Sunday, August 31, 2008

Firms Relocating to Downtown Milwaukee Stimulate Office Sector

MILWAUKEE, WI — The Milwaukee economy is undergoing a change from manufacturing to more service-oriented industries, but the transition will take several years, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

There are bright spots, however, such as the Downtown submarket, where local companies like Roundy and Manpower are moving in from the suburbs

(Colby Abbot Building, Downtown, top right photo. 735 Water office building, middle left)

“While investment activity may moderate further through the second half of the year, buyers with market knowledge will likely continue to target assets with repositioning or value-add opportunities, particularly in the suburbs,” says Matthew Fitzgerald, regional manager of the Milwaukee office of Marcus & Millichap.

Following are some of the most significant aspects of the Milwaukee Office Research Report:

· Developers are on pace to add 900,000 square feet of office space to the Milwaukee metro this year for a 3 percent stock increase.
· Vacancy is forecast to end the year at 15.8 percent.
· Asking rents are expected to gain 0.4 percent to $19.08 per square foot.
· Effective rents will end the year at $15.24 per square foot.
· The median price has appreciated roughly 15 percent to $111 per square foot during the past year.

For a copy of the complete Milwaukee Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/

Press Contact: Stacey Corso
Communications Department
(925) 953-1716
.

Drop in Jobs and Leasing Spark Vacancy Rise in Northern New Jersey

ELMWOOD, N.J. — A modest decline in office-using employment has been posted so far this year in Northern New Jersey, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

The pace of job losses has quickened recently, however, setting the stage for higher vacancy and slower rent growth by year end.

“Perhaps reflecting concerns over the near-term direction of the economy and its impact on the local office market, investment activity has slowed in the past few quarters,” says Michael Fasano, regional manager of the New Jersey office of Marcus & Millichap.

“Investors remain interested in Class C properties, however, due to their encouraging long-term performance.”

Following are some of the most significant aspects of the New Jersey Office Research Report:

· Approximately 500,000 square feet is slated for delivery this year, including more than 300,000 square feet in Morris County.
· Vacancy is forecast to end the year at 14.7 percent.
· Asking rents is projected to finish the year at $27.35 per square foot, an increase of 2.7 percent.
· Effective rents will rise 2.7 percent to $23.70 per square foot.
· Investor interest in medical assets remains steady, with several deals complete so far this year.

For a copy of the complete New Jersey Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716

Office Leasing Activity in East Bay, CA Centered Along Interstate 680 South/Livermore Corridor


OAKLAND, CA— Office market fundamentals in the East Bay are expected to soften modestly through the rest of this year as job losses and the housing market downtown weigh on tenant demand, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Rents are forecast to remain essentially flat this year, potentially drawing employers with expiring leases in more expensive Bay Area markets to the East Bay.

“Buyers seeking value-add opportunities may look to the Interstate 680 South and Livermore areas, where a rise in leasing activity among technology companies may prompt owners to raise rents closer to market value,” says Jerry Smith, regional manager of the Oakland office of Marcus & Millichap.

Following are some of the most significant aspects of the Oakland Office Research Report:

· Office construction is projected to total 209,000 square feet this year, compared with 74,000 square feet in 2007.
· Vacancy is forecast to finish the year at 14.5 percent.
· Asking rents are projected to rise 0.2 percent to $27.13 per square foot.
· Effective rents will end the year at $23.05 per square foot.
· The median price has appreciated 7 percent year over year to $233 per square foot, indicating the current flight-to-quality sentiment.

For a copy of the complete Oakland Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.


Press Contact: Stacey Corso
Communications Department
(925) 953-1716

Ties to Energy Sector Lift Oklahoma City's Office Sector


OKLAHOMA CITY, OK — Oklahoma City is expected to maintain fairly solid office fundamentals this year as limited supply additions are offset by modest job gains, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

The metro’s ties to the booming energy sector should support job growth going forward and will likely curb the market’s exposure to the national economic slowdown.

