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Shula Moves From Coaching to Steak

Coach Don Shula, the winningest coach in the NFL, is scoring in the restaurant businesses.

The Shula's chain, which has over two dozen locations, is based in Florida. Shula has been making a splash in Texas also. A Shula's steakhouse just opened in the Hyatt Regency in downtown Houston and the new Sheraton Fort Worth Hotel in downtown Cowtown also sports a  Shula's steakhouse.

Another unit was just added in Jacksonville, Fla. in July. "The Shula's 347 Grill in Jacksonville is truly a gorgeous restaurant," said architect Marc Geftman, founder of TurnKey Concepts, which created the woodwork at the Shula's in the Sheraton Jacksonville. TurnKey Concepts, based in Lake Worth, Fla., specializes in restaurant concepts, designs, architecture and millwork.

Coach Shula is mainly involved in the promotional appearances for the restaurant chain. His son, Dave Shula, directs the company operations.

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Workplace Outlook for Real Estate

The 2008 job outlook for real estate professionals – particularly in the commercial sector – remains positive, says a new survey conducted by FPL Advisory Group, one of the industry’s leading strategic recruitment and advisory firms.

According to Bill Ferguson, FPL’s co-Chairman and co-CEO, two-thirds of senior U.S. real estate executives responding to his firm’s annual hiring and compensation survey expect to add staff in 2008. And while double-digit compensation increases will become less common, the vast majority of respondents do expect pay levels to increase at least moderately across the industry.

Ferguson commented, “Given the well-publicized problems in the debt markets and generalized concern over the health of the economy, these results seem counterintuitive. We haven’t seen a precipitous drop in demand for talent. Rather, strong underlying fundamentals and the continued availability of large amounts of equity capital have resulted in a hiring environment that is much more robust than the markets may indicate. One of our clients has seen their stock price drop 40% in the last two months, but the underlying business is still good. They’re still hiring.”

Commercial Real Estate – Core Performance is a Growing Priority

Approximately 75 percent of survey respondents who identify themselves as Commercial Ownership/Services Firms intend to increase their ranks in 2008, despite continuing uncertainty in the financial markets. Another 17 percent anticipate no change in headcount and just 5 percent in this category plan to reduce staff.

Notably, those firms that will be actively hiring are putting heavy emphasis on people and positions aimed at enhancing the core value of their operations. Top priorities include asset/portfolio management and property management functions. However, there still is significant demand for talent to support acquisitions, development and other growth functions.

Ferguson points out that this pattern is atypical. “Historically, when the industry hits hard times, you see a pull-back in demand for acquisitions talent and a renewed focus on asset and portfolio management. This time around, supply and demand are generally in balance, there’s a ton of equity capital seeking deployment, and globalization is fueling growth. So there’s actually strength across multiple functions – turbulence in the market and concerns over vacancies are causing companies to renew their focus on managing their assets, but not at the expense of growing through acquisition.”

Particularly surprising is the finding that nearly half of all commercial mortgage firms surveyed intend to hire new staff even despite the recent slowdown in lending. “Certainly, originations activity has slowed dramatically, and there has been a decrease in demand for underwriting professionals as a whole,” explained Ferguson.

Across all real estate sectors, survey respondents indicate that investment boards will be most highly focused on company performance and oversight of corporate strategy, consistent with commercial real estate’s 2008 recruitment trends.

Residential Real Estate -- Moves to Reduce Staff

In contrast to the outlook for the majority of commercial real estate firms, over 70 percent of FPL respondents active as homebuilders, residential mortgage bankers or residential brokerage companies predict their total headcount will decline in 2008. While there will be demand for new talent in major West Coast markets, which have sustained a positive market for condominium and mixed use development, the outlook for hiring among residential real estate sector firms elsewhere remains gloomy for 2008.

Ferguson commented, “This is the most dramatic storm we’ve seen in the residential markets in history. The only real hiring we’re seeing is by private equity firms that are flush with pension fund capital and that are looking to capitalize on the current situation by snapping up undervalued residential assets.”

Moderate Increases in Salary Predicted Across Real Estate Sectors

Despite expected declines in certain sectors, which have been most negatively impacted by troubles in the debt and housing markets, the majority of survey respondents across real estate sectors still expect single-digit increases in total compensation (including base salary, annual cash bonus, and long-term equity awards) for 2008. These results reflect the fact that 2007 marked a mixed year in terms of performance, in that bottom-line fundamentals remained strong while stock prices dropped substantially due to macroeconomic factors (a trend which, while not directly correlated, could be indicative of challenges facing private companies as well as public ones). As a result, changes in compensation will most likely be mixed: salaries will likely increase at rates similar to broader corporate America (3-4%), cash bonuses should remain stable and in some cases will increase, while long-term components may drop (in some cases significantly).

