National market report

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


Atlanta


Atlanta’s attempts to recover from the condo glut are drawing new auction businesses to the area, the Atlanta Journal-Constitution reported. Sellers can still profit on auctioned units if they are sold in bulk, said Andrew Gardner, vice president of condo operations for Lane Co., an Atlanta-based developer. Lane auctioned more than 40 units in 90 minutes in Midtown Atlanta earlier this year. Another auction was scheduled for last month, with the goal of selling nearly 60 units in two days. Auction bids generally start one-third below the original listing price for a unit.

Boston

Local communities are battling over nearby residential and commercial developments, the Boston Globe reported. Framingham is suing Natick over Chrysler Apartments, a $65 million affordable-housing complex off Speen Street, near the Framingham-Natick border. Framingham officials say the project would create more traffic — another 2,714 vehicle trips per day — than the town can handle, and the lawsuit asks for money for road improvements. Newton and Brookline are also fighting over a housing, office and retail project called Chestnut Hill Square. Brookline officials, like those in Framingham, say the Newton project will generate too much traffic.

Chicago

Chicago wants to tear down most of Michael Reese Hospital, a South Side medical facility, to build an Olympic village for the 2016 Summer Games. But state preservation officials say the hospital, whose main building was built in 1907, may be historically significant, the Chicago Tribune reported. The Illinois Historic Preservation Agency is legally required to assess the property before any project at the site is allowed to proceed, but the city has already agreed to buy the hospital campus for $86 million and sell it to developers for the $1 billion Olympic village.

Las Vegas

Two luxury condominium projects on Las Vegas Boulevard, the 275-unit Streamline Tower and the 359-unit One Las Vegas, have hit financial trouble. Streamline, which is 10 percent sold and has already had some move-ins, filed for Chapter 11 bankruptcy protection in late April, the Las Vegas Review-Journal reported. One Las Vegas, which was completed in June, has been taken over by its lender, Corus Bank of Chicago. Corus will sell the project’s units, which were originally priced starting in the $400,000s, at a 50 percent discount. Several other Las Vegas projects, including Newport Lofts, Cosmopolitan, Turnberry Towers and Mira Villa, recently went back to their lenders.

Short sales are increasing in Las Vegas, but according to local brokers, the bank approval process for these sales remains slow, the Las Vegas Review-Journal reported. The city saw a 27.5 percent increase in short sales in April from March, with 246 short sales, according to Rob Jenson of the Jenson Group. There were 8,119 short sale units on the market in April, a 4.3 percent increase from the previous month. Distressed sales made up 86 percent of all Las Vegas sales in April, and the numbers have been similar for the last seven months.

Los Angeles

Los Angeles’ largest office landlord, Maguire Properties, lost $53.9 million in the first quarter of this year, following 18 months of losses, the Los Angeles Times reported. Low demand for rental space and $5 billion in debt are hurting the owner of U.S. Bank Tower, Wells Fargo Center and other buildings in Los Angeles, Glendale and Pasadena. The company took on debt to purchase 23 office buildings in the Los Angeles area in 2007. CEO Nelson Rising, who has been head of the company for a year, has tried to raise money by selling off Orange County office properties but has had little success.

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Philadelphia

The Waldorf-Astoria Hotel slated for 1441 Chestnut Street is on hold, the Philadelphia Inquirer reported. Timothy Mahoney, president and CEO of Mariner Commercial Properties, sold his stake in the project to his partner, Brook Lenfest of Brooks Capital Group. Mahoney said the two did not agree on how to move forward with the project in a climate marked by falling prices and rising inventory. The $420 million project, which was to include 136 luxury condos in addition to retail and restaurant space, is one of nine City Center hotel projects that have been delayed.

Area malls are seeing vacancies rise as retailers struggle with the recession. Occupancy at the Gallery at Market East, one of eight Philadelphia-area malls owned by Pennsylvania Real Estate Investment Trust, fell to 78.8 percent in the first quarter, down from 84.5 percent in the same period of 2008, the Philadelphia Inquirer reported. At the Springfield Mall, occupancy among non-anchor tenants fell to 84.7 percent from 88.3 percent at the end of 2008’s first quarter. The REIT has taken out large loans for renovations at several of its malls and the company had $2.8 billion in debt at the end of the first quarter.

Phoenix

A lawsuit filed in Maricopa County Superior Court early last month claims that home builder KB Home and lender Countrywide rigged appraisals to inflate the values of new homes sold since 2006, the Arizona Republic reported. The plaintiffs, seven KB Home buyers in Buckeye and Sunrise, are seeking class-action status to bring more buyers into the suit. Some appraisers have said they were forced to inflate the values of homes or risk losing business. The suit claims that appraisers selected inappropriate comparable sales, ignored the housing market’s decline after 2005 and used data from incomplete KB Home sales.

San Francisco

A waterfront project that was slated to bring as much as $10.2 million annually to the Port of San Francisco will likely be scaled back, the San Francisco Chronicle reported. The revised plan cuts the amount of retail space to about 186,000 square feet. The scaled back site is expected to bring in about $6.5 million in yearly revenue. The developers hope to begin construction in 2013 on the $2 billion project, which would include 10 commercial and residential buildings, and complete it in phases over a 17-year period.

Seattle

If a past-due loan is not paid off, about half of the site of the Heron and Pagoda towers in downtown Seattle will be sold at a foreclosure auction June 19, the Seattle Times reported. The project, which was to consist of 1.2 million square feet of condo, hotel, retail and office space spread over two 550-foot towers, was postponed indefinitely last year. Lender G4 Capital Partners said an affiliate of developer Multi Capital Group has defaulted on its $13.7 million loan, plus $900,000 in interest and fees, which was to be paid on Dec. 1.

Washington, D.C.

Buyers from across the country and abroad have made offers on a two-story farmhouse in Leesburg on sale for $1 as of last month. The buyer must be able to move the house from its current location, where owner H.H. Hunt plans to build an assisted-living facility. Prospective buyers offered to tow the house on tractor-trailers and described the properties where they would put the structure. Some described their trouble getting loans or told stories of homelessness, and one potential buyer hoped to transport the house by boat for her 18 grandchildren to live in, the Washington Post reported.

Compiled by Sara Polsky