National market report

<i>Commercial and residential real estate news briefs from the most active U.S. markets</i>

Boston

A Boston developer has hit a few snags in its plan to build a giant residential tower. Goldman Properties wants to construct a 25-story, 232-unit apartment building and parking garage in the Fort Point Channel neighborhood that, if built, would be the tallest structure in the neighborhood. Goldman will have to make concessions in order to gain construction approval for the 315,000-square-foot development from the Boston Redevelopment Authority, the Boston Globe reported. The developer’s options include building 30 affordable housing units or donating another property for local artists displaced by the project. To sweeten the deal, Goldman has offered to pony up $900,000 to help build more parks in the neighborhood.

Chicago

The Colorado Division of Securities filed an official sanction against Chicago real estate group GHP Capital Corp for violating Colorado securities registration rules, the Denver Business Journal reported. In its report, the Colorado regulatory group alleges that GHP called Colorado residents in an attempt to lure them into investing in Chicago real estate projects. The Division of Securities claims that GHP did not register its security offering with state officials. Additionally, because the real estate group’s offers were made through cold calls, the securities division argues that the investment opportunity was a public one, not a private offering that would have been exempt from the public registration rules.

Dallas-Fort Worth

Commercial real estate analysts are abuzz with news that electronics retailer RadioShack may move its headquarters out of Texas, after spending over 45 years located in the Dallas-Fort Worth region. The company was granted a rent-free, three-year lease on its five-building campus in 2008, when Tarrant County College bought the spot. With the 2011 deadline looming, reports have surfaced suggesting that the company may set up its headquarters in Charlotte, N.C.; Nashville, Tenn.; or Albuquerque, N.M., according to the Dallas Morning News. If it chooses, the company also has an option to extend its lease through June 2013. RadioShack declined to comment on the reports. Currently, 1,700 RadioShack employees work in the company’s 900,000-square-foot corporate campus.

Detroit

Some good news for the perennial Charlie Brown of the national real estate market: The number of unsold homes in Detroit is approaching normal levels, according to third-quarter data. Inventory is at an 8.4-month supply, the Detroit Free Press reported, compared to the same quarter a year earlier, when the supply of unsold homes was at 13.4 months. Normal levels are considered to be a three- to six-month supply. Still, it may be too soon to celebrate, according to Dan Elsea, president of brokerage services with Real Estate One, Michigan’s largest real estate company. Elsea said, “Inventories are artificially low because of banks holding back and the 90-day moratorium on foreclosures in Michigan.”

Honolulu

Hawaii’s hotel industry is struggling this year, as the first three quarters of 2009 have yielded a $455 million drop in hotel room revenue from the same time period a year earlier, according to a recent report from the Triangle Business Journal. Average room revenue fell to $103 a night in September, compared to $112 during the same month a year earlier. Although there is some concern among analysts over how these figures could affect new hotel developments in the coming years, Joseph Toy, president and CEO of Hospitality Advisors, said that sustainable recovery in the industry could begin as soon as summer 2010. The latest data could mean bad news for the Trump Organization, which recently opened its Trump Waikiki — a condo-hotel development in Honolulu. The development, which is 38 stories and includes 463 units, offers room rates ranging from $250 to $8,000 per night.

Las Vegas

A commercial real estate recovery in Sin City is not in the cards, at least for now. A report from the Urban Land Institute and accounting group PricewaterhouseCoopers said the market will get worse in Las Vegas before it gets better. “After more than a year spent in suspended animation lagging the already shattered housing market, the commercial real estate industry will hit bottom in 2010,” the report said. Local unemployment has reached nearly 14 percent and the city’s crucial hotel industry is grappling with dwindling occupancy, the Las Vegas Sun reported.

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Los Angeles

As the magazine goes, so goes the mansion. Playboy Enterprises is gasping for breath, with its year-over-year print revenue down 44 percent in the third quarter and its iconic Holmby Hills estate in “disarray,” the Wall Street Journal reported. The Iconix Brand Group is in talks to buy the racy brand and, if the deal goes through, the mansion would be a part of the package. The magazine empire’s 83-year-old founder, Hugh Hefner, pays Playboy Enterprises rent to live there.

Miami

A year after a celebrity-studded gala reopening of the $650 million renovation of the Fontainebleau Miami Beach, financial woes have overshadowed the glitz. Contractors say they were ordered to work double or triple time to get the Fontainebleau ready for a Nov. 15, 2008, party, replete with Victoria’s Secret models stalking the runway in a televised lingerie show, and are owed more than $60 million, the Miami Herald reported. Bankruptcy for the hotel is a possibility, a senior executive admitted, saying the $600 million construction loan weighs heavily on its finances. The investment arm of the Dubai government, which paid developer Jeffrey Soffer’s ownership group $375 million for a 50 percent stake in the Fontainebleau, exercised its option to take over restructuring negotiations if there were problems with the resort’s loans. Nakheel Leisure managing director Hamza Mustaffa said his company is working with Soffer.

New Orleans

Two of Nicolas Cage’s foreclosed homes, both in New Orleans, were brought to auction by Regions Bank, which had originally seized the properties. The first, a 13,000-square-foot French colonial home priced at $3.4 million this spring, sold for $2.2 million, the Wall Street Journal reported. The other, the supposedly haunted LaLaurie Mansion in the city’s French Quarter, originally priced at $3.55 million, went for $2.3 million. Cage reportedly owes the city $151,729 in unpaid taxes, which the city extracted from the deal. The actor has already shed properties in New York City and beyond, and reportedly owes the IRS around $6.3 million in unpaid taxes.

Phoenix

Alternative energy group GWS Technologies and Dominion Real Estate Investments teamed up to construct a 36-acre solar energy farm in the suburb of Florence, Ariz., just outside Phoenix. The farm is one of the largest development projects currently in the state, Globe Newswire reported. When completed, the solar energy site could provide power for roughly 12,000 homes. The project could be crucial for the state, as all regulated utilities will be required to generate 15 percent of their power using renewable resources by 2025, according to new standards set by the Arizona Corporation Commission.

San Francisco

San Francisco home prices have seen their first increase since November 2007. The median price for houses and condos in the nine-county Bay Area region rose 4 percent in October from a year earlier, to $390,000, according to research firm MDA DataQuick. The number of homes sold was also up, rising 4.2 percent to 7,933 sales. The boost in prices was the result of fewer foreclosure sales and an uptick in the sale of homes priced over $500,000, according to a report by Bloomberg.

Seattle

The 20-story Expedia tower in the Seattle suburb of Bellevue sold for $168 million. The transaction marks the biggest real estate deal in Seattle in 2009 so far, according to the Seattle Times. Development group Hines sold the building to HRPT Properties Trust. Travel company Expedia signed a 10-year lease on the building in 2007 and, despite the company’s recent layoffs, has no reported plans to vacate the space. HRPT said it is confident the rent it will collect from Expedia over the next several years will make the deal worthwhile.

Compiled by Amy Tennery