Is Commercial Real Estate Immune to Economic Slowdowns?

With the benefit of more than 25 years of experience working with real estate industry leaders, Bill Ferguson reflected, “The very nature of most sectors of commercial real estate – with long-term revenue streams being the norm – enables companies to plan and hire for the medium- to –long-term. If there’s one thing I’ve learned from working with real estate industry leaders, it’s that the vast majority operates from this basis – and therefore they are both opportunistic and strategic in planning as they seek to position their organizations for long-term growth.”

He continued, “The industry’s ongoing stability also has been positively impacted by the enhanced flow of equity capital across national borders in recent years – U.S. institutional money seeking investments overseas for the past several years as well as the recent increase in foreign capital investing here.”

FPL Advisory Group surveyed top U.S. real estate executives about their expected hiring and compensation strategies for 2008. The survey generated and analyzed 275 responses from professionals, including CEOs and other senior-level executives from companies active primarily in commercial property investment, commercial mortgage lending and single-family homebuilding, along with a sampling of respondents from investment banks, real estate investment trusts, major corporate real estate departments and pension funds actively investing in the real estate sector. The full survey report is available at http://www.fpladvisorygroup.com.

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Commercial Real Estate Outlook

Most commercial real estate markets are enjoying relatively low vacancy rates and healthy rent growth from a fundamentally sound economy, according to the latest Commercial Real Estate Outlook of the National Association of Realtors.

NAR Senior Economist Lawrence Yun said, “Commercial real estate responds to economic growth and job creation, which have been fairly strong over the past two years and have created the need for additional commercial space,” he said. “These fundamentals will continue to support commercial real estate markets in 2008. There has not been much overbuilding in the commercial sectors, and investors are more diverse.”

Yun said pricing for some commercial real estate has been at a record high, and capitalization rates have been at historic lows. “Normalization of prices may be occurring, but it isn’t clear what the definition of normal might be in the current market given the repricing of risk in the capital market. In short, the difference between the cash flow on a typical property and its price is close to a maximum, indicating prices may even out.”

A record $257 billion was invested in commercial real estate in the first seven months of 2007, up from $146.7 billion in same period in 2006; that total does not include transactions valued at less than $5 million, or of investments in the hospitality sector.

Cindy Chandler of Charlotte, N.C., chair of the Realtors Commercial Alliance, said there have been some problems recently regarding the availability of capital. “Over-reaction to credit concerns in the financial markets could limit the availability of capital needed by private investors, but overall the situation does not appear to have significantly impacted institutional-grade commercial properties,” she said. “We're returning to the fundamentals and deal structuring of the mid 90s, and may see some dampening in investment activity, but there is a lot of momentum in commercial real estate.

“We see the commercial sectors holding at a healthy level of activity in most of the country, although there could be some slowing as a result of postponed transactions and delays in decision making.”

The NAR forecast in four major commercial sectors analyses quarterly data for various tracked metro areas. The sectors are the office, industrial, retail and multifamily markets. Metro data were provided by Torto Wheaton Research and Real Capital Analytics.

Office Market
The office sector is the most favored by investors, with strong rent growth this year. The cost of steel and other factors have helped minimize speculative construction in most markets. The demand for space is expected to remain strong into 2008, and areas with strong job growth are benefiting the most. Older vacated space is lagging on the market in some cities.
Office vacancies are projected to edge up to an average of 12.9 percent in the fourth quarter from 12.5 percent in the fourth quarter of 2006, and then dip to 12.4 percent by the end of 2008. Annual rent growth in the office sector is forecast at 6.1 percent in 2007 and 3.1 percent next year, after rising 5.2 percent in 2006.
Projections for the third quarter show areas with the lowest office vacancies include New York City; Ventura County, Calif.; Seattle; Los Angeles; Honolulu; and Long Island, N.Y., all with vacancy rates of 9.4 percent or less.
Net absorption of office space in 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, should total 53.8 million square feet this year and 65.1 million in 2008, compared with 78.0 million last year.
Office building transaction volume in the first seven months of this year totaled $147.0 billion, a record for the period, which is 53 percent higher than the same period in 2006. Equity funds accounted for 43 percent of office building purchases, followed by private investors at 21 percent.

