National market report

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

Baltimore

The developer of HarborView, a waterfront resort community along Baltimore’s Inner Harbor, put up four undeveloped parcels of residential land for sale, according to Baltimore Business Journal. The sites, which were being prepared for construction before the downturn, are now being marketed by commercial real estate firm CB Richard Ellis. Baltimore businessman Richard Swirnow’s HarborView Property Development Co. is looking to find buyers for the sites, but will also consider offers from investors looking to become equity partners to help finance the project. The sites could increase the number of residential units in the area by more than 1,500, and according to Mike Muldowney, a broker with CB Richard Ellis, each parcel of land could sell for $20 million or more. “HarborView is one of the most successful waterfront communities in downtown Baltimore,” Muldowney said in a statement. “These parcels represent a unique opportunity as the last developable parcels of this project.”

 

Boston

The 62-story John Hancock Tower in Boston’s Back Bay sold for $930 million. Boston Properties bought the glass skyscraper from Normandy Real Estate Partners and Five Mile Capital Partners, two months after it was put to auction. “It is an epic conclusion for an iconic landmark,” Finn Wentworth, a founding partner at Normandy, told the New York Times. “It’s due to a combination of real estate savvy and capital savvy.” Normandy and Five Mile took over the building in spring 2009, after winning the property at a foreclosure auction for $660.6 million, around half the price it was valued at in 2006. The two firms spent $40 million on improvements during their ownership, including an upgraded lobby and an underground parking garage. And less than a year ago, Boston-based private equity firm Bain Capital signed a 15-year lease for 208,000 square feet of space in the landmark building. In the deal, which closed Dec. 29, Boston Properties agreed to put up $289.5 million and take on the $640.5 million mortgage.

 

Chicago

According to the New York Times, plans are moving forward for the redevelopment of the long-closed U.S. Steel plant in South Chicago. The master plan, by architecture firm Skidmore, Owings & Merrill, calls for the 470-acre South Works site on Lake Michigan to be redeveloped into 13,575 market-rate and affordable homes for 50,000 new residents, 17.5 million square feet of retail and commercial space, a high school, a marina and 125 acres of new lakefront parkland, for an estimated cost of $4 billion. Chris Raguso, Mayor Richard Daley’s deputy chief of staff, told the Times, “The scale of the project is extraordinary. The fact that anybody in this economy still wants to take a shot at developing a site that is basically a landfill and is basing the development on retail and housing is also extraordinary.” Last spring, the city approved the master plan, and in September, the city awarded the project a $98 million tax increment grant that will be used to finance the development’s first phase. Pittsburgh-based U.S. Steel Corporation and McCaffery Interests of Chicago are the developers of the project.

 

Dallas

After nearly five years of discussions, executives at two top real estate firms have decided to merge, the Dallas Morning News reported last month. Fort Worth’s largest commercial real estate firm, Huff Partners, is joining operations with competitor Transwestern’s Dallas regional office. Huff Partners, which has a staff of about 30, will increase the number of employees at Transwestern’s regional firm to over 300. “We had had lengthy discussions about merging the two firms,” Jack Eimer, president of Transwestern’s Dallas central regional office, told the Dallas Morning News. “When the opportunity comes along to work with quality people like this, we want to take advantage of it.” Transwestern, which has firms across the country, oversaw $3.3 billion of leasing, financing and sales transactions in 2009. The two companies will lease and manage almost 40 million square feet of office, industrial and retail space.

 

Las Vegas

According to the Las Vegas Sun, Moody’s Investors Service and Standard & Poor’s Ratings Services are in disagreement about the credit-rating outlook of the $8.5 billion CityCenter resort complex on the Las Vegas Strip that opened a little over a year ago. Moody’s said the outlook is stable, while Standard & Poor’s said the outlook is negative. Standard & Poor’s justified its low evaluation of CityCenter’s credit rating, saying the complex experienced a “very slow operational ramp-up, largely due to weak economic conditions” since it opened. “Additionally, challenges associated with operating a new property, including heightened operating costs, access issues and lower marketing spend than typically associated with the opening of a property of CityCenter’s scale, also contributed to depressed operating performance,” S & P said. Moody’s report said the stable rating outlook reflects its view that Las Vegas operating trends have hit bottom and will improve over the next 12 to 24 months.

 

Pittsburgh

Google has reached a deal to lease another 70,000 square feet of space at the Bakery Square complex, a $130 million development in Pittsburgh, the Post-Gazette reported last month. The company now occupies 45,000 square feet on two floors of the old Nabisco plant. Google’s deal with developer Walnut Capital will expand the Mountain View, Calif.-based search company’s lease to nearly half of the 250,000-square-foot building, which will allow as many as 500 employees to work at the site. Herky Pollock, a CB Richard Ellis/Pittsburgh executive vice president who markets space at Bakery Square, said the presence of establishments like Google and the University of Pittsburgh Medical Center at Bakery Square has “created a buzz” for retailers looking to lease in the area. Google’s expansion in Pittsburgh came one month after it bought 111 Eighth Avenue in Manhattan for $1.8 billion, the year’s biggest real estate deal.

Washington, D.C.

The White House has lost nearly a quarter of its value over the last three years, according to Zillow, the online real estate marketplace, the Los Angeles Times reported. And two months ago alone, it dropped around $4 million in value. Like most other homes in the country, 1600 Pennsylvania Avenue is not worth as much as it was in 2007. Zillow estimates a 23.6 percent decline in value for the 132-room mansion, sliding from $331.5 million at the top of the housing boom to a current $253.1 million. Mark Zandi, chief economist for Moody’s Analytics, told the Daily Mail, “By the end of this year, the housing crash could be over, or, if we see foreclosures pushed into next year, we might not see a recovery until the end of 2012.”

Compiled by Lisa Euker