Bay Area gets hotel boost
Hotels in San Francisco are finally seeing positive growth after an industry slump. PKF Consulting, which tracks industry trends, found San Francisco’s average daily hotel rate at $167 this year, only $2 short of the city’s record-high 2000 average rate. Occupancy rates, now at 78 percent, are also expected to continue rising. Brokers predict that by 2010, average daily hotel room rates will be above $200 in the city. The few new hotels in the pipeline will also drive up rates. And a recent labor agreement between 13 hotels and more than 4,000 hotel workers has also helped fuel the turnaround.
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Atlanta
Commercial
Atlanta is grappling with its biggest commercial real estate slump in 10 years, according to brokerage Cushman & Wakefield. The downtown vacancy rate hit 29 percent in the second quarter, the nation’s highest. (In the third quarter, it fell to 27.2 percent.) Some high-rise office buildings in downtown have vacancy rates as high as 80 percent, and Fortune 500 companies are moving out of the city center. Brokers say overdevelopment is partly responsible. About 3.9 million square feet of office space was under construction during the third quarter of 2006. Additionally, Atlanta’s unemployment rate stood at 4.5 percent at the quarter’s end. In 2000, it was 2.6 percent.
Residential/Commercial
A big property sale should speed revival of the downtown railroad district, once Norfolk Southern railroad sells a quartet of Spring Street buildings. Two historic buildings in the former railroad headquarters complex will be turned into 250 apartment units, which will be a mix of condominiums and rentals, the Atlanta Journal-Constitution reported. Developer Wood Partners also plans a new residential building with 250 units near the railroad tracks and a pair of office buildings. The $80 million complex will bridge the surrounding residential communities and the downtown business district.
Austin
Residential
East Austin is seeing a wave of residential development as trendy residential lofts replace industrial and warehouse space, the Austin Statesman reported. About a dozen condo and rental projects are expected to bring more than 900 units to the neighborhood. Real estate analysts say the construction boom is due to low land prices and demand to live near downtown. One of the new condo projects is the 67-unit Este, on East Sixth Street, where individual unit prices will range from $180,000 to $275,000.
Boston
Residential
Home prices are falling in Boston, but residents aren’t seeing a break on taxes. Massachusetts property taxes, which have shot up 42 percent this decade, will continue to rise this year despite the softening housing market, the Boston Globe reported. The average statewide property tax bill grew to $3,703 from $2,577 six years ago. The rises are a result of a flawed assessment system, critics say, where tax increases are based more on local budgets rather than assessed values. Many brokers say the residential sales market is hurting as a result of higher taxes.
Commercial
The $563 million CitySquare development is seen as a leading driver of Downtown Worcester’s revitalization, as the residential, office and commercial space replaces the vacant Worcester Common Outlets mall complex, about 49 miles west of Boston. Costs for the urban village project will be partially met with state bonds, the Worcester Telegram reported. The project will entail demolition work, construction of new streets and the design of underground parking garages.
Chicago
Commercial
More New York investors are putting their money in cheaper Chicago office buildings. Last month, New York-based investor Robert Gans and partners bought the Citadel Center, a trophy office property on South Dearborn Street, for $560 million. The price is about $370 a square foot for the 1.5-million-square-foot building constructed in 2003. A similar structure in New York would cost around $800 million, or $530 a square foot, Crain’s reported. Also sold this year to New York-based investors was 311 South Wacker Drive and 19 South LaSalle Street, which sold for $292 million and $29.8 million, respectively.
Residential
Demolition started last month on the long-shuttered Columbus Hospital to clear the 3.5-acre site for what will be the first major multifamily project to go up in Lincoln Park since the 1970s, the Chicago Tribune reported. The triple tower high-rise will include 312 units and 13 townhouses. Few big new projects have been built in Lincoln Park because appropriate sites are scarce. That should help insure the project’s success despite the slow market, brokers say. The $350 million project is expected to be finished in about three years.
Las Vegas
Commercial
Developers plan to build a 50-plus story jewelry marketplace in downtown, the Las Vegas Sun reported. The World Jewelry Center will look to attract corporate jewelry and gem offices from around the world, brokers say. Approximately seven of the top floors of the planned tower will be sold as luxury residential condos. The 5.4-acre site is located between Interstate 15 and the Spaghetti Bowl freeway interchange. The jewelry market will include a smaller retail building open to the public and a jewelry museum.
Commercial
The Las Vegas office vacancy rate is rising, a sign the market is headed for a slump. During the third quarter, the vacancy rate reached 9.9 percent and is predicted to go as high as 12 percent in the next year, In Business Las Vegas reported. Analysts say the amount of office space under construction is responsible for the rising vacancy rate. Brokers predict the market glut will worsen with another 4.4 million square feet of office space under construction and 6.8 million square feet in the planning stages.
Los Angeles
Residential
Home sales in Los Angeles County continue to drop as the real estate market slows. At the end of September, sales volume was down more than 31 percent from the year before, despite the median price increasing 4.4 percent to $585,700 during the same period, the Los Angeles Daily News reported. Sales are taking an average of 54 days rather than 30 days a year ago, though brokers say the market is still performing steadily.
Residential
The housing slowdown has led to major layoffs at Los Angeles-based mortgage giant Countrywide Financial Corp. The mortgage company is cutting 5,000 jobs nationwide to save $500 million a year, the Los Angeles Daily News reported. Most staff cuts are expected in the Los Angeles area, where Countrywide has around 18,000 employees. (The company has more than 55,000 employees total.) Real estate financing has remained flat despite a decline in interest rates during the past quarter, and Countrywide said it expects home sales will slow dramatically during the fourth quarter.
Phoenix
Commercial
Phoenix’s public school system will see a bigger bump in funds for new school construction. The state’s Joint Legislative Budget Committee agreed to an increase of 12.2 percent per square foot, the Arizona Daily Star reported. The increase reflects the nationwide jump in construction costs. The rise is estimated to add more than $38 million in taxpayer costs to the $361 million already in the budget.
San Francisco
Residential
The decommissioned Treasure Island Naval Station will be redeveloped into a self-sufficient community under a $1.2 billion plan approved by the city last month. The 403-acre island in San Francisco Bay and its smaller neighbor, Yerba Buena Island, will get 6,000 homes, a new ferry terminal and 300 acres of open space, the San Francisco Chronicle reported. The lead developer in the project is Kenwood Investments.
Seattle
Commercial
Seattle is the best office market in the U.S. to invest in right now, according to a survey by the Urban Land Institute. The survey found tight supply and office rents set to rise in the city, the Wall Street Journal reported. Seattle is also expected to benefit more than any other West Coast city from Asia’s economic growth, according to the annual Emerging Trends in Real Estate 2007 report.
Washington, D.C.
Residential/Commercial
Along with major redevelopments, some areas of Washington, D.C., are also getting renamed. Southeast Waterfront, which is seeing a boom in commercial and office construction, is now being called “The Yards” because of its proximity to the Navy Yard, NBC4 reported. The intersection of Pennsylvania and 7th Street is now being called Penn Quarter by some. Real estate agents are calling the neighborhood north of Massachusetts Avenue NoMa. South of Florida Avenue is — of course — SoFlo.