Industrial Market
Although the main driver for the industrial market continues to be the need for warehouse and distribution space, particularly in ports and distribution hubs, the rebirth of the technology sector is fueling demand for flex space, with a marked increase in markets such as San Jose, Calif.; Portland, Ore.; Seattle and Phoenix.
Much of the new industrial supply has been on a build-to-suit basis, and building obsolescence remains a factor for distribution facilities. With tightening availability in many primary markets, users are starting to show greater interest in secondary markets.
Vacancy rates in the industrial sector are likely to average 9.6 percent in the fourth quarter and 9.4 percent by the end of 2008, compared with 9.4 percent in the fourth quarter of 2006. Annual rent growth will more than double to 3.9 percent by the end of this year, and is estimated at 3.7 percent in the fourth quarter of 2008, up from a 1.4 percent annual rise at the end of last year.
The areas with the lowest industrial vacancies include Los Angeles; Albuquerque; Tucson; Orange County, Calif.; Portland, Ore.; and San Francisco, all with vacancy rates of 5.4 percent or less.
Net absorption of industrial space in 58 markets tracked will probably total 125.0 million square feet in 2007 and 165.6 million next year, down from 202.8 million in 2006.
Industrial transaction volume in the first seven months of 2007 was $26.8 billion, up 13 percent from the same period in 2006. Private investors accounted for 36 percent of industrial purchases, followed by equity funds at 25 percent.

Retail Market
Recovery in the retail market has been held back by high levels of new supply, but developers appear to have gotten the message. The majority of new space on the market today is in non-regional malls, but new available space should see marked declines in 2008. Credit problems have not yet impacted retail sales, but will be watched closely.
Vacancy rates in the retail sector are expected to rise to 9.3 percent in the fourth quarter from 8.1 percent at the end of 2006; vacancies are forecast at 8.9 percent by the end of next year. Average retail rent is projected to rise 2.9 percent in 2007 and 1.0 percent next year, following a 3.9 percent increase in 2006.
Retail markets with the lowest vacancies include San Francisco; Orange County, Calif.; San Jose, Calif.; Ventura County, Calif.; Washington, D.C.; and Las Vegas, all with vacancy rates of 5.1 percent or less.
Net absorption of retail space in 53 tracked markets should be 12.1 million square feet this year and 19.0 million in 2008, up from 10.7 million last year.
Retail transaction volume in the first seven months of this year totaled $37.4 billion, up from $22.3 billion in same period in 2006. Private investors accounted for 35 percent of transaction volume, followed by institutional investors at 22 percent and foreign investors, 18 percent.

Multifamily Market
The apartment rental market – multifamily housing – anecdotally appears to be impacted by an influx of single-family homes being offered for rent, cutting into the demand for apartment rentals. In addition, condos are being converted into rental units, particularly in markets such as Washington, D.C., and several areas of Florida.
At the same time, potential first-time home buyers are hesitant and staying in the rental market, supporting multifamily fundamentals until the lure of homeownership returns, the housing cycle changes and more buyers enter the housing market.
Multifamily vacancy rates are likely to average 5.9 percent in the fourth quarter, the same as the fourth quarter of 2006, and then ease to 5.6 percent by the end of next year. Average rent is expected increase 2.9 percent this year and 3.8 percent in 2008, after a 4.1 percent rise last year.
Multifamily net absorption will probably total 209,200 units in 59 tracked metro areas this year, down from 229,400 in 2006, but increase to 234,400 in 2008.
The areas with the lowest apartment vacancies include Northern New Jersey, Salt Lake City, Philadelphia, Pittsburgh, Los Angeles, Minneapolis and Nashville, all with vacancy rates of 2.7 percent or less.
Multifamily transactions in the first seven months of this year totaled $46.3 billion, compared with $41.5 billion in the same period in 2006. Half of the purchases were by private investors, while condo converters accounted for only three percent of acquisitions.

The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the Realtors® Commercial Alliance. The RCA, formed by NAR in 1999, serves the needs of the commercial market and the commercial constituency within NAR, including commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and NAR affiliate organizations.
Organizations in the RCA include the CCIM Institute, the Institute of Real Estate Management, the Realtors® Land Institute, the Society of Industrial and Office Realtors®, and the Counselors of Real Estate. The RCA also provides commercial products and services.
Nearly 140,000 NAR members offer commercial services, and 73,000 of those are currently members of the RCA.

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Henry Cisneros on New Orleans

With all eyes on New Orleans two years after Hurricane Katrina’s devastating impact on the region, CityView Executive Chairman and former HUD Secretary Henry Cisneros has issued an innovative challenge to private companies and public entities to provide a solution which will bring desperately needed housing to the area. Cisneros calls for more private capital investments and proposes collaboration that is not completely dependent on government funding. The uniqueness of this model also relies on unifying local stakeholders, including elected officials, financial institutions, employers, non-profit organizations, builders, developers and neighborhoods to create homes more rapidly than the present building cycle.

