National Market Report

Atlanta

Residential/Commercial
Some developers say Atlanta’s skyline is undergoing “Manhattanization” and is becoming denser. More residents are living within walking distance of work and are not driving to jobs and recreation. To meet growing demand, the Related Group is planning a multiple high-rise “city within a city” development one block from Lenox Square Mall. The 16-acre CityPlace at Buckhead includes 4,000 residential units and retail space. Other amenities include small parks, fountains, walkways and dog parks. A group of developers including Pope and Land Enterprises Inc., Wood Partners, Novare Group Inc., Post Properties and Duke Realty Corp. will build a 925,000-square-foot, mixed-use twin-tower development on four acres at the northwest corner of Peachtree Road and Peachtree Dunwoody Road. The project will include a 40-story tower with 14,000 square feet of retail, 411,000 square feet of office space and 134 residential luxury condo units. An all-residential, 260-unit second tower will be added later. A third high-rise condo project near Lenox Square is being developed by a partnership of Related and Simon Properties Group.

Boston

Residential
Boston’s condo market made a significant rebound at the end of 2006. The year saw a 3.4 percent decline in condo prices and a 9.8 percent decline in sales from 2005, but sales and prices increased in the fourth quarter, raising broker hopes for 2007, the Boston Globe reported. According to the Listing Information Network, the median price for the 3,494 condos sold in 2006 was $449,000. Boston’s waterfront saw the greatest increase in sales, 73 percent, in the fourth quarter of 2006.

Residential
Boston banks last year auctioned off almost twice the number of foreclosed homes as in 2005. According to the Warren Group, a mortgage market analysis firm, lenders advertised 1,007 foreclosure auctions in 2006 for Boston and in surrounding Suffolk County. There were 521 auctions advertised in 2005. Analysts say the increased auction activity was caused by 2006’s sluggish housing market, the Boston Herald reported. Falling prices — the aftermath of the recent housing slowdown — left homeowners in financial trouble.

Chicago

Commercial
While downtown office vacancy rates have fallen, they are likely going to be heading back up, thanks to five new office buildings hitting the market. The high-rises, set to open by late 2009, will add almost 4.4 million square feet of additional office space to the market, Crain’s Chicago Business reported. According to a report by John Buck Co.’s Strategic Advisory Group, the new buildings will push vacancy rates to about 16 percent, from around 14 percent this year. Because of competition for office space, rents are expected to climb 6 percent during 2007, reaching their highest level since 2002.

Residential
McKinley Park, a working-class neighborhood on the Southwest Side of Chicago, is experiencing a burst of condo and townhouse development. The new housing is attracting young professionals, most of them first-time buyers. Development projects in the area include McKinley Gardens, a complex with 69 townhouses built around three parks at 3250 S. Western Avenue, and McKinley Park Village, with 134 townhouses and 110 condos at 3600 S. Western Avenue. Prices range from the upper $100,000s for a condo to the upper $300,000s for a large four-bedroom townhome, the Chicago Sun Times reported.

Las Vegas

Commercial
The second of eight buildings at World Market Center is now open. The $345 million, 1.6-million-square-foot addition is part of a $3 billion multi-tower development, GlobeSt.com reported. When completed, the World Market Center will total 12 million square feet — making it the largest trade show complex in the world. World Market Center hosts the biannual Las Vegas Market, a home furnishings trade show, and had 1,200 exhibitors at the 2007 Winter Market. The first building, a 1.3-million-square-foot exhibition hall, opened in mid-2005. A 2.1-million-square-foot building is scheduled to open in 2008.

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Residential/Commercial
The average price for an acre of vacant land in Las Vegas jumped 78.4 percent from a year ago to $1.24 million at the end of 2006, the Las Vegas Review-Journal reported. Analysts say increased development densities and relatively low interest rates have calmed concerns about a real estate bubble burst. In one example showing the rise in prices, ADG Development of New York, which recently broke ground on the mid-rise luxury condo project Loft 5 on Pebble Road near Las Vegas Boulevard, paid less than $1 million an acre for 10 acres about three years ago. They recently paid $2 million an acre for five adjacent acres where another project, L5 Lofts, is planned. Continued demand in the commercial real estate sector is also driving up land values. The office market is reporting its most robust level of new construction in years, nearly 4 million square feet, which could outstrip demand for office space, analysts say.

Los Angeles

Residential/Commercial
City officials plan to spend $2 billion to revitalize the Los Angeles River. The plan is to convert the 32-mile concrete channel into a sequence of parks, walkways, bike paths and housing, the San Diego Union-Tribune reported. The proposal also includes redeveloping industrial land into residential developments. The plan, which is not yet funded, would take a minimum of 25 years to complete and involve approximately 239 projects. Officials say breaking down the redevelopment process into phases will allow for several funding sources. The proposal will allow for construction of approximately 6,200 residential units along the river in Canoga Park and 4,665 units near Chinatown.

Residential
A tower constructed in the 1960s is set for a large condo conversion in downtown Los Angeles. The 42-story Crocker-Citizens National Bank at 6th Street and Grand Avenue may be the largest adaptive reuse project in Los Angeles history, the Los Angeles Times reported. According to the Los Angeles Planning Department, the New York-based Chetrit Group, which bought the building in 2005, plans to convert it into a mixture of commercial and residential condominiums. Most of the loft and condo development in Los Angeles has been outside the downtown area. Brokers say the Crocker-Citizens building conversion would come on to the market at the same time as several new residential buildings in the South Park district.

Philadelphia

Commercial
Philadelphia’s suburban office markets are becoming tight. Eight of the city’s 11 suburban office markets experienced positive absorption, rising rents and a decrease in vacancy in the final quarter of 2006, according to GlobeSt.com. Industry analysts expect vacancy to reach 15 percent as the existing tenant base continued to grow, down from 18 percent in 2006. While it’s still a tenant’s market, many brokers say the market will change in favor of landlords during 2007, according to commercial brokerage GVA Smith Mack. New spec-built office buildings, including BPG Properties’ 1000 Continental in King of Prussia and Brandywine’s Metroplex in Plymouth Meeting, are a sign developers see the market as healthy.

Residential
Condo projects in Philadelphia fared better than expected last year. The sales climate was less volatile and prices were more stable in Philadelphia than across the nation. According to market observers, mid-range condos — priced from $300,000 to $750,000 — are the strongest segment of the market. But the $1 million-plus condo market took a downturn when high-end suburban buyers seeking to move were not able to sell their houses, the Philadelphia Inquirer reported.

Phoenix

Residential
More than 100 homes will be auctioned off in a housing sale in downtown Phoenix in late March. Home sellers are resorting to the auction block to sell stale listings, the Arizona Republic reported. The National Real Estate Auction Corp. will auction the properties at prices ranging from the $100,000s to the multimillions. The Valley’s housing market is struggling with more than 40,000 resale homes on the market, 10,000 to 15,000 more than historic-high levels of inventory.

San Francisco

Residential
California developers say 2007 will be tolerable, the San Francisco Chronicle reported. Developers expect to build roughly the same number of homes this year as last. According to a forecast by the California Building Industry Association, builders are unlikely to slash prices further after the dramatic price drops of 2006. For example, Standard Pacific Homes dropped prices 10 to 20 percent at its Bay Area projects last year. Between 155,000 and 170,000 new homes, condos and apartments will be built this year, according to the industry forecast. In the San Francisco Bay area, 30,000 condo units are in the pipeline for the near future. Industry analysts say the Bay area accounts for just 10 percent of new single-family homes in the state.

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