National market report

<span style="font-style: italic;">Commercial and residential real estate news from the most active U.S. markets</span>


In Gwinnett County, many construction sites face funding troubles and foreclosure. Developer Brett Harper planned to build an office and retail center with a brook running through it in downtown Snellville. But when the Community Bank of Loganville, Harper’s lender, was shut down last fall, Harper lost his funding and had to stop mid-construction, the Atlanta Journal-Constitution reported. For the banks, the cost of maintaining the project sites can run higher than the values of the properties, and the banks could have to pay fines if the sites are damaged under their ownership.

Downtown Atlanta’s Equitable Building was auctioned off in early June for $29.5 million, 56 percent of the amount due to the project’s lender, the Atlanta Journal-Constitution reported. Building owner Equastone 100 Peachtree owed $52 million to lender Capmark Bank. Buyer 100 Peachtree Street Atlanta LLC, a Capmark affiliate, was the only bidder in the auction. Equastone bought the building for $56.8 million in May 2007, and tax records place the current value of the half-vacant building and the land at about $45 million. The sale price indicates how much buyers are now willing to pay for Atlanta’s Class A office space, local experts said.


The Massachusetts Division of Banks issued 87 cease-and-desist orders against mortgage brokers and lenders, the Boston Globe reported. The brokers and lenders allegedly failed to provide required financial information, such as evidence of posting bond money, due by the end of March. Five of the companies that received cease-and-desist orders had submitted information as of early June and are no longer subject to the order. The others may not accept new applications and must transfer pending applications to other lenders or brokers.


The U.S. Postal Service announced in early June that it will auction the former Chicago Post Office on Aug. 27, the Chicago Tribune reported. The suggested starting bid for the 3 million-square-foot, 14-story building at 433 West Van Buren over the Eisenhower Expressway is $300,000, but there is no minimum bid. Since 1995, when the building became vacant, proposed uses for the space have included a casino, a water park and a $300 million condo, office and hotel project. That project received initial approval from the city two years ago, but the Postal Service’s deal with the developer fell through.

Las Vegas

The average listed home price has fallen 16 percent in Las Vegas during the past year, the Las Vegas Review-Journal reported. The average price fell from $330,870 to $276,780, according to data from Trulia, a real estate search engine company. Thirty percent of the listed properties in Las Vegas have seen at least one price cut. Of homes listed for more than $150,000, 35 percent have seen at least one price cut, while 23 percent of homes listed for less than $150,000 have seen cuts. A higher percentage of single-family homes than condominiums saw cuts.

The framing for the $50 million Mercer condominium project was taken down in late May, following a construction halt in November. The project is the first in the Las Vegas area to be taken down, the Las Vegas Review-Journal reported, but it is unlikely to be the last, local real estate experts said. Tom McKinley, managing member of Vanguard Construction, former general contractor for the 113-unit project, said he expects developers JDL Development and Modern Living Holdings to sell the property. Jim Letchinger, JDL president, said the condo project had been 60 percent sold and had complete financing.

Los Angeles

Properties in several parts of Southern California are selling for less than they sold for 20 years ago, according to the Los Angeles Times. In 14 zip codes in the region, mostly in desert communities, median prices are below what they were in April 1989, according to real estate information service MDA DataQuick, meaning that many homes have lost all of their appreciated value. In one Lancaster zip code, the median home price was $87,000 in April, down 74 percent from the peak of $334,500 in 2007. Such extreme value losses in one downturn are unprecedented, economists said.


Harleysville National Bank & Trust Co. said in June that it had been given until the end of the month to gain more capital to cover possible loan losses. The bank, which has lent to many suburban Philadelphia homeowners, has been hit hard by the real estate downturn. The bank had $3.6 billion in loans as of the end of March, half of them backed by first mortgages, home-equity loans and loans to residential builders, according to the Philadelphia Inquirer. Harleysville CEO Paul Geraghty said he expected to raise $65 million to $120 million from private investors.

Craig Spencer, developer of the Residences at Ritz-Carlton at 15th Street and South Penn Square, has not let the downturn in the luxury real estate market change his plans for his 270-unit project. Spencer said he turned down an offer from a potential buyer who asked for a $50,000 price cut on a unit. The project cost developer Arden Group about $300 million, and unit prices range from the $500,000s to $12 million, the Philadelphia Inquirer reported. So far, 80 units in the project have closed, and Spencer expects half of the 37 pending contracts to fall through.


Economic problems are hitting the developers of some of Phoenix’s most upscale condominium projects, the Arizona Republic reported. At the Summit at Cooper Square, a two-year-old luxury building, the city threatened to post a water shut-off notice because the project was three months behind on payments. Weitz Company, which built the project, sued W Developments in November, alleging that the final payment on the Summit was not made. At other projects, financial difficulties have led to the loss of some luxury amenities. Owners have lost their valet parking at Landmark Towers on Central Avenue, and owners at nearby Orpheum Lofts have filed a lawsuit over parking issues.

As the real estate downturn continues, senior housing projects remain a fairly active market in Arizona, with more than 2,200 units planned across seven projects, according to the Arizona Republic. Developer Avenir Group plans to build a 500-unit project at 91st Street and Legacy Boulevard. Silverstone, developed by Plaza Cos. and Classic Residence by Hyatt, will consist of 270 units at Scottsdale and Pinnacle Peak roads. Life Care Services’ Sagewood will have 342 units southwest of Loop 101 and Tatum Boulevard. Several of the projects expect move-ins to begin early next year.

San Francisco

A group of Walnut Creek residents and a local mall owner are hoping to overturn the City Council’s approval of a Neiman Marcus slated to open at Broadway Plaza. The residents complain that the city already has too much retail and that the 90,000-square-foot store will only create traffic and parking problems. Taubman, the company that owns the Sunvalley mall in Concord, is paying people to gather signatures for a petition against the Neiman Marcus opening, the San Francisco Chronicle reported. The Neiman store was originally slated to be 107,000 square feet, but the developer scaled back the plans after residents filed suit in January.


GIS International, the Bellevue developer that proposed a hotel and condo tower in Seattle’s Denny Triangle, put the property up for sale in early June. The site, at Minor Avenue and Stewart Street, is on the market for $3.995 million. The developer planned to build 180 condos, 132 hotel rooms and 4,800 square feet of retail space and underground parking. But the developer never pursued permits for the project, according to city records, and city rules would have prevented the proposed tower from being built because a 440-foot residential tower was planned for the adjacent lot, the Seattle Times reported.

Washington, D.C.

Lord & Taylor announced in late May that it would close its store at the Landmark Mall in Alexandria on June 12. Company officials did not give a reason for the store closure, but analysts said the mall’s vacancy rate is growing and the demographics of the area are no longer a fit for Lord & Taylor. The Landmark Mall is owned by General Growth Properties, which has filed for Chapter 11 bankruptcy, and Landmark also filed for bankruptcy protection independently, the Washington Post reported.

Compiled by Sara Polsky