“The theme moving forward from the second anniversary should be that the time has come for the private sector to step up, partner with public entities and invest in New Orleans. Although the commemoration brings heightened attention to the area, America must focus on the urgency for private capital investments during the coming weeks and months to put New Orleans residents back into homes,” Cisneros said. “We must think out of the box to do everything we can to move faster to build quality housing. Nowhere else is a collaborative effort between the private and public sectors more important than in New Orleans and the Gulf Coast region.”

Cisneros points to the success of a recent collaboration in the area to rehabilitate 320 severely wind-damaged homes known as the Gates on Manhattan. Leading the partnership are his company, CityView, a national urban housing investor, American Sunrise Communities, a national non-profit organization founded by Cisneros and CityView President Joel Shine, and Le Triomphe Property Group, a Louisiana-based real estate company led by third-generation developer Stewart Juneau. Both Louisiana Governor Kathleen Babineaux Blanco and New Orleans Mayor Ray Nagin are excited and supportive of this new model and solution to the area’s housing crisis.

Le Triomphe brings established relationships within the New Orleans region, which allows the team to quickly identify additional partners for the collaboration. The national team also includes homebuilder partner Our Castle Homes. The homeowner outreach, education and services side of the project is being coordinated by American Sunrise Communities and includes participation from the region’s Desire Community Housing Corporation, Chase Bank, Fannie Mae, Dryades Savings Bank and the Jefferson Parish Community Development Department.

“The rehabilitation of an existing dilapidated apartment complex along with creative construction and financing by the partnership has resulted in newly reconditioned two- and three-bedroom condominiums with a market value between $65,000 and $85,000,” Juneau said. “The development expertise of the partners converted these former tax-credit units into condominiums which are more affordable than many of the area’s rental units. Partnering with CityView and American Sunrise Communities was an opportunity to show that new homes for the area’s working families can be created with no government subsidy and at the speed of business.”

The partnership is currently reaching out to major public and private employers, faith-based organizations and other community groups to provide low-interest mortgages, subsidies, homeownership education services and case management assistance to ensure buyers become solid stakeholders in the community.

“This collaboration with private builders, developers, community lenders, public institutions, major employers and non-profit community groups provides quality housing within the reach of working families who are actually part of the rebuilding effort themselves,” said David Grunwald, president of American Sunrise Communities. “This effort to provide them with housing ensures stable communities and creates important incentives for maintaining public and private resources. This is all necessary to guarantee the long-term health, revitalization and survival of the region.”

CityView, a national housing investor based in Santa Monica, California, has invested more than $700 million to build homes for working families across the nation. The firm has partnered with homebuilders and developers in more than 30 communities across 12 states. The total value of the 6,000-plus homes CityView has financed is more than $2 billion and growing. CityView has additional offices in New York, Dallas, and San Antonio.

In 2006, Cisneros and Joel Shine, president of CityView, formed the national non-profit American Sunrise Communities. Their mission is to create a national model, leveraging public, private and non-profit resources to facilitate large-scale homeownership opportunities for low-income and minority families excluded from the housing market. In 2007, the organization added offices in Denver, New Orleans, San Francisco, and Seattle and created partnerships with local stakeholders resulting in the potential development of over 5,000 affordable homes.

Affordable Housing:

A Must for Worker Retention

Concern is apparent within the business community -- particularly among larger employers -- about the lack of affordable housing for employees, with companies reporting the shortage as being problematic in hiring and retaining entry- and mid-level workers, according to a new survey released by the Urban Land Institute (ULI). The same survey showed interest by moderate-income workers in moving closer to work if affordable housing were available.

The survey, conducted between April 26, 2007 and May 1, 2007 by Harris Interactive, was taken to gauge perceptions by employers and commuters regarding the impact of long distances between housing and jobs on business operations and workers' quality of life. The employer portion polled employers from three groups - those with less than 50 employees; those with 50 to 100 employees; and those with more than 100. More than 300 companies from across the United States responded. The largest companies consistently reported the greatest awareness of problems resulting from long commutes and an inadequate supply of affordable housing -- ranging from high employee stress to high employee turnover. Overall, companies in the West were the most likely to acknowledge insufficient affordable housing as being a problem.   

The consumer portion, covering more than 1,200 commuters nationwide, included those with commutes of less than 30 minutes, 30 to 60 minutes, 60 to 90 minutes and more than 90 minutes. On the whole, the survey found that the majority of employees will tolerate living farther away from work if housing is more affordable; but there were noticeable differences in opinion when measured by commute time, income and age. Those with the longest commutes were the most willing to change jobs for a shorter commute, and the most apt to move closer to their jobs if more affordable housing options were available. Those with incomes of less than $50,000 - widely considered the "mainstream" workforce - were significantly more likely to move closer to work if affordable housing were available than those with higher incomes. When measured by age, those aged 18-34 were the most likely to uproot and change jobs,
likely reflecting fewer family obligations and fewer ties to their existing neighborhoods.

