National market report

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

alternate textForbes.com named the Mile HIgh City the second-worst housing market in America last month

Boston

Boston Mayor Thomas Menino is railing at Vornado Realty Trust for failing to develop a site it owns in the Downtown Crossing neighborhood in a timely fashion, according to the Wall Street Journal. Vornado had intended to develop the site, which has remained empty since discount retailer Filene’s Basement closed in 2007, into a $700 million mixed-use space. Vornado tore down almost all of the building in 2008 to make way for the One Franklin development before construction stalled. In a letter to Vornado head Steven Roth, Menino did not mince words. “Blight kills jobs by destroying an area’s appeal to businesses and consumers,” Menino wrote, according to the Journal. “Inflicting pain on people, businesses and communities to inflate the return to your enormously profitable company is reprehensible.”

Denver

About 10 months ago, Forbes.com named the Mile High City “America’s best city in which to buy a home,” only to declare it “the second-worst housing market in America” last month. Forbes attributed its new assessment to the glut of inventory that’s hit the city recently. Denver’s current stock of 42,000 homes on the market is 27 percent higher than a year earlier, according to Zillow.com, which Forbes used in its survey. But at least Forbes wasn’t alone in its optimistic outlook last year. In May 2009, Barbara Corcoran told NBC’s “Today” show that Denver was “clearly on a rebound,” naming it the number-one city in America poised for a real estate comeback.

Detroit

After months of depressing news from the Detroit housing market, things might be looking up for the industrial city. Overall home sales climbed 6.2 percent in the Detroit metro region in March, according to data from Realcomp, a multiple listing service cited in a story in the Detroit Free Press. Perhaps most surprising, the median sales price for homes in Detroit climbed 33 percent to $7,725 during the same month, while inventory dropped 28 percent to 3,919. Karen Kage, president of Realcomp, said that it’s crucial that for-sale inventory continue to decline in the metro region over the next few months. “If the inventory continues to drop, then we’ll be able to absorb that pile of listings … the foreclosures that I’m told are coming in this summer,” Kage told the Free Press.

Los Angeles

Los Angeles County is expected to see average apartment rents drop another 3.5 percent before the end of the year, due in part to rising unemployment and inventory, according to the Casden Real Estate Economics Forecast cited in a story by the Los Angeles Times. While other nearby cities like Riverside and San Bernardino are expected to do better in the coming year, the Casden report said that “L.A. is going to perform the worst” through the year, due in part to the excessive property construction that took place during the housing bubble.

Miami

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After years of sluggish sales, Miami developer Urban All Development Group sold 65 remaining units in the San Lorenzo condominium at auction last month. One-bedrooms fetched a minimum of $80,000, and two-bedrooms went for at least $141,750, according to Real Estate Disposition, which conducted the auction. As real estate consultancy Condo Vultures previously reported, the 10-story, 87-unit condo in the Little Havana section of Miami was completed in 2007 and sold 22 residential units for an average price of $224,000, or $329 per square foot, prior to the auction. All sales took place between August 2007 and February 2008 before stalling. The auction, with a minimum asking price of $50,500 per unit, or $63 per square foot, drew a crowd of 375 to the live auction at the Hyatt Regency Miami, along with online bidders. All units sold in less than three hours.

While Miami’s Icon Brickell launched sales in 2008, activity only picked up in the first quarter of the year, according to the South Florida Business Journal. Developer Related Group sold 162 units at the development during the first quarter of the year, according to Condo Vultures, but the average sales price was $404 per square foot, down around 26 percent from the $543-per-square-foot average sales price seen before. While the development still has 1,400 units to sell, according to Peter Zalewski, a principal with Condo Vultures, the new closing prices could help. “The simple reason why Icon Brickell product is moving today is that the pricing has come crashing down to levels that some buyers consider to be good value,” Zalewski said.

New Orleans

While the Louisiana Recovery Authority has allocated about $5 million to fix problems with faulty Chinese drywall installed in homes, the Home Builders Association of Greater New Orleans called that just a drop in the bucket. The builders argue that around $100 million is needed to correct the faulty drywall problems around Louisiana and in New Orleans, according to the Times-Picayune. Around 700 to 1,000 families in the state live in homes with corrosive, unsafe Chinese drywall, according to the home builders’ group, with many of those homes localized in hurricane-ravaged towns along the water.

Portland

The city’s suburban office parks are suffering heavily, according to a first-quarter report from Grubb & Ellis. While Portland’s downtown office vacancy rate has been gradually moving toward a rebound, offices outside the city center are seeing an 18.2 percent vacancy rate. Although Grubb & Ellis predicts that the downtown vacancy rate will continue to decline through 2010, the outlook is grim for suburban office plazas. “The suburbs will get worse and lease rates will fall to levels not seen in years,” the report says.

The construction industry is looking bleak in Portland as well, according to recently released employment figures. Statewide, just 63,700 construction workers had jobs in March, a 40 percent drop from March 2007 peak figures, when 105,500 workers were employed, according to the Oregonian. But Tim Duy, a Portland-based economist, predicted a turnaround in employment figures. “I really don’t expect a double-dip recession,” Duy said. “It looks like the private-sector demand is picking up.”

Washington, D.C.

The market for medical offices is holding strong in the nation’s capital, according to Cushman & Wakefield’s first-quarter MarketBeat report. The Washington, D.C., metro region reported a medical office space vacancy of about 9.5 percent, well below the national average of 13 percent. The district proper, meanwhile, showed a vacancy rate of just 5.6 percent, the lowest in the overall Washington, D.C., region. The average rent per square foot hovered around $40 — nearly $10 more than the rest of the metro area.

Compiled by Amy Tennery