January 6, 2009
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Equilibrium continues. Some investors remain confident that market conditions will remain favorable. Some investors are concentrating on both acquiring quality assets and disposing of under-performing ones. Rapid growth of the Internet and of the telecommunication industry is fueling the demand for office and industrial space. |
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Increases in interest rates are having a minimal affect on the ability of all-cash buyers to complete deals.
Several insurance companies are going public to increase access to public funds.
New Favorite Websites
www.pikenet.com: "It's probably the best one for real estate," says a participant.
www.edgar.com: SEC information.
www.lodgingresearch.com: Great for hospitality information relating to sales, performance, and trends.
www.fedstats.com: Provides a full range of statistics and infomraiton from more than 70 agencies in the U.S. federal government.
Valuation Issues
Marketing TIme
Average marketing time for all surveyed markets held steady from last quarter.
Average marketing time for all surveyed markets decreased from one year ago.
Manhattan office market has the highest average marketing time.
Boston office market has the lowest average marketing time.
Average marketing time for all surveyed hotel markets increased from both third quarter 1999 and one year ago.
Extended-stay hotels have the highest marketing time, while full-service hotels have the lowest average marketing time.
Reserves for Replacement
Reserves for replacement increased in ten of the surveyed markets
The largest decrease occurred in the national regional mall market.
Management Fees
Management fees increased in six of the surveyed markets.
The San Francisco office market reported the lowest average management fee.
Leasing Commissions
Leasing commissions decreased in six of the surveyed markets.
The largest increase occurred in the national industrial market.
Economic News
Strong growth in productivity is minimizing concerns of a near-term recession.
Increases in interest rates are relating a "slower is better" message to the nation.
The country is currently experiencing of the longest economic expansions in history.
New Capital Markets
International CMBS issuances are expected to increase in 2000.
Under-performing U.S. REITs will attempt to remain viable through both joint ventures and refocused strategies.
Private equity and debt are being drawn toward riskier investments.
Special Report — Real Estate Value Cycles
Property owners, investors, tenants, and lenders are all affected by real estate value cycles that exist in both residential and commercial real estate.
Modeling and forecasting real estate value cycles has received significant attention over the past seven years.
Rents, cap rates, and valuation are impacted by value cycles.
Four major phases of a value cycle are recession, recovery, expansion, and contraction.
Analyzing value cycles assists in answering questions, such as which markets (or submarkets) are hot, when should I sell, when should I buy.
Special Report — National Net Lease Market
Is one of the hottest real estate markets.
Net lease investments include sale-leaseback transactions, triple net leased property acquisitions, and 1031 exchanges.
High property values are prompting many companies to perform sale-leasebacks to raise capital.
Investors are interested in both investment-grade and noninvestment-grade properties.
Tenant's credit rating is typically more important than the underlying value of the asset.
Overall cap rates vary greatly depending on such factors as the tenant's credit rating.
National Regional Mall Market
Many under-performing malls are being redesigned and retenanted.
Mall owners are trying to find ways to use the Internet to their advantage.
National Power Center Market
Least favorite retail property for investors.
Property values are down; yet, rental rates are stable.
National Strip Shopping Center Market
Asking prices are high for quality products.
Some REITs have been acquiring properties.
Grocery-anchored centers remain the choice property type for investors.
National CBD Office Market
Buyers are hot to acquire top-tier buildings.
Sale prices remain very high in the most preferred cities.
Strong second-tier cities are also attracting interest.
National Suburban Office Market
Fears of overbuilding are causing limited investor interest.
Many properties are not performing as originally expected.
Atlanta Office Market
Older properties are more negatively affected by new construction.
Midtown and Buckhead continue to perform well.
The average market rent change rate dropped significantly this quarter.
Boston Office Market
Investors paying high sale prices.
No new construction expected over the near term.
Market conditions likely to remain strong.
Chicago Office Market
1999 sale transactions were down from 1998.
Suburban markets are relatively healthy.
Dallas Office Market
New construction is nearly double that of demand.
Some investors expect an oversupply to be short lived.
Some properties have been pulled from the market due to lack of interest.
Houston Office Market
Healthy job growth is expected to spur a rebound for the market.
New construction is in the suburban markets only.
The average market rent change rate dropped significantly this quarter.
Los Angeles Office Market
Multimedia firms are leading the demand for space in West Los Angeles.
Value appreciation over the next 12 months is expected to be strong.
Manhattan Office Market
High rents and employment shortages are driving some companies out of the market.
Vacancy rates are extremely low.
Pacific Northwest Office Market
Leasing activity is steady in both Seattle and Portland.
Some submarkets in Seattle are performing better than others.
San Francisco Office Market
High sale prices are limiting the number of bidders.
Downtime between leases is relatively short.
Some new properties are expected to open later this year.
Southeast Florida Office Market
Limited new construction is keeping market conditions strong.
Biscayne Boulevard is a preferred investment location for investors.
Washington, DC Office Market
The market is performing very well.
Most new construction is in Northern Virginia.
National Industrial Market
E-commerce companies are a leading force behind strong demand.
Traditional warehouse facilities may be a thing of the past.
National Apartment Market
Concessions are increasing in some markets due to overbuilding.
REITs are active sellers.
New Canadian Market Report
Total sales volume in the office market has decreased significantly since 1997.
Values for regional malls are eroding.
Rental rates in the industrial market may soon increase.
Vacancy rate for the apartment market is extremely low.
Average discount rates and overall cap rates are the lowest in the Midtown apartment market.
National Hotel Market Highlights
Market is mature.
Many investors are disposing of unwanted properties.
Pricing is competitive in many markets. The overall occupancy rate declined at the end of 1999.
The average daily room rate for the industry increased at year-end 1999.
The rate of profit growth is declining.
National Full-Service Hotel Market
Competition is increasing from upscale extended-stay products.
Most properties in Chicago, New York, and San Francisco are performing well.
The average ADR change rate declined significantly this quarter.
National Economy/Limited-Service Hotel Market
Construction has slowed.
RevPAR growth is strong.
National Luxury Hotel Market
Total room supply is increasing.
Numerous upscale hotels are under construction in South Florida.
The average ADR change rate declined significantly this quarter.
National Extended-Stay Hotel Market
Demand is strong.
Competition is prompting many hotel operators to construct their own extended-stay products.
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