ULI Senior Resident Fellow William H. Hudnut III, discussed the survey results during a presentation June 2, 2007 at the National Association of Real Estate Editors annual real estate conference, held this year in Philadelphia. The responses, he said, indicate that larger employers understand the reality of moderately priced housing being scattered far from employment centers. And, while many consumers continue to equate success with being able to afford a larger home in outlying areas, he said the responses from moderate-income and younger workers show they are starting to "feel the pinch" of money and time spent commuting.

"What we're seeing from employers and lower to moderate-income workers signals a need for more housing to be built closer to jobs," Hudnut said.

Some highlights from the employer survey:
* Fifty-five percent of larger companies (those with 100-plus employees) reported a lack of affordable housing near their location.
* Sixty-seven percent of the larger companies that acknowledged a lack of affordable housing believe that it is having a negative impact on retaining qualified entry-level and mid-level employees.
* Fifty-eight percent of the larger companies that acknowledged a lack of affordable housing reported having lost employees at least in part to long commute times.
* Sixty-nine percent of the larger companies believe a long commute time increases employee stress; 63 percent believe it triggers negative emotion among employees; 48 percent said it causes more absenteeism; and 46 percent said it contributes to employee turnover/attrition.
* Thirty-six percent of the larger companies believe it is important to be actively involved in providing employee access to affordable housing.
* Awareness among larger companies regarding corporate and government housing programs remains relatively low (25 percent were aware of corporate programs and 34 percent were aware of government programs); but 42 percent of larger companies said they would participate in a government program.
* Forty-five percent of the larger companies offer flextime to reduce commuting time; 21 percent offer telecommuting.  

Some highlights from the consumer survey:
* Sixty-seven percent of those with annual household incomes of less than $50,000 would be at least somewhat likely to move closer to work if more affordable housing were available.
* Sixty-four percent of those earning less than $50,000 would be at least somewhat likely to make a lateral employment move in exchange for a shorter commute; compared to 60 percent earning more than $50,000.
* Seventy-six percent of those aged 18-34 would be at least somewhat likely to make a lateral employment move in exchange for a shorter commute; and 76 percent in that age group would be at least somewhat likely to move closer to work if affordable housing were available.
* Fifty-seven percent of all commuters surveyed said they would be at least somewhat likely to move closer to work if affordable housing were available.
* Eighty-five percent of respondents who commute more than 90 minutes daily said they would be at least somewhat likely to make a lateral job switch to cut their commute in half.
* Forty-seven percent who work in suburbs prefer to live closer to work even though it may mean higher housing prices and less disposable income; while 53 percent of suburban workers prefer to live in an area with affordable housing opportunities and more disposable income, even if it means living further away from work and having a longer commute.

One notable finding in the consumer survey suggests "a lingering gap between perception and reality," Hudnut noted. Of all consumer respondents, 42 percent said they would prefer to live closer to work to shorten their commutes, even if it meant higher housing prices. Fifty-eight percent said they would prefer to live in an area with more affordable housing, even it meant a longer commute. "Many consumers who don't perceive living closer to work as desirable are likely not factoring in transportation costs as a rising expense, and are likely not aware that desirable housing close to jobs is even an option. The reality is that moderate-income housing can be developed near employment centers in a way that provides a high quality of life, offering proximity to both amenities and work," he said.

Moreover, Hudnut said, the far-flung living environment many believe to be preferable is not sustainable, in terms of conserving land or energy. "Ever-increasing commutes are taking a heavy toll on our urban areas, from a social, economic, and environmental aspect. Something's got to give," he said.

To help raise awareness of the need for more housing affordable to moderate-income workers, ULI has established the ULI Terwilliger Center for Workforce Housing, funded with a $5 million commitment from former ULI Chairman J. Ronald Terwilliger, chairman and chief executive officer of Atlanta-based Trammell Crow Residential.

Plans call for the ULI Terwilliger Center to be based in Washington, D.C. Its staff members will work with ULI district councils, housing-related organizations, and various public- and private-sector representatives in several urban areas to create models of mixed-income workforce housing design, development and financing that can be applied to other cities. Initially, the center will focus on three markets - Atlanta, Washington, D.C., and Southeast Florida. In each, the center will develop a plan to increase the production of mixed-income housing over a specified time period; to expand available project financing where necessary; and to support developers in completing projects. The goal is to produce at least 3,500 units of new workforce housing in the three markets within five years.

