National briefs

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

Atlanta

More Georgia homeowners are becoming landlords as they attempt to wait out the housing market. The number of Georgia residents switching their insurance policies from homeowner to landlord plans increased by 35 percent in the first quarter of this year, according to Allstate Insurance Company. Renting out their homes could mean more property damage, accidents and other legal risks for homeowners, the Atlanta Journal-Constitution reported. But the average price of a home in the Atlanta metropolitan area was 15 percent lower this May than it was a year ago, according to the Case-Shiller index, making many homeowners reluctant to sell.

Many Georgia banks are struggling to find buyers for half-completed subdivisions as the recession takes its toll on construction projects and home sales. “Zombie” subdivisions are particularly prevalent in the suburbs that circle Atlanta, the Atlanta Journal-Constitution reported. At WaterLace, a subdivision in Fayette County, 400 homes were slated for construction, but the incomplete project was shut down last year after developer Stephen Macauley went bankrupt and the lending bank failed. A few residents occupy the homes, but amenities like the clubhouse and pool remain unfinished. Some banks are combining lots from different subdivisions and attempting to sell them to investors.

Boston

Hallmark Health Corporation is seeking a buyer for the 21-acre former Malden Hospital site, the Boston Globe reported. Hallmark’s deal with Deaconess Abundant Life Communities of Concord fell through in June after the prospective buyer failed to get financing for a proposed 301-unit senior housing project. Hallmark still hopes to find a developer that will build an assisted living or senior housing community on the large site, which overlooks the Boston skyline, a spokesman said. Hallmark would not reveal the property’s asking price, but it has been assessed at $10.1 million, including the land and the hospital building, according to city records.

Chicago

Four Chicago condominiums participated in an energy usage pilot program this summer called “demand-response,” which paid the buildings to adopt certain energy practices, the Chicago Tribune reported. At the four condos, 535 N. Michigan Avenue, Park Millennium Condominium Residences, 600 N. Lake Shore Drive and the Domain, at 900 N. Kingsbury, the buildings’ air-conditioning systems were programmed to power down for short periods of time when demand for electricity peaked, with the buildings storing some cool air to keep temperatures down. Each building was paid $10,000 for the 2009 season for the study by a public-private partnership.

United Airlines could be benefiting from the weak real estate market, gaining a new command center and offices in Willis Tower, formerly known as the Sears Tower, under a deal announced in early August. United’s offices in Willis Tower, which could house 2,800 employees, will cost about $35 million for the year, but in exchange, the airline will get about $25 million in incentives from the city, the Chicago Tribune reported. As of mid-August, the Chicago City Council still needed to approve the incentives in order for the deal to proceed.
 
Las Vegas

Apartment rental prices have dropped steeply in Las Vegas as single-family homes available for rent create a shadow market, the Las Vegas Review-Journal reported. As of mid-August, there were 457 homes available for rent with at least 1,400 square feet for $1,100 per month, according to Spencer Ballif, senior vice president of multifamily housing at CB Richard Ellis. Ballif said there are at least 10,000 rentals on the market, in addition to about 6,400 apartments that were completed or are under construction this year. Foreclosed homeowners who were expected to become apartment renters, lowering the inventory, have instead chosen to rent houses.

Los Angeles

California’s overall residential mortgage delinquency rate rose to 9.5 percent in June and hit 9.9 percent in Los Angeles County, according to First American CoreLogic. The previous year, the state’s mortgage delinquency rate was 6 percent and the Los Angeles County rate was 5.2 percent. About 60 percent of California mortgages that have been in default recently ended up entering foreclosure, the Los Angeles Times reported. But foreclosure rates might not climb as high in the coming months if lenders do more loan modifications or approve more short sales, said Andrew LePage, an analyst for MDA DataQuick, a San Diego research firm.

Philadelphia

The number of large-scale meetings and conventions held in Philadelphia has declined about 13 percent this year compared to last year, according to the Philadelphia Convention and Visitors Bureau. As a result, the city’s hotels have seen a steep drop in occupancy. The total number of rooms occupied through May 31 at the city’s 41 hotels dropped almost 62 percent from the same period a year ago, to 1.03 million from 2.7 million, the Philadelphia Inquirer reported. Even as demand declines, the city is bringing more event space online, with an expansion to the Pennsylvania Convention Center due for completion in 2011.

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Phoenix

The rent-to-own option is becoming more popular in the Phoenix housing market, the Arizona Republic reported. Offering buyers a rent-to-own or lease option deal helps both sellers and buyers because it allows the seller’s home to stand out from the other options on the market, local experts said, and gives tenants the chance to come up with down payments while also rebuilding their credit. Some argue that if investors offer their homes with lease options, it could stop a flood of investment homes from hitting the market when owners are ready to sell. But others say the rent-to-own process rarely results in a sale, because buyers withdraw or do not qualify to purchase the property.

Foreclosure notices have been issued to nearly 2,200 commercial properties in Maricopa County since Jan. 1, an average of 300 or 400 foreclosure notices per month through summer, the Arizona Republic reported. Together, these properties have about $6.3 billion in real estate loans. Commercial condominiums, in which individual spaces are sold to small businesses such as medical offices, represent a particularly high number of commercial foreclosures.

San Francisco

The San Francisco school district is trying to make better use of its real estate holdings, the San Francisco Chronicle reported. The district holds more than 19 million square feet of property. Most of it is used for school-related activities, but the district has identified 10 of its sites as “surplus,” a designation state law requires before a school-owned property can be sold. These surplus properties could bring in $132 million, according to a consultant’s analysis. But school officials are also considering leasing, developing or holding on to the properties.

About 40 houses of worship are on the market throughout the San Francisco Bay Area, the San Francisco Chronicle reported. About 170 are on the market around the state. They have proved hard to sell during the recession, with several having been on the market since 2007, when financing first became difficult. It is also difficult to find comparable sales and establish prices for these buildings, which are unique and do not trade often.

Seattle

Median prices were down and closed sales were up in Kings County in July, according to numbers from the Northwest Multiple Listing Service. The median price of a single-family home was $384,000, a 2.9 percent drop from June and a 13.7 percent drop year-over-year, the Seattle Times reported. But closed sales were up more than 10 percent from their July 2008 levels, and the number of homes on the market was nearly 20 percent lower than in July 2008. The $8,000 tax credit for first-time homebuyers has spurred market activity, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

Washington, D.C.

Local governments in the Washington area are trying to help developers amid the recession by extending building permits, collecting lower fees from new projects and holding off on tax increases, the Washington Post reported. Communities are trying to give builders more time to complete their projects so that they won’t have to pay to reapply for permits. The Montgomery County Council is considering delaying a proposed 3.5 percent annual increase to the tax that developers pay toward infrastructure costs. Fairfax County officials have lowered the amount of surety bonds developers must put up to guarantee that a project will be finished.

Compiled by Sara Polsky