National Market Report

Commercial and residential real estate news briefs from around the U.S.


Baltimore’s Ritz-Carlton Residences

Baltimore


Novelist Tom Clancy
Novelist Tom Clancy has purchased three additional penthouse condos at Baltimore’s Ritz-Carlton Residences, adding to the three he already owned, the Baltimore Sun reported last month. With the new properties, Clancy has increased his square footage from 12,000 to a little over 17,000, and he now owns an entire penthouse level of one of the Ritz-Carlton’s six buildings. Clancy paid a total of almost $2.2 million for all three condos, which are located alongside the Inner Harbor. Ten months ago he paid $12.6 million for the first three penthouses. The decrease in price reflects Baltimore’s struggling luxury market. The developer of the high-end project, RXR Realty, lowered prices over the summer by 5 to 30 percent on nearly a third of the condos, and plans to lower prices on 30 more units in January. A total of 33 transactions have been completed in the 190-unit complex.

Chicago


Wells Fargo Center in Seattle
The Irvine Co. is set to acquire the 49-story Hyatt Center office building from the Pritzker family for $625 million, according to the Wall Street Journal. The curved glass and stainless steel tower on South Wacker Drive, completed in 2005, has about 1.5 million square feet of office space. The building, whose tenants include Hyatt Hotels Corp. and the office of Goldman Sachs Group Inc., is about 96 percent leased. The $400-per-square-foot sale will be the second-priciest building sale in Chicago of 2010, after KBS Realty Advisors purchased 300 N. LaSalle Drive for $655 million in July.

Las Vegas


The Cosmopolitian of Las Vegas
The Cosmopolitan of Las Vegas opened last month and will be the last new casino to open on the Strip for at least a few years, the AP reported. The Cosmopolitan, owned by German lender Deutsche Bank, was the last casino to receive full funding before loans became scarce for casino projects. The Cosmopolitan opened exactly one year after its neighbor, the Aria Resort & Casino, the central feature of the CityCenter complex, which reported an operating loss of $1.27 billion during last year’s first three quarters. The 2,995-unit Cosmopolitan was originally planned as condos, some of which are involved in litigation suits from buyers who wanted to purchase the residences in 2005. Vegas’s economy, dependant on tourism and gambling, has taken a hit the past few years, when not as many people were traveling and spending money. Construction has stopped at four other major casinos, including the half-finished Fountainebleau Las Vegas, which was bought last year in bankruptcy court for $156 million.

Los Angeles

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HCP Inc., a Long Beach-based real estate investment trust, has agreed to buy the real estate assets of nursing home giant HCR Manor Care Inc. for $6.1 billion, in the biggest private equity deal of 2010, the Los Angeles Times reported last month. HCP is gaining 338 nursing homes and assisted-living properties in 30 states. According to research firm Dealogic, there have been 46 buyouts of nursing homes totaling $20 billion in the last five years. Michael Lombardi, president of Stonebridge Holdings, a health care real estate development company in Los Angeles, told the Times that aging baby boomers are increasingly presenting real estate opportunities. “We don’t have enough medical facilities,” Lombardi said. “One of the major demands for real estate development will be health care.”

Nashville

According to the Tennessean, Chartwell Real Estate Partners announced its purchase of the foreclosed Rolling Mill Hill luxury condos. The 72 condo units in three buildings, one of them the former Nashville General Hospital, will be turned into rental apartments with prices ranging from $850 to $2,200 per month. Direct Development lost the nearly complete condos to foreclosure in September 2009 as buyers began backing out of contracts. The project, which has not had any residents, reflects the lagging condo market in downtown Nashville. But developers in the area are moving forward with plans for apartment building projects for people who cannot afford to buy homes or do not qualify for a mortgage in this market. Meanwhile, the Metropolitan Development and Housing Agency is set to complete work on a 109-unit, low-income apartment complex on the Rolling Mill Hill site early this year.

Phoenix

High-end office space is renting for less, with more than one-quarter of Phoenix’s office space vacant, the Arizona Republic reported last month. Owners of upscale office properties have been inviting tenants of less-desirable spaces to move into their buildings at little or no added cost. During a slow economic time when few businesses are being formed or expanded, there is increased competition among building owners to fill empty office space. During last year’s first nine months, 150,000 square feet of previously vacant office space was leased to tenants, a positive change compared to the same time in 2009, when nearly 900,000 square feet of office space sat unused. According to CB Richard Ellis, office rents have been dropping. The average rent in the third quarter of 2010 was $22.25 per square foot compared to $23.44 per square foot during the same time in 2009. Blake Hastings, senior vice president with the office services group at Cassidy Turley BRE Commercial in Phoenix, told the Arizona Republic, “It’s sort of a musical-chairs phenomenon.”

Seattle

Beacon Capital Partners, the Seattle area’s largest office landlord, has reached a deal with lenders to get a $2.7 billion dollar loan modified, according to the Seattle Times. After negotiating for eight months, Beacon and the servicer of the interest-only loan agreed to modify the terms. The loan was taken out in 2007 to buy 20 office towers and complexes, nine of which are in the Seattle area, including the 47-story Wells Fargo Center and the 27-story City Center Bellevue. Beacon bought the 9.9 million square feet of property from Equity Office Properties around the office market peak in April 2007. After the recession hit and vacancies rose and rents fell, the buildings experienced a financial plight. The financing to fund the purchase was the second-largest commercial real estate loan to be securitized, after the $3 billion first mortgage for the 2006 purchase of Stuyvesant Town and Peter Cooper Village in New York.

Compiled by Lisa Euker