“The investment outlook for Oklahoma City is bright, given the area’s healthy job growth and modest additions to supply,” says Gary R. Lucas, (top right photo) regional manager of the Oklahoma City office of Marcus & Millichap.

Following are some of the most significant aspects of the Oklahoma City Office Research Report:

· Employers are expected to expand payrolls 1.3 percent this year with the creation of 7,200 positions.
· Builders are anticipated to bring 50,000 square feet of office space online by year end, increasing inventory by 0.3 percent.
· Vacancy is projected to finish the year at 15.5 percent.
· Asking rents are predicted to reach $14.77 per square foot by year end, a gain of 1.9 percent.
· Effective rents will climb $12.76 per square foot, an increase of 2.5 percent.

For a copy of the complete Oklahoma City Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716

West Palm Beach Office Assets Offer Opportunities to Out-of_State Investors


PALM BEACH, FL— Properties scheduled to come online this year in Palm Beach County will test the market’s capacity to absorb new space at a time when declining employment is weakening demand, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Overall, supply growth in 2008 will be a significant factor behind an increase in vacancy of nearly 300 basis points.

“A slowdown in the rate of price appreciation may provide an attractive entry point for some out-of-state investors, who have been less active in the market recently,” says Gene A. Berman, (top right photo) regional manager of the Fort Lauderdale office of Marcus & Millichap.

Following are some of the most significant aspects of the Palm Beach Office Research Report:

· In 2008, developers will deliver 1.4 million square feet of for-lease office space, including the new headquarters building for Office Depot.
· Vacancy is forecast to end the year at 14.3 percent.
· Asking rents are projected to advance 2.7 percent to $29.67 per square foot.
· Effective rents will add 1.1 percent to $24.88 per square foot.
· The median price of office assets changing hands in the last year has gained 2 percent to $224 per square foot.

For a copy of the complete Palm Beach Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso,
Communications Department,
(925) 953-1716

Attractive Pricing Lures Out-of-State Office Investors to Indianapolis

INDIANAPOLIS,IN — Indianapolis’ economy and office market are proving to be more resilient than those in many other Midwestern metros, which have recorded significant payroll contractions and decreased employer interest during the past year, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

This strength is evidenced by steady office-using employment growth, a trend that is expected to persist in the short term.

“The market’s above-average cap rates, currently in the low- to mid-8 percent range, will continue to attract out-of-state buyers, as Indianapolis offers a yield premium during coastal and larger Midwestern metro areas,” says Josh Caruana, sales manager of the Indianapolis office of Marcus & Millichap.

Following are some of the most significant aspects of the Indianapolis Office Research Report:

· Employers are forecast to add nearly 2,800 new positions in 2008 for an expansion of 0.3 percent.
· Developers will complete 210,000 square feet of office space, increasing metro stock by 1 percent.
· Vacancy is projected to finish the year at 15.4 percent.
· Asking rents are predicted to rise 0.4 percent to $17.79 per square foot.
· Effective rents will gain 0.1 percent to $14.85 per square foot.

For a copy of the complete Indianapolis Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso,
Communications Department,
(925) 953-1716

Rent Gains Remain Solid, Although San Francisco Office Market Shows Signs of Slowing

SAN FRANCISCO, CA — Fundamentals in the San Francisco office market are expected to reach more sustainable levels in 2008, following a year of robust leasing activity, according to a second-quarter Office Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.

Rent gains will be among the highest in the country, ending the year up nearly 50 percent from 2004.
“Transaction velocity is expected to wane from the levels recorded in 2007, though healthy fundamental growth will still drive investor interest in the metro’s office assets,” says Jeffrey Mishkin, (top right photo) regional manager of the San Francisco office of Marcus & Millichap.

Following are some of the most significant aspects of the San Francisco Office Research Report:

· Payrolls are forecast to increase 1 percent, or by 10,000 jobs, in 2008.
· Developers are projected to complete approximately 1.4 million square feet of competitive office space this year, a 1.6 percent increase.
· Vacancy is predicted to end the year at 9.5 percent.
· Asking rents are forecast to increase 7.7 percent to $43.24 per square foot.
· Effective rents will end the year at $37.16 per square foot, an 8.1 percent rise.

