Wednesday, July 9, 2008

PKF Study Finds U.S. Hotels Extremely Vulnerable To Sharp Declines In Airline Capacity

ATLANTA, GA., July 9, 2008 – According to the latest analytical data from PKF Hospitality Research (PKF-HR), U.S. hotels could face a decline in lodging demand greater than that experienced during the turmoil following the terrorist attacks on September 11, 2001.

Under a worst-case scenario, a 1 percent decline in the number of seats flown within the U.S. will result in a 0.39 percent decline in the demand at the nation’s hotels. These findings come from an in-depth econometric analysis performed by lodging experts PKF Hospitality Research.

“Many industry participants have been speculating about the spillover effect a deteriorating airline industry will have on hotels,” said Mark Woodworth, (top right photo) president of PKF Hospitality Research. “Our research measured the historical relationship between these two components of the travel industry. This allowed us to project just how much business hotels stand to lose given the cutbacks in capacity announced by the major airlines.”

Using historical data from Smith Travel Research, Moody’s, and the Department of Transportation, and controlling for the effects of changes in income and employment, PKF-HR found what many intuitively believe: a highly significant relationship exists between available seats and hotel room night demand.

“Based on our findings that a 1 percent decline in available airline seats results in a 0.39 percent decrease in hotel demand, if airline capacity is reduced by 10 percent as some have suggested, then lodging demand would fall off 3.9 percent. To put this in perspective, the decline in lodging demand experienced in 2001 was just 3.3 percent,” Woodworth noted.

Given PKF-HR’s second quarter Hotel HorizonsSM forecast for 2008, a 3.9 percent reduction in lodging demand for the year would translate into approximately 40 million fewer room nights occupied, or $4.3 billion in revenue, on an annual basis.
“With losses like this, hotel operators would be forced to make drastic cutbacks in staffing and other operating costs,” Woodworth concluded.

Several factors, however, suggest that the decline might not be quite so bad. “As one would expect, the airlines are eliminating those flights that are in least demand and lowest in fuel efficiency. Some portion of the demand that would have booked a flight that is no longer available will simply adjust the timing of their travel plans. Trips will still be made,” Woodworth noted.

Location and Rate Matter
“Just as we have observed during the ebbs and flows of the normal lodging cycle, the reaction of U.S. hotels to a major economic shift will differ based on a variety of factors,” he added.

Statistically speaking, the PKF-HR regression analysis found that Miami, Orlando, Phoenix, and Denver have historically shown the most significant relationships between airline seats and lodging demand.
This indicates that these cities are the most sensitive to changes in airline service.

(Atlanta's Jackson International Airport at left)
“What these markets have in common is that they are either major leisure destinations, or geographically situated in an isolated location away from other major metropolitan areas,” said John B. (Jack) Corgel Ph. D., the Robert C. Baker professor of real estate at the Cornell University School of Hotel Administration and senior advisor to PKF-HR. (photo at left)

“Conversely, cities that are very economically diverse, or those that are easily accessible from other metro areas via automobile or train, are best positioned to withstand cutbacks in airline capacity. Most of the major cities along the two coasts fall into these categories.”

Pricing levels also dictate the vulnerability of hotels to changes in the airline industry. In general, properties in the highest and lowest rated chain-scales are least susceptible to movements in airline capacity, while those in the middle stand to lose the most.

“Historically, the performance of luxury hotels and budget-oriented motels is largely insensitive to changes in airline capacity. Conversely, lodging establishments in the upscale and midscale without food and beverage categories have exhibited the greatest historical vulnerability to changes in the airline industry.

"These two lodging segments are popular with mid-level business and leisure consumers that don’t have quite the economic insulation of executive luxury travelers, or the bare-bones budget of construction crews and thrifty trekkers,” Corgel said.


“Given what is happening in today’s economy, there are many moving parts influencing the performance of hotels.

"What we at PKF-HR have accomplished is isolating the direct impact of the airline industry on lodging, as opposed to the downward pressures on hotel demand caused by the credit crisis, rising gas prices for automobiles, and declining consumer confidence,” Woodworth stated.

“If significant reductions to airline capacity do occur, the potential exists for an extremely negative impact on U.S. hotels. The impact will vary by geographic location and property orientation, but will be hard to completely avoid no matter where, or who, you are.”