As part of its overall program of work, the center will identify barriers to workforce housing production (such as inflexible zoning and building codes) and work to eliminate those barriers by raising awareness of the affordability gap and by advocating changes in public policy.  Hudnut noted that the center will advocate greater use of inclusionary zoning, which offers development incentives such as density bonuses in exchange for the provision of a certain percentage of below-market rate units. "Inclusionary zoning is one of the best tools to get housing built that people can afford, and it does this in a mixed-income housing context," Hudnut said. "Mixed-income is the only effective way to build affordable housing. Housing that is segregated by income is not conducive to a diverse, thriving community. A truly sustainable community is one that provides housing choices. "

To educate the public and help change public policy, the center will partner with local, regional and national organizations, including chambers of commerce, employer organizations, home builder organizations and housing advocacy groups. The center will publish best practices, organize conferences and provide competitions to recognize individuals and companies demonstrating excellence in the area of mixed-income housing production.

The workforce housing provided through the center will be oriented toward people typically making between 60 percent and 120 percent of the median income for the targeted market, and it will be mixed with housing offered at market rates. Those income boundaries will be kept flexible, however, to reflect variations of salaries and housing costs in individual markets. An emphasis will be placed on designing and building housing in ways that encourage long-term affordability.

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Eminent Domain: A Hot Topic

Eminent domain has become the nation's most legislated and emotionally inflamed property rights issue with 30 of the nation's state legislatures passing new eminent domain laws in the last year and more legislation on the way.

Voters in nine states approved some form of eminent domain legislation in November elections. Most of the new laws are designed to prevent eminent domain acquisitions that improperly deliver properties to private developers via the use of condemnation proceedings.

But the nation's most seasoned eminent domain company, Lewis Realty Advisors, says these new laws won't come into play very often. "I would not say all of these state legislators were wasting their time. But if you take a balanced look at the thousands of eminent domain cases that have occurred over the years, this power to take land has not been abused very often," said David Lewis, founder of Houston-based Lewis Realty Advisors.

Lewis, who founded his appraisal and consulting firm in 1961, has handled thousands of eminent domain cases. "Of course, governmental agencies make mistakes. But for the most part, the thousands of eminent domain cases that I have been associated with have been based on reasonable circumstances," Lewis said. "It's rare that this power is misused."

Eminent domain has been a hot topic nationally over the last year. In June 2005, the U.S. Supreme Court issued a ruling in the Kelo v. City of New London case giving governments the authority to condemn private property for development by private, for-profit investors. The City of New London, Conn. is taking waterfront property for a mixed-use development.

"The Supreme Court ruling in the New London eminent domain case was alarming to Americans," Lewis said. "Since the beginning of time, people have had strong feelings about their homes, farms and properties. It's part of who we are."

Given the fact that Americans care so much about their property, it is not surprising that so many states have taken action on eminent domain, Lewis said. Commercial property appraisals and negotiation in eminent domain cases is one of the specialties of Lewis Realty Advisors.

The company represents both private property owners and governmental agencies.

Hines Announces Second Office Building in Phoenix

The Phoenix office of Hines plans to develop a second office building at 24th At Camelback. The 11 story building, which is being developed jointly by Hines and a major U.S. pension fund represented by Morgan Stanley Real Estate, will be 300,000 square feet.

24th At Camelback is a mixed-use project located at the southwest corner of 24th Street and Camelback Road in Phoenix’s Biltmore area. The 10-acre site, has been planned to complement provide tenants with  views of Piestewa Peak and Camelback Mountain.

"We think that this new building will be a terrific addition to Phoenix as well as the Biltmore community," said Hines Senior Vice President Clayton Elliott.

The new building will include ground-floor retail space and a 1,040-space parking structure as well as a garden with native plants and materials.

Hines completed in an eight-story, 300,000 square feet office building including ground floor retail space, and a 1,175 space parking structure in June of 2000.

Hines: 'Real Estate Industry Ready for Green'

Hines/CalPERS in Green JV

Hines, the international real estate firm, announced today the closing of the Hines CalPERS Green Development Fund (HCG), capitalized with more than $120 million of committed equity and with leverage will have the ability to invest up to $500 million. HCG will concentrate on developing high performance, sustainable office buildings certifiable through the Leadership in Energy and Environmental Design Core and Shell Program (LEED-CS). The fund will focus on developing office projects throughout the United States.

The fund has already deployed capital to take controlling interest its first project, Tower 333 in Bellevue, WA. Completion for this Hines-developed 20-story, 410,000-sf office project is expected in the fourth quarter of 2007.

Hines President Jeff Hines, said, “The formation of this fund represents several significant events. First, the largest pension fund in the nation has acknowledged the importance and economic viability of sustainable building, which is a monumental step for the industry. Second, it is notable that CalPERS has selected Hines to create the nation’s first ‘green’ fund, based on our experience in sustainable development as recognized by the USGBC and the EPA. Third, it represents the continuation of a long, successful joint venture relationship between Hines and CalPERS.”