For a copy of the complete San Francisco Office Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.

Press Contact: Stacey Corso,
Communications Department,
(925) 953-1716

Johnson-Laux Construction expands operations into Maryland following award of Adventist HealthCare project in Rockville, MD

ORLANDO, FL – A leader in providing mission-critical healthcare construction and meeting its unique requirements, Orlando-based Johnson-Laux Construction has expanded operations into Maryland following its recent award of an Adventist HealthCare project (top right photo) in Rockville, MD.

Johnson-Laux President and LEED Accredited Professional Kevin Johnson said the company will establish a permanent office to serve the greater Potomac region in connection with its work on the Shady Grove Adventist Hospital Pharmacy project.


Contact: Kenneth H. Cristol, 407-774-2515

Saturday, August 30, 2008

Tampa's Industrial Vacancy Level Rises to 7.1%

TAMPA, FL-- A challenging economy continued to weigh heavily on Tampa’s industrial market during the second quarter of 2008, according to a new market analysis by Randy Smith (top right photo), Director of Research, GVA Advantis, Tampa.

.Year-to-date, both direct and sublease space have expanded, pushing Tampa’s overall vacancy rate to 7.1 percent—up from 5.0 percent at this year’s start.
New construction boosted Tampa’s industrial inventory by just over 800,000 square feet in the first half, with 60 percent of this space committed on delivery.

It now appears that the climb of Tampa’s industrial rents peaked in the final quarter of 2007 at $7.66 per square foot. The average asking rate for industrial space in Tampa has since receded to the $6.66 mark this period.
However, the longer term prospects for Tampa’s industrial market show definite signs for optimism.

According to projections by Global Insight, Florida’s economy will make a turnabout in the second half of this year—real gross domestic product in the state is forecast to grow by 1.2 percent in 2008 and accelerate to double that pace for 2009.

This upcoming improvement in Florida’s economic production should have a positive impact on local industrial demand going into next year.

According to a mid-year 2008 review by Real Capital Analytics (RCA), the sale prices of Tampa’s industrial properties are stacking up well against other markets in the Southeast region.

Based on RCA’s regional average of $101 per square foot for flex properties, Tampa’s flex sales recorded a 25 percent premium so far this year. For warehouse / distribution properties, Tampa’s pricing registered 90 percent higher than RCA’s average of $44 per square foot for the Southeast region.

For a detailed copy of the report, please contact Randy Smith, Director of Research, Advantis Real Estate Services Company, 3000 Bayport Drive, Suite 100, Tampa, FL 33607. Tel 813.342.4725. Fax 813.372.4004. E-mail rsmith@gvaadvantis.com
www.gvaadvantis.com

Stephanie Lockard of Cushman & Wakefield, Orlando, Represented NAIOP Central Florida at NAIOP Developing Leaders Summit in Colorado

ORLANDO, FL – Local NAIOP Developing Leaders committee co-chair Stephanie Lockard (top right photo) of Cushman & Wakefield, Orlando, was among a select group of 25 commercial real estate professionals nationwide in representing NAIOP Central Florida at the NAIOP Developing Leaders Summit on August 8-9 at Cheyenne Mountain Resort in Colorado Springs, CO.

The purpose of the summit held by the National Association of Industrial and Office Properties, she explained, was to provide an idea exchange on education, career development and networking forums that have proven successful in other parts of the country. With 50 DL committee members locally, the committee’s mission is to develop young NAIOP members into future leaders of Central Florida’s commercial real estate community.

“Targeted to a new generation of future leaders, age 35 years and younger,” said Lockard, “NAIOP’s Developing Leaders initiative has been an instant success both locally and nationally. For example,” she continued, “our local DL committee first captured the attention of NAIOP National following creation of our innovative Educational Immersion Series.”

