National Market Report

Commercial and residential real estate news briefs from the most active U.S. markets


An environmental group hopes to protect the area surrounding Los Angeles’ famous Hollywood sign from development

Boston

Liberty Mutual Group has announced plans to build a $300 million office tower in the city’s Back Bay neighborhood, according to the Boston Globe, while also hiring approximately 600 new employees. The construction is set to begin as early as September, and city officials have estimated that approximately 500 construction jobs will be created for the project. In a statement, Gov. Deval Patrick described the planned tower as a tipping point for the city’s financial stability. “Their decision to expand their presence and grow over 1,000 jobs is great news for the city and the state and another indication that we are on the road to economic recovery,” Patrick said. Liberty Mutual, which is based in Boston, has garnered a $16 million property tax break from the city to assist in the development, officials said.

Chicago

More than a third of the residential properties sold in the greater metropolitan Chicago market last year were in distress, according to year-end figures gleaned from the RE/MAX Northern Illinois real estate network. While this figure is in line with national fourth-quarter figures — with the National Association of Realtors reporting 32 percent of residential property sales nationwide as distressed home sales — it is a big change for the Chicago market, according to Jim Merrion, the director of the RE/MAX Northern Illinois network. “In the last two to three years, distressed properties have gone from being a small portion of the residential marketplace to a significant one,” Merrion said last month. Around 70 percent of those distressed sales were on foreclosed properties, with short sales accounting for just 28 percent. Merrion said this is due in part to stubborn lending practices — something he hopes will improve in 2010. “We continue to see problems with securing lender approval and processing of short sales even though these transactions typically bring more money for a property than can be obtained after foreclosure,” Merrion said.

Los Angeles

An environmental group is in a race against the clock to block the possible development of 138 acres surrounding the famous Hollywood sign in Los Angeles. While the sign is reportedly protected from demolition, a group of Chicago-based investors owns the surrounding area and had planned to build luxury mansions there, according to Desert Sun Wire Services. While the investors originally planned to sell the land to developers for $22 million, they told the Trust for Public Land that they would sell the space to the trust for $12.5 million. So far the organization has accumulated about $7 million, with the Los Angeles Public Works and Recreation and Parks departments contributing more than $3.5 million to help the cause. Private donors are expected to provide the rest. The offer expires April 14.

Miami

The Related Group has backed out of a partnership in the Trump Towers condominium development in Sunny Isles Beach near Miami, according to GlobeSt
.com. Betsy McCoy, Related’s vice president and associate general counsel, said the company had sold its interests in Trump II and Trump III at Sunny Isles and satisfied its obligations to lenders. Michael Cannon, executive director of Integra Realty Resources in Miami, said it was not uncommon for large developers to contract in a severely weakened economy, though the scaling back is a bit humbling for the reputation of Related, which built Murano at Portofino, Icon South Beach and Apogee in Miami Beach, plus 50 Biscayne, 900 Brickell and Loft Downtown in Miami. For Chairman Jorge Perez, the retreat has had a personal impact. He was dropped from the Forbes 400 list, where he once ranked at No. 197 with an estimated personal wealth of $1.8 billion. After his net worth declined by 50 percent, he was removed from the 2009 list, GlobeSt.com reported.

New Orleans

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Hotel operators in New Orleans appear to have benefited from their hometown team’s football glory. Amy Reimer, the general manager at the International House Hotel in New Orleans, told USA Today that mere minutes after the Saints defeated the Vikings in the NFC championship game, tourists were clamoring for a spot in her hotel during Super Bowl weekend. By Reimer’s estimation, the hotel’s weekend occupancy rocketed from 35 percent to 95 percent during the few hours after the Saints’ NFC victory. Steve Swope, CEO of Atlanta-based travel research group Rubicon Group, told USA Today that hotel bookings in New Orleans jumped 267 percent after the Saints’ NFC win, from a rate of 1,600 before to 5,900 bookings per day after.

Park City, Utah

The ski resort haven just saw its first new development real estate auction, which resulted in eight ski-slope-side residences selling for a total closing value of $13 million. The auction, conducted by Accelerated Marketing Partners, saw an average closing price of $1.62 million, according to a press release sent last month. The winning bidders were treated to free $100,000 memberships at Talisker Club, a golf and ski resort.

Philadelphia

Turns out “Snowmageddon” wasn’t just tough on drivers. Philadelphia-area real estate agents say it’s been hard to coax clients out of their homes in the rough weather. Jeff Block, an agent with Prudential Fox & Roach, told the Philadelphia Inquirer that the bad weather this winter has made the housing market even worse. “Virtually every buyer will cancel or not schedule appointments on [bad] days and for even a few days after,” Block said. The first-time homebuyer tax credit, which some have credited with spurring home sales, will expire April 30.

San Francisco

Silicon Valley, known for its pristine locale in the San Francisco Bay area, is seeing its real estate industry get slammed. Job losses in the region — as many as 90,000 from the second quarter of 2008 to the second quarter of 2009 — have been hard on the commercial real estate market there, according to the New York Times. Commercial real estate vacancies in Silicon Valley had climbed by about 33 percent between 2008 and 2009, as funding for key industries, like the burgeoning “green technology” field, seemed to fade away. Companies that focus on green technologies saw venture financing for their programs dwindle by about 37 percent over the course of 2009, according to the Times.

Washington, D.C.

The Mortgage Bankers Association agreed last month to sell its headquarters in the district at 1331 L Street at a major loss, according to a report from DS News, after finding itself deep in debt. The trade organization fell underwater on its mortgage for the property, which it had purchased for $79 million around three years ago. CoStar Group, a commercial real estate research firm, struck a deal with the MBA to buy the building for $41.25 million. The closing price came out to $243 per square foot, well below the median market rate in the area of $518 per square foot. The organization plans to move out of the building soon and rent at another location in the district.

Compiled by Amy Tennery