Hines Senior Vice President and fund manager Dan Rashin, added, “We have long tried to persuade tenants that there are significant bottom-line benefits to sustainable development and build out. Fortunately, the green movement is gaining steam as the public become more conscious of its benefits. The real estate industry is finally ready for green.”

Hines and CalPERS share five other joint ventures, including chronologically: National Office Partners, LP; Hines CalPERS Mexico Holdings, LP; Hines CalPERS Brazil Interests, LP; Hines CalPERS Spain Interests, LP; and Hines CalPERS China Interests, LP.

"CalPERS couldn't be more pleased about this venture with Hines," said Russell Read, the pension fund's Chief Investment Officer. "First, we have great confidence in Hines, based on many years of investments that have given us substantial returns. Second, we are fully committed to developing sustainable, high performance office projects to reduce our reliance on diminishing natural resources. Investing in buildings that conserve these resources perfectly complements our search for alternative energy sources."

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Major Industrial Deal

in California

Bakersfield, Calif. - Titan Real Estate Investment Group, a
private real estate investment firm, in partnership with Urdang Capital
Management, has acquired a six-building, 524,051-sf, multi-tenant
industrial portfolio located in Bakersfield, California. The seller was
Panattoni Development Co.

The purchase price was $22.5 million. The warehouse buildings are located on East Brundage Lane and on District Boulevard and are currently 98% leased. 

According to Stephen Haupt, Senior Vice President of Industrial Properties for Colliers Tingey International, "With the purchase of this large portfolio, Titan has made a major play in this growing industrial market.

  
"We are very bullish on the Bakersfield market and Panattoni develops excellent buildings.  Combining this with the lack of available space and continued demand in Bakersfield, we believe this acquisition will perform well", said Kevin Kaseff, Managing Partner of Titan.

The seller was represented by Bill Palmer and Russ Arnold of The Palmer Team.  Steve Haupt of Colliers Tingey has been retained to do the leasing.

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Solid Fundamentals in

Nation's Commercial Realty

WASHINGTON – Healthy demand for space is driving commercial real estate markets with solid fundamentals and strong investment activity, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of Realtors®.

David Lereah, NAR’s chief economist, said fundamentals are improving with tightening vacancies. “Rent growth in commercial space is gaining traction, although there is some softness in part of the retail sector,” he said. “Commercial real estate remains a bright spot in the economy, but there are concerns over energy costs, rising interest rates and slower-than-expected job growth which could dampen future demand.”

Lereah said investment considerations remain positive. “With tightening vacancies and a slowdown in speculative construction, the office market will offer respectable returns for investors,” he said. “Strong international trade is supporting warehouse and distribution space, especially near port facilities. In addition, demand for rental apartments and hotel rooms is on the rise.”
The NAR forecast for five major commercial sectors includes analysis of quarterly data for various tracked metro areas. The sectors include the office, industrial, retail, multifamily and hospitality markets. Metro data were provided by Torto Wheaton Research and Real Capital Analytics.

Office Market

Rising oil prices and slower job growth have dampened expectations for the office market, but vacancy rates are still likely to drop to an average of 12.7 percent in the fourth quarter from 13.6 percent during the same period in 2005. Office rents are forecast to rise 4.4 percent this year.

Areas with the lowest office vacancies currently include Ventura County, Calif.; New York City; Orange County, Calif.; Fort Lauderdale, Fla.; Riverside, Calif.; and Washington, D.C., all with vacancy rates of 8.8 percent or less.

Net absorption of office space in 56 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, should be 64.1 million square feet in 2006, down from 89.5 million last year. High construction costs are putting a lid on speculative development.

Large institutional investors and pension funds returned to the office market during the first quarter, more than doubling what they spent on office buildings in all of 2005; total investment in the first quarter was $20.5 billion.

Over the last year, the top markets for office investment were Manhattan, Chicago, Los Angeles, San Francisco, Northern Virginia and Washington, D.C.

Industrial Market

Industrial vacancy rates are forecast to decline to an average of 9.5 percent during the second half of the year from 9.9 percent in the final quarter of 2005, with new construction increasing along with space absorption. Trade with China continues to fuel demand for warehouse and distribution space. Although market fundamentals appear to be healthy, industrial rents are likely to increase only 1.9 percent in 2006.

The areas with the lowest industrial vacancies are West Palm Beach, Fla.; Los Angeles; Fort Lauderdale; Las Vegas; Miami; and Orange County, Calif., all with vacancy rates of 5.4 percent or less.

Net absorption of industrial space in 54 markets tracked is expected to be 211.0 million square feet this year, down from 290.5 million in 2005. Most of the demand is coming from users and tenants involved with the distribution of goods, but rising industrial production could bolster demand for manufacturing space, which has been lagging in recent years.