Contact: Kenneth H. Cristol 407-774-2515

CVS Pharmacy in Pensacola, FL Gets $1.675M Loan

ORLANDO, FL— Daniel Byrnes, Assistant Vice President for Thomas D. Wood and Company, secured financing in the amount of $1,675,000 for the CVS Pharmacy in Pensacola, Florida.

The loan was financed through Summit Investment Partners, one of Thomas D. Wood and Company’s correspondent lenders, at a permanent fixed-rate of 6.49%. The loan term is 10 years, based on a 19-year amortization, and a loan-to-value of 57.5%. The 10,908 square-foot retail store was built in 1997 and is located at 5301 North Palafox Highway, Pensacola, Florida.

CONTACTS:
Daniel Byrnes (407) 937-0470, dbyrnes@tdwood.com
Jessica Gurtowski (407) 937-0470, jgurtowski@tdwood.com

Tri-City Electric Working on Contracts Valued at $10.97M


Altamonte Springs-based Tri-City Electrical Contractors, Inc. under way on new 120-unit Villa Grande (top right photo) on Saxon Apartments assisted living facility in Orange City, FL

ORLANDO, FL – The Multi-Family and Residential Division of Tri-City Electrical Contractors, Inc. is under way on $770,000 of work at the new 120-unit Villa Grande on Saxon Apartments, an assisted living facility in Orange City, FL, under its contract with LeCesse Construction, Altamonte Springs, FL. Completion is slated for December 2008.

Tri-City working on $10.2 million of contracts at Darden Restaurants' new 400,000-square-foot LEED-certified Support Center and Data Center

ORLANDO, FL – The Central Florida Commercial Division of Tri-City Electrical Contractors, Inc. is under way on $8.4 million of work at Darden Restaurants’ new 400,000-square-foot LEED-certified Support Center as well as $1.8 million of work at its new 16,284-square-foot LEED-certified Data Center, both located on Taft-Vineland Road in Orlando, FL, under its contract with Hardin Construction, Orlando. The projects are slated for completion in December 2009 and December 2008 respectively.

(Darden's $100 million corporate headquarters was designed by Chicago-based Perkins+Will. The facility will achieve LEED certification with green features such as grey water irrigation, a reflective roof system, high-efficiency HVAC chillers, and an open workspace plan that maximizes natural light.

(The three-story, 450,000-sf project will accommodate more than 1,500 corporate employees and will include a 30,000-sf culinary development center, 25,000-sf training center, onsite dining facility, fitness and wellness center, company store, bank branch, and 17,000-sf data center.
Trammell Crow is developing the project, which will be the largest office building constructed in Orlando in the last decade.)

Contact: Kenneth H. Cristol 407-774-2515

HFF engaged to sell Lend Lease’s 50% interest in the King of Prussia Mall


(Atrium photo above of the 2.6-million-sf King of Prussia Mall, King of Prussia, PA)


PITTSBURGH, PA – HFF (Holliday Fenoglio Fowler, L.P.) has been named to sell Lend Lease’s 50% interest in the nationally renowned King of Prussia Mall, (above centered photo) a 2,613,476-square-foot national fortress retail shopping destination with a trade area extending throughout portions of the Northeast and Mid-Atlantic regions of the U.S.

The King of Prussia Mall, with sales volume well in excess of $1 billion annually, is home to major national anchor tenants such as Nordstrom, (bottom left photo) Neiman Marcus, Lord & Taylor, Bloomingdale’s, Macy’s, JCPenney and Sears along with nearly 400 other international, national, regional and local tenants located in the northwest portion of the Philadelphia MSA.

As one of the largest destination retailing locations in the U.S., King of Prussia attracts customers from portions of the Northeastern and Mid-Atlantic regions of the U.S. as well as Canada, not to mention tourists from other foreign countries who are visiting these regions.

