelphia
Residential/Commercial
Philadelphia’s downtown condo market is so hot it’s taking a big chunk out of the hotel industry there just as the city’s Convention Center is set to double in size and increase demand for hotel rooms by 25 percent. The hotel room count in downtown is down 10 percent since its recent peak in 2002, according to the Philadelphia Inquirer. Much of this decrease is due to hotel owners cashing in on converting parts or all of their hotels. The condo conversions, however, have helped spur high occupancy rates at downtown hotels. Through the first nine months of 2005, the Inquirer reported, downtown hotels filled 74 percent of their rooms at an average daily rate of $139.
Commercial
Steep vacancy rates in some of downtown Philadelphia’s top office towers are causing landlords to cut asking rents, sometimes drastically, in a commercial market where the overall vacancy rate was more than 17 percent during the summer. One Liberty, for instance, had asking rents between $36 and $38 a square foot at the start of 2005, the Philadelphia Business Journal reported. By the fourth quarter, those asking rents had generally declined by $10 a foot.
San Francisco
Commercial
Tishman Speyer bought in late October what turned out to be the most expensive office space in San Francisco history. The New York developer bought the 283,000-square-foot 550 Terry Francois Boulevard for $600 a square foot, the San Francisco Business Journal reported. The six-story office building, the only one in the Mission Bay neighborhood, is leased entirely by the Gap Inc. through October 2017.
Commercial
The San Francisco office market should exit 2005 strongly. Commercial asking rents increased during the third quarter and the vacancy rate for prime space declined for the eighth straight quarter, the San Francisco Chronicle reported. Asking rents in San Francisco’s central business district climbed to $28.86 a square foot in the third quarter, and the vacancy rate was 13.1 percent. If the city’s job market keeps growing and the pace of conversions of older commercial properties to residential uses continues, then San Francisco’s vacancy rate could drop to 11 percent by the end of 2006, the Chronicle reported.
Seattle
Residential/Commercial
Seattle’s apartments are selling as briskly as the city’s houses. Some $2.1 billion worth of apartments have changed hands in the Seattle metro area in 2005 as of early November, the Seattle Times reported. That’s triple the level of two years ago. Seattle apartments are selling for an average of $140,000 per unit almost 60 percent higher than two years ago. That makes a market good for landlords, the Times reported, but probably bad for tenants as rents are expected to spike sharply.