To purchase a second quarter 2008 Hotel HorizonsSM forecast report for the United States, or one of 50 individual markets, please visit the firm’s online store at, or call (866) 842-8754. (Chicago's O'Hare International Airport at right)

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.


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

Mark Woodworth
PKF Hospitality Research
3475 Lenox Road, Suite 720
Atlanta, GA 30326
(404) 842-1150, ext 222

S&P Teleconference: The Effect Of Mortgage Insurer Ratings On Municipal Housing; Thursday, 7/10/08 @2pm ET

SAN FRANCISCO, CA--Standard & Poor's Ratings Services will hold a teleconference call on Thursday, July 10, 2008, at 2 p.m. Eastern Daylight Time to discuss its recently released report, The Effect Of Mortgage Insurer Ratings On The Municipal Housing Sector.

At the conclusion of the call, there will be a question and answer session. Please note that Standard & Poor's offers all of its broadcast teleconference calls to all interested participants on a complimentary basis.

The call will begin promptly at the time indicated. Please call at least 15 minutes before the scheduled start of the call to complete the precall registration process.

Live Dial-in Number: 1-210-234-6461

Conference ID#: 2539571

Passcode: SANDP

Replays: Recorded replays of the call are made available about an hour after the call concludes and are available until Thursday, July 17, 2008.

Replay number: 1-402-344-6800.

Media Contact: Christopher Mortell , New York, (1) 212-438

Analyst Contacts: Lawrence Witte, San Francisco (1) 415-371-5037 Wendy Dolber, New York (1) 212-438-7994

Terranova Signs Wachovia Securities to 7-Year Lease at Weston Corporate Centre in Weston, FL

MIAMI BEACH, FL– Terranova Corporation is proud to announce that Wachovia Securities, LLC, the nation's third largest brokerage group and a leading corporate and investment bank, has signed a 7-year lease at Weston Corporate Centre (top right photo) located at 2500 Weston Road in Weston, Fla. This will be a new location for Wachovia Securities.

Terranova senior commercial associate Gordon Messinger represented the landlord in the 5,600 square foot transaction valued at nearly $1.4 million. The deal marks the fourth deal signed at Weston Corporate Centre since the beginning of 2008, for a total of nearly 30,000 square feet.

Weston Corporate Centre is a showcase asset in South Florida’s office market. The 9.83-acre property, which fronts I-75 and Royal Palm Boulevard in the city of Weston, consists of two four-story buildings totaling nearly 150,000 square feet. The property benefits from its Weston location, with easy access to major expressways making it a sought after corporate destination within the Southwest Broward office submarket.

Wachovia Securities provides financial advisory, brokerage, asset management and other financial services to individuals, institutions and corporations through approximately 18,000 registered representatives in more than 3,700 locations nationwide. Headquartered in St. Louis, Missouri, Wachovia Securities is a nonbank affiliate of Wachovia Corporation (NYSE: WB).

Media Contact: Karen LaFleur, 305 695 8700,

Grubb & Ellis|Commercial Florida Completes Disposition of Popeye’s Portfolio

TAMPA, FL --- Grubb & EllisCommercial Florida has negotiated the sale of the former Popeye’s restaurant on US Highway 19 in Pasco County.
The 2,714 square foot freestanding restaurant, located in the city of Holiday was the last property remaining in the former Popeye’s franchisee’s portfolio.

Michelle Seifert, (top right photo) vice president of the firm’s Retail Group and associate Josh Tarkow (top left photo) negotiated the recent sale representing the seller, Southeast Restaurant Properties based in Deerfield, Ill.

“I started with more than 12 properties in multiple markets 18 months ago and despite the current economic conditions was able to liquidate these assets within a fairly short timeframe,” said Seifert.

Phong Hong Nguyen of New Port Richey purchased the former Popeye’s Restaurant building.

For more information, please contact

Michelle Seifert Vice President or Josh Tarkow Grubb & Ellis/Commercial Florida 813-830-7890

Larry Lietzman, Marketing Associate, Grubb & EllisCommercial Florida, 813-830-7890

Larry Vershel or Beth Payan, Larry Vershel Communications, 407-644-4142

Marcus & Millichap Arranges Sale of Six-Property Portfolio in Four States for $15.62M

CORPUS CHRISTI, TX July 9, 2008 – Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has arranged the sale of six single-tenant net-leased properties in four states, including Texas, Florida, Georgia and Alabama, totaling 49,160 square feet. The sales price is $15.62 million.

John Glass, (top right photo) a senior vice president investments and senior director of Marcus & Millichap’s National Retail Group in San Francisco, represented the seller of the Colonial Bank portfolio.

Andrew Gallas, an associate in the firm’s Chicago Downtown office, and Robert Bender, (top left photo) a senior associate in the firm’s Detroit office, represented the seller of the AutoZone properties.

Andy Dorf, a senior associate and associate director of the firm’s National Retail Group in Brooklyn, and Zachary Silver Felson, an investment specialist also in the firm’s Brooklyn office, represented the buyer.

“These properties offered the buyer a rare opportunity to purchase six single-tenant triple-net leased properties with no management responsibilities in strong locations,” says Dorf.

The portfolio includes:
· A 11,400-square foot Colonial Bank, located at 1100 East Three-Notch St., Andalusia
· A 4,200-square foot Colonial Bank, located at 4312 Manatee Ave. West, Bradenton, Fla.
· A 13,500-square foot Colonial Bank, located at 501 Walnut St., Macon, Ga.
· A 5,904-square foot Colonial Bank, located at 801 E. State Road, Longwood, Fla.
· A 6,786-square foot AutoZone, located at 2149 Airline Road, Corpus Christi, Texas
· A 7,370-square foot AutoZone, located at 14062 Northwest Blvd., Corpus Christi, Texas

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

SchenkelShultz Receives 2008 United Cerebral Palsy Universal Accessibility Design Award

ORLANDO, FL – SchenkelShultz Architecture, Orlando, one of Florida’s leading green design firms, has received the 2008 United Cerebral Palsy (UCP) Universal Accessibility Design Award at the Annual Awards for Excellence Dinner in Washington, DC.

Daniel M. Tarczynski, (top right photo) AIA, a Partner and Designer with the firm, accepted the prestigious national award on behalf of SchenkelShultz.

“At SchenkelShultz, we believe in designing special needs facilities that inspire, exceed accessibility requirements and produce a welcoming environment,” said Tarcynski.

SchenkelShultz has completed pro bono work for UCP Holloway Center (middle left photo) and UCP Pine Hills facilities and is currently designing a UCP Research Park facility, all in Central Florida. The Orlando office of SchenkelShultz is located at 200 East Robinson Street, Suite 300, Orlando, FL, phone 407-872-3322.

In other activity, SchenkelShultz designed the University of Florida’s College of Dentistry’s new $5.4 million, 20,000-square-foot Dental Clinic now under way on the campus of Edison College in Naples, FL. (bottom right photo)

Compliant with the U.S. Green Building Council’s LEED® Silver Certification requirements, the 2-story pediatric dental clinic and educational facility will be a state-of-the-art facility serving the dental needs of children.

It will also support clinical training for doctoral students and dentistry residents of the University of Florida, as well as continuing education opportunities for dentists in the region.

The clinic will include a patient waiting area with views of natural wooded spaces, 10 private dental operatories, four open dental operatories, two surgical dental operatories, classrooms, as well as space for future expansion. W.G. Mills, Inc., Bradenton, FL, serves as construction manager for the facility which is slated for completion in October 2008.

Contact: Kenneth H. Cristol, President, Cristol Marketing Company,237 Hunt Club Blvd., Suite 102, Longwood, FL 32779 USA. PH 407-774-2515 FX 407-774-6647. Strategic Marketing, Brand Management, Publicity and Advertising, and Corporate Communications

Meridian Capital Group Arranges Financing for Miltifamily Building in St. Petersburg, FL

ST. PETERSBURG, FL - Meridian Capital Group has arranged a loan in the amount of $5,945,000 for the refinance of Boca Ciega, (top right photo) a 109 residential unit building located at 3797 37th Street South.

Chaim Lanner of Meridian’s Florida office negotiated to secure a rate of 5.38% over a 5-year term. In addition, the building is under a HAP contract that will be renewed annually.