HFF’s executive managing director and managing member, John Pelusi, (top right photo) and senior managing directors Glenn Whitmore (top left photo) and Chris Turner (middle right photo) will lead the team on behalf of Lend Lease.
“With its dominant retailing position in the populous and high income Northeast and Mid-Atlantic regions, the King of Prussia Mall is viewed as one of the top 10 retail destinations in the U.S.

"As one of just a handful of retailing locations able to generate over $1 billion in annual sales, it is a must location for all major international and domestic tenants such as Apple, Tiffany, Thomas Pink, Coach, Salvatore Ferragamo, and Hugo Boss,” said Whitmore and Turner.

“King of Prussia’s historic growth in sales volumes and revenue streams will be further enhanced by the rollover of existing tenants with below market rents as well as the redevelopment of the former Strawbridge Department Store. We anticipate that an asset of this quality will command unprecedented investor interest and pricing,” said Pelusi

Lend Lease, headquartered in Australia, is an international property group with broad skills across the property value chain. Lend Lease is structured along five key lines of business globally: retail, communities, public private partnerships, investment management, and project management and construction.

Lend Lease is a member of the Dow Jones Sustainability World Index which is used by DJSI licensed asset managers to manage investments worth over US$5 billion each year.

HFF (NYSE: HF) operates out of 18 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry.

HFF offers clients a fully integrated national capital markets platform including debt placement, investment sales, structured finance, private equity, note sales and note sale advisory services and commercial loan servicing. http://www.hfflp.com/

CONTACTS:

John H. Pelusi Jr., HFF Executive Managing Director and Managing Member, 412 281 8714, jpelusi@hfflp.com

Glenn E. Whitmore, HFF Senior Managing Director, 212 245 2425, gwhitmormailto:gwhitmore@hfflp.com


C. Christopher Turner, HFF Senior Managing Director, 404 832 8460, cturner@hfflp.c.om

Laurie Fish McDowell, HFF Associate Director, Marketing, 617 338 0990, lmcdowell@hfflp.com

Special Report: PKF Says Caribbean Hotels Face Several Threats In 2008

(Sandy Cay , above, is a private Caribbean tropical island, located approximately 1/2 mile off the west end of the main island of Utila. Utila Island is itself located approximately 18 miles from the coastal town of La Ceiba on the northern coast of mainland Honduras)


ATLANTA, GA-–PKF Hospitality Research (PKF-HR), an affiliate of PKF Consulting, has released its 2008 edition of Caribbean Trends in the Hotel Industry.

The report finds that the Caribbean hotel industry faces some strong challenges going forward. After a soft 2006, most Caribbean destinations saw their visitation rates grow in 2007.

In 2008, however, the combination of a slow U.S. economy, increased competition, rising energy costs, and threats of reduced air service could result in lower levels of occupancy and profits for the region’s hotel owners and operators.

“Given the region’s dependence on airlift, the most daunting issues facing the Caribbean hotel industry are the rising cost of airfares and the announced cutbacks in air service,“ said Scott Smith, (top right photo) MAI, senior vice president in the Atlanta office of PKF Consulting.

“Due mostly to the rising cost of fuel, four of the five leading air carriers to the Caribbean have announced cutbacks in service. Puerto Rico and the Dominican Republic could see as many as 26 percent fewer flights in December of 2008 compared to December 2007.” In an effort to maintain air service, the Puerto Rico Port Authority is offering to reduce airport fees by 45 percent.

Not only is the reduced air capacity a concern, but so are rising airfares. “The Caribbean has always been attractive to price-sensitive travelers. If airfares continue to rise, hotels may have to reduce their room rates in an effort to maintain the Caribbean’s position as an affordable destination,” Smith said.

Airlines are not the only mode of transportation impacted by the rise in energy costs. The relatively low cost of Caribbean cruises has made the region the number one cruise market in the world.

“Despite the strength of the market, we have seen shifts in the cruise industry that have been influenced by the rising cost of fuel. Cruises to more remote ports in the southern Caribbean, such as Aruba, are being cut from itineraries due to the length of the trip and fuel required to get there,” Smith noted.

