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July 1, 2007
Cover Story
FAREWELL CHEAP DEBT
At the halfway mark of 2007, leveraged investors are saying goodbye to the lowest commercial mortgage rates in 40 years and are coming to grips with increased capital costs....
Features
Turning Brownfields into Goldfields
Across from the Manhattan skyline showcasing the nation's premier properties, for more than 30 years a sprawling parcel of land sat neglected and overgrown with weeds in the shadow of the George Washington Bridge. Once, silent film star Mary Pickford posed for close-ups in a film studio on the site. Nearly a century later, where others saw blight, developer John Johnson, president of Centuria Corp., saw possibility....
Office Towers Sprout
Toronto is in the midst of a revival, with three new towers encompassing 3.1 million sq. ft. under construction a few blocks apart in Toronto's CBD....
Subprime Lending Fallout
Turmoil over subprime lending in the single-family home market is taking a toll on mortgage real estate investment trusts. Through June 19 of this year, the mortgage REIT industry posted a total return of negative 13.40%, a huge swing from the 19.32% return posted for all of 2006, according to the National Association of Real Estate Investment Trusts (NAREIT)....
Self-Storage REITs Feeling the Pinch
In self-storage markets, scattered signs hint of a slowdown. In cities such as Columbus, Ohio, customers can get the first month's rent for $1. Shares of the average self-storage REIT lost 3.4% in the first four months of 2007, according to the FTSE NAREIT Equity index. With housing sales falling, some investors worry that fewer homeowners will be storing lawnmowers and computers....
Philanthropy Flourishes
After years of strong commercial property markets, many entrepreneurs are turning attention to giving away their fortunes. Companies that once made ad hoc donations have developed foundations and systematic giving programs....
Introducing the $1,200 Nightly Stay
A year ago Strategic Hotels & Resorts Inc., a publicly traded REIT in Chicago, went on a buyout binge, acquiring nameplates such as the Westin St. Francis in San Francisco and the Hotel del Coronado near San Diego. This year Strategic is embarking on its first major ground-up development, a small hotel called La Solano near Puerto Vallarta on Mexico's west coast. Construction costs will run $1 million per room and rates are expected to start at $1,200 a night after the hotel opens in 2009....
Express Delivery in Outsourcing
For at least 20 years, U.S. firms have outsourced real estate functions — from space planning to landscaping — as a way to concentrate on their core business. But now, many top firms are taking outsourcing further, using service partners to help them grow, and locate or manage new workplace facilities....
Developments
More REITs Exit Stage Left
Private equity-led buyouts of real estate investment trusts show no sign of slowing down at midyear. Eight large privatizations worth $43.3 billion were announced through the first five months of 2007....
A Growing Office Empire
As one of the nation's fastest growing suburban office markets, Ontario, Calif. is teeming with new development. With a booming local economy, cranes are rising all over this Inland Empire city of 171,000 located 35 miles east of Los Angeles....
Sweet Auburn Rebirth
By the late 1990s, Atlanta's Sweet Auburn district had soured. The area, named a National Historical Landmark in 1976 for its role and significance in the civil rights movement and African-American history, suffered from decades of urban decay and neglect....
China Tightens Rules
China is taking new steps to curb foreign investment in commercial and residential real estate and to quell fears that offshore investors are driving up prices to unacceptable levels. Announced June 11, the new rules extend licensing and equity-participation requirements for property purchases to cover investments in Chinese holding companies as well....
Q & A
Jill Dalton of Manhattan-based risk management firm Marsh Inc. tracks the weather, particularly hurricanes, far more than most people. As managing director...
Names In The News
NAMES IN THE NEWS
Peter Dunn has joined Marcus & Millichap Capital Corp. as senior director of the firm's Houston office. Dunn will oversee debt and equity transactions for the company's Houston office....
Deals And Projects
DEALS & PROJECTS
Harbor Group International LLC based in Norfolk, Va., has acquired the BB&T Tower, an 18-story office building in downtown Jacksonville, Fla., from an...
In Progress: SkyCity Orlando
DEVELOPER: Sky Development LOCATION: Orlando, Fla. SIZE: Sky Tower I, a 25-story, Class-A office tower; Sky Tower II, a 35-story, 350 room hotel with...
11 TIMES SQUARE PROJECT BEATS THE CLOCK IN EARLY GOING
SJP Properties has broken ground two months ahead of schedule on a speculative 40-story office tower in Times Square. The 11 Times Square project is being built on one of the few viable development sites in midtown Manhattan....
Columns
Goldilocks Economy for Real Estate Gives Way to More Volatile Climate
Much like a powerful HBO special, the commercial real estate industry produced plenty of drama in the first half of 2007 — even without Tony Soprano. The first nail-biter ended in early February when shareholders of Equity Office Properties approved a $39 billion takeover offer by The Blackstone Group following a fierce bidding war with investors led by Vornado Realty Trust....
Boston's Historic Ames Building Will Become Boutique Hotel
When it was constructed in 1889, the 13-story Ames Building was the first skyscraper in Boston. The wealthy Ames family owned the hugely successful agricultural tool business, Ames Plow, launched in the late 1770s. Ames Plow picked a pinnacle point in downtown Boston on which to construct its corporate home, One Court Street, just off Washington Mall. Now the unique building may be transformed into a boutique hotel....
World Beat
Many Americans look at the Middle East primarily as a source of trouble, but it's also a land of opportunity, as C. MacLaine Kenan of Arcapita has found. The Bahrain-based private equity firm has a healthy $2.7 billion balance sheet, and has completed $18 billion in deals over the last decade....
Hedge Funds Wield Clout in Real Estate
The size of offerings for commercial mortgage-backed securities and collateralized debt obligations has been growing by leaps and bounds during the last...
SOX Auditing Rules Eased
REITs may find complying with the Sarbanes-Oxley Act (SOX) easier since the U.S. Securities and Exchange Commission voted unanimously May 23 to ease some of its more restrictive requirements....
The High Cost of Bad Tax Forecasting
Corporate accounting and tax departments often have difficulty producing reliable property-tax expense forecasts for budgeting purposes. Inaccurate forecasts can reduce corporate net incomes by millions of dollars....
As Good As It Gets?
If the real estate mortgage market were a chair, it would be supported by four legs: commercial real estate, single family, condo conversion, and land loans. Given the current state of the overall mortgage markets, that chair is barely standing. Three of its four legs have either fallen off or are wobbling, and only one leg remains stable — commercial real estate mortgage loans....
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Photo Galleries
Hudson Yards Development
Check out images for Coach's new global headquarters, which will anchor the initial tower of the Eastern Rail Yards site within the 26-acre mixed-use Hudson Yards Development on Manhattan's far West Side.
Outstanding Women in Commercial Real Estate
From housing low-income families in Southern California to closing some of Manhattan's largest office leases, women leaders are using commercial real estate as a platform to reshape communities while they drive investor returns.
Click here to view more photo galleries.
Videos
2012 MBA CREF/Multifamily Housing Convention & Expo Video Blogs
Check out the Vlogs from the 2012 MBA CREF/Multifamily Housing Convention & Expo from JLL...
Click here to view more videos.
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