Contact: Meridian Capital Group, LLC
1 Battery Park Plaza
New York, NY 10004
(212) 612-0109
Dani Sabesan at

Noble Investment Group Acquires the Hyatt Regency Valencia and Santa Clarita Conference Center in Los Angeles County

Acquisition Marks Noble’s Twelfth Value-Add Investment in Current Private Equity Fund

ATLANTA, GA--Privately held Noble Investment Group (“Noble”), a leading sponsor of private equity real estate funds and an integrated lodging and hospitality operating and development organization, has acquired the Hyatt Regency Valencia (middle left photo) located in a planned community within Los Angeles County, California that is ranked among the top 25 places to live in the U.S. by CNN/Money magazine.

The 244-room first class Hyatt Regency Valencia is integrated into the approximately one million square foot mixed-use development, Valencia Town Center,(above centered photo) which serves as the community focal point for business, shopping, dining and entertainment in the vibrant Santa Clarita Valley.

The Hyatt Regency Valencia is home to the valley’s premier meetings and events venue, the Santa Clarita Conference Center, (bottom right photo) which features 16,000 square feet of exceptional meeting and event space including three outdoor garden areas overlooking the prestigious Valencia Country Club.

Noble will operate the hotel under a long-term license agreement with Hyatt Hotels Corporation. The investment marks the company’s twelfth acquisition in the Noble Hospitality Fund, LLC, the organization’s current, fully discretionary private equity real estate fund.

“Noble continues to execute our investment strategy to acquire and develop premium branded hotels in top markets throughout the United States where we can add value through a combination of our operating and development core competencies,” said Mit Shah, (top right photo) Noble’s senior managing principal and chief executive officer.

“The acquisition of this first-class hotel in the strong west coast market of Valencia is a great example of Noble’s investment strategy enabled by the strength of our organizational platform as we were able to secure the opportunity, perform real-time due diligence and close the transaction in a total of six weeks,” said Rodney Williams, (bottom left photo) Noble’s managing principal and chief investment officer.

“Our team will now focus on increasing market share, revenue and profitability through the combination of the completion of the planned physical enhancements in conjunction with our process based, balanced scored operational framework.”

The Hyatt’s spacious guest rooms feature upscale amenities and finishes, including the new Grand Hyatt bed, i-home systems, high-speed internet access and majestic views of the surrounding Santa Susana and San Gabriel Mountains. A double-sided fireplace highlights the Hyatt’s outdoor heated swimming pool, whirlpool, and sundeck area, set in an alluring resort style courtyard overlooking a picturesque golf course backdrop.

Located in Los Angeles County, the Hyatt Regency Valencia easily accessible to downtown Los Angeles, San Fernando Valley, and Ventura and is only a mile and a half from Six Flags Magic Mountain and Hurricane Harbor Water Park.

Media Contacts:
Chris Daly, Daly Gray Public Relations, 703.435.6293,

Bonnie Herring, Noble Investment Group, 404-262-9660,

Tenants Continue to Enjoy Leverage in Metro Washington, DC Office Leasing Deals

WASHINGTON, DC--Jones Lang LaSalle presents its first group of market materials for 2nd Quarter 2008.

Included are the MarketSmart Statistics, Metro DC, Washington, DC, Suburban Maryland and Northern Virginia SubMarketSmarts, 2nd Quarter 2008 Market Highlights and Under Construction Pipeline and New Supply lists.

In several weeks, we will follow-up by sending the entire MarketSmart report, with detailed SubMarketSmart reports on all of the 35 submarkets that comrpise the Metropolitan Washington, DC market.

(For a copy of the current complete report, please contact John Sikaitis, (top right photo) Vice President, Communications, The Mid-Atlantic Research Group, 202.719.5839,

The upcoming November election has the region and the country in a buzz about how each candidate would change the course of the current political mindset and fabric. However, despite the political buzz, there has been minimal effect on the office market. To date, the office market remained relatively stable from a demand standpoint, while new supply continued to be added to the market, shifting market fundamentals and leverage to the tenant in recent months

Looking ahead, opportunities for tenants to negotiate deals and evaluate options remained elevated from 12 to 18 months ago due to the combined slowdown in demand and increase in supply.

With a substantial amount of development yet to deliver and expected slowing in both the regional and national economies through the end of the year, leverage will remain firmly with tenants over the short term.

As the election is decided and companies begin to react and plan for growth in anticipation of the next Administration's priorities, we expect employment growth, federal spending growth and occupancy growth to be realized, slowly removing abundant space options from the market and gradually shifting leverage from tenants back to landlords.