Energy Costs

The rising cost of energy is not only impacting transportation, it has perpetuated the high cost Caribbean hotels have to pay for utilities, as well. Utility costs for the average property in the Caribbean Trends sample were 7.3 percent of total revenue, or $8,341 per available room in 2007. This compares to just 3.6 percent, or $3,868 per available room, for comparable U.S. resorts.

In an effort to offset the rising cost of energy, some Caribbean hotels have instituted energy surcharges. Most people believe this is not a permanent solution. The buzz word in the region is to “go green.”

“To preserve the natural beauty of the region, Caribbean resorts have had a long history of being environmentally friendly,” Smith commented.

“Hotel operators are now parlaying this experience into energy conservation. In addition to installing cost-cutting equipment, such as efficient light bulbs, showers, toilets, sinks, and air conditioning, Caribbean hoteliers are working with their local energy providers to develop new sustainable technologies. This will not only reduce the cost of operations, but improve the overall economy of the island on which they operate.

New Competition

Another challenge to Caribbean hotels is the anticipated growth in competitive supply predicted over the next few years.

Most major international brands have extensive plans to increase their presence in the region. The World Travel and Tourism Council estimates that more than $100 billion has been committed to the development of new hotels in the Caribbean over the next five to six years.

“If you profile the hotel projects that are currently under construction there, you’ll find a preponderance of luxury and upper-upscale properties,” Smith observed. “Like the recent trend in the United States, most of these projects are resorts with a significant residential component and first-class spa.”

Caribbean properties will not just face new competition from within the region. Hotel construction is flourishing throughout Latin America. “Belize and Costa Rica are two markets that are becoming increasingly competitive with the Caribbean as a vacation destination for U.S. citizens, as well as travelers from Europe and South America,” Smith said.

Operating Costs

For the third consecutive year, PKF-HR compared the financial performance of Caribbean hotels with comparable U.S. resorts. The observations continue to be consistent.

“Historically, Caribbean hotels have enjoyed the benefit of paying their employees relatively low salaries and wages. However, due to rising standards of living among the islands, we have started to see a closing of the gap between U.S. and Caribbean labors costs,” Smith noted.

(Photo at left, Suerre Caribbean Beach Hotel Resort, Punta Uva Beach, Province of Limon, Costa Rica.)

Caribbean hotels continue to pay less property taxes than their U.S. counterparts. This is attributable to the level of government subsidies tourist-related businesses frequently receive.

Utility costs are not the only expense that is extraordinarily high for Caribbean hoteliers. “Because of their isolated locations, hotels in the Caribbean need to import the majority of their food and beverage items. Accordingly, the profit margins in this department are lower than would be expected within the United States,” Smith observed. “In addition, Caribbean insurance costs continue to exceed the U.S. average due to the constant risk of hurricanes.”

To purchase a copy of the 2008 Caribbean Trends in the Hotel Industry report in PDF format, please visit the firm’s online store at www.pkfc.com/store, or call (866) 842-8754. The report contains several data tables that allow Caribbean hotel owners and operators to benchmark the financial performance of their property based on size (room count) and ADR groupings.

(Photo at right, Blue Reef Island Resort, Ambergris Cave, Belize.)

PKF Hospitality Research (PKF-HR), headquartered in Atlanta, is the research affiliate of PKF Consulting, a consulting and real estate firm specializing in the hospitality industry. PKF Consulting has offices in Boston, New York, Philadelphia, Washington DC, Atlanta, Indianapolis, Houston, Dallas, Bozeman, Sacramento, Seattle, Los Angeles, and San Francisco.
Contacts:
Scott Smith, MAI Senior Vice President, PKF Consulting, Inc., 3475 Lenox Road, Suite 720, Atlanta, GA 30326. PH (404) 842-1150, ext 233

Chris Daly or Jerry Daly (media), Daly Gray Public Relations, 620 Herndon Parkway, Suite 115 Herndon, VA 20170. PH (703) 435-6293