National Market Report

Commercial and residential real estate news briefs from around the U.S. <br>

The San Francisco skyline
The San Francisco skyline

San Francisco

San Francisco Bay Area sales dropped in July, as economic uncertainty kept nervous buyers out of the market, the San Francisco Chronicle reported last month. Throughout the nine Bay Area counties, the median price paid for an existing single-family house was $400,000, down 7.5 percent from the same month of last year, according to DataQuick, a San Diego real estate research firm. A total of 5,096 homes changed hands, roughly the same as in July 2010. Bank sales of foreclosed homes accounted for 26.6 percent of Bay Area resales in July, and short sales represented 18.8 percent. “People became more concerned about the future and took a step back to the housing sidelines as we saw an increasing number of negative reports on the economy and jobs, and people fretted about the outcomes of the debt-ceiling debate in Washington, D.C.,” Andrew LePage, a DataQuick analyst, told the Chronicle.

Washington, D.C.

The 291,838-square-foot Capitol Plaza office tower in Washington, D.C., traded hands for $149.5 million last month, Bloomberg News reported. Iowa-based Principal Real Estate Investors purchased the property from Area Property Partners, headed by developer William Mack, and the Van Ness Property Group. The building, which was vacant when Area acquired it in 2007, is now 98 percent leased. Tenants include the U.S. Internal Revenue Service and the Department of Homeland Security. “This is one of the preeminent office properties in a growing submarket with limited Class A office product,” Jim Halliwell, managing director at Principal Real Investors, said in a statement.

New Orleans

The Poydras Street parcel where developer Donald Trump once planned to construct the state’s tallest building sold at a sheriff’s foreclosure auction last month for $5.44 million, the Times Picayune reported. The property was purchased by the operator of the surface parking lot at the site, Premium Parking Service. Jim Huger, CEO of Premium Parking, said he intends to retain the land until new opportunities arise. “Like any long-term buyer, we’re interested in any development opportunities,” he said. “When the city is ready for something, we’ll be there.” Trump’s plan for a high-rise condominium project had been in the works since 2005. “The economy just did not justify going forward,” Stephen Dwyer, an attorney for developer Poydras Properties, which worked with Trump on the project, said. He added that Poydras “has not given up on building a project in New Orleans.”

Houston

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Houston-based developer Hines is planning to launch a $1 billion investment fund to develop, acquire and manage office and medical buildings nationwide, the Houston Chronicle reported. The new venture is backed by the New York State Common Retirement Fund, one of the largest pension plans in the country. Seeded with $500 million in equity to leverage another $500 million in debt, the new fund may finance up to 12 deals, Hines vice president Doug Donovan said. It will target buildings predominantly occupied by single tenants in Houston and other major U.S. cities. “We together believe that there will be compelling opportunities to develop build-to-suits given the market dynamics,” Donovan said.

Las Vegas

The Las Vegas rental market is finally beginning to stabilize after 11 consecutive quarterly declines, according to a recent report by the business advisory firm Applied Analysis. The report found that apartment rents in the area saw the smallest quarterly drop — 1 percent — since late 2008. The market appears to be “feeling its way along a choppy bottom,” Jake Joyce, a manager at Applied Analysis, told the Las Vegas Review Journal. The average monthly Las Vegas rent dropped to $758 in the third quarter, down from $766 in the same period of last year, the report showed. Meanwhile, occupancy rose to 92 percent from 90.7 percent in the prior-year quarter. Occupancy rates bottomed out at 90.1 percent in late 2009, Joyce said, and have been steadily rising since then. However, Las Vegas landlords are facing more competition from single-family homes, as investors increasingly buy houses in all-cash sales with the intention of renting them out. “This is changing the dynamic of our communities, as more and more and more homes have become tenant-occupied,” said local real estate agent Bill Myers.

New Jersey

Boston’s Intercontinental Real Estate has made a $215 million deal to renovate an outdated, 770,000-square-foot office complex at 800 Scudders Mill Road in Plainsboro, N.J., the Boston Globe reported. The development will be the new U.S. headquarters of Danish drug maker Novo Nordisk. The project is a joint venture with Ivy Equities and LCOR Corporation. Wells Fargo and Sovereign Bank are providing financing. “This transaction is a signal that banks, both domestic and international, have faith in the commercial markets coming back,” said Peter Palandjian, CEO of Intercontinental. “We haven’t seen projects of this size since before the collapse.” Work on the development, scheduled to begin next month, is expected to create 500 construction jobs.

Los Angeles

Commercial landlord CIM Group has purchased a Hollywood building that once housed the Old Spaghetti Factory restaurant, the L.A. Times reported. CIM plans to construct a mixed-use building at the site, and though the terms of the deal were not disclosed, real estate experts valued the transaction at more than $20 million. The Old Spaghetti Factory closed that location, at 5939 West Sunset Boulevard, several years ago. CIM is considering a design that would preserve the historic building and transform it into a complex with a 22-story, 305-unit residential tower and 40,000 square feet of office and retail space, the Times said. Oregon-based development group Gerding Edlen Development announced plans to build at the site in 2006, but the project did not materialize due to the financial climate. “Things ground to a halt in Hollywood over the last couple of years,” said Leron Gubler, president of the Hollywood Chamber of Commerce. “This will be a chance to really get started again.”

Compiled by Katherine Clarke