Private investment also is occurring in the industrial sector, with transactions totaling $10.5 billion in the first quarter. The top industrial investment markets are Los Angeles; Chicago; Dallas; San Diego; San Jose, Calif.; and Northern New Jersey. Some older properties in urban areas are being converted to other commercial uses.

Retail Market

With absorption matching new supply, retail vacancy rates are projected to be fairly stable for the balance of the year, at an average of 7.6 percent in the fourth quarter, but higher than the 7.2 percent recorded in the fourth quarter of 2005.
Higher energy costs and slowing home price appreciation will hold back consumer spending, impacting the retail sector. Overbuilding and fallout from mergers and acquisitions have impacted certain markets, including regional shopping centers. Average rent is seen to grow 0.7 percent in 2006.

Retail markets with the lowest vacancies include Las Vegas; Miami; Orange County, Calif.; San Francisco; San Jose; and San Diego, all with vacancies of 3.9 percent or less.

Net absorption of retail space in 54 tracked markets should be 14.1 million square feet in 2006, down from 30.2 million last year.
Investment in retail space is cooling with just $7.4 billion spent in the first quarter, dominated by private investors; strip centers accounted for almost three-fourths of retail investment activity. The top markets for retail investment include Los Angeles, Chicago, Houston, Dallas, Phoenix, and Northern Virginia.

Multifamily Market

The apartment rental market – multifamily housing – is expecting vacancy rates in the fourth quarter to average 5.7 percent compared with 6.2 percent during the same period in 2005. Average rent is forecast to rise 4.1 percent this year compared with 2.9 percent in 2005.

Conversion of apartments into condos is waning, but a slight softening in the housing market is boosting rental demand. Concerns about sustainable job growth and job security are playing a role by keeping some people in the rental marketplace.
Total investment in multifamily property was $24.0 billion during the first quarter, up 30 percent from the first quarter of 2005; seven out of ten transactions were garden-style apartment complexes. Condo converters accounted for less than 15 percent of transactions, taking a little over 30,000 units from the rental market.

The top markets for apartment investment over the last year were Manhattan, Phoenix, Los Angeles, Tampa, Orlando and Atlanta.

The areas with the lowest apartment vacancies currently include Fort Lauderdale, Northern New Jersey, Washington, West Palm Beach, Miami and Tampa, all with vacancy rates of 2.5 percent or less.

Multifamily net absorption is likely to be 256,500 units in 59 tracked metro areas this year, compared with 351,000 absorbed in 2005.

Hospitality Market

With rising construction activity, hotel occupancies are forecast at 63.4 percent in 2006 compared with 64.5 percent last year, and revenue per available room (RevPAR) is projected to grow to $72.37 in 2006, up 7.5 percent from $70.47 last year. An additional 17,500 hotel rooms should be added to the inventory in 52 markets tracked in 2006, up from only 5,600 last year.
Markets with the highest RevPAR include New York City, Washington, Honolulu, West Palm Beach, San Francisco and Miami, with RevPAR in excess of $103, in contrast with the national average of $80 expected for the first quarter, which is the highest ever.

Hospitality markets with the highest level of construction include Houston, Orlando, Fort Worth, Washington, Atlanta and San Diego. Overall transaction activity during the first quarter totaled 660 hotels with a combined value of $23 billion; 2006 is expected to be a record for the number of properties changing hands.

The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the Realtors® Commercial Alliance. The RCA, formed by NAR in 1999, serves the needs of the commercial market and the commercial constituency within NAR, including commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and NAR affiliate organizations. These organizations include the CCIM Institute, the Institute of Real Estate Management, the Realtors® Land Institute, the Society of Industrial and Office Realtors®, and the Counselors of Real Estate.
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• Hines Buys Chicago Tower   click here

• Commercial Real Estate Draws Big Investment                  Dollars    click here

• Book Review of House Poor by June Fletcher   click here

• Orbitz leases in Chicago      click here

• Wastin' Away Again in Martha-Stewartville  click here

• Hines To Build Flordia Tower   click here
• Multi-Fam sold for $73,000 per unit   click here
• Hines Lands Tenant for 60-story Tower   click here
• Perseus Realty Investment Group Launched   click here

• TIC Buyer Pays Big Price For Memphis Office    click here

• Beame Designs Miami Project     click hereWeingarten Updates Buying and Selling    click here
• California Buildings Sold    click here

• Mayor Rudy Giuliani of NY Appealing to Building

  Owners     click here

• Crescent & Hines Developing Office In Orange County California      click here

• Commercial Real Estate Outlook:National Picture Bright

  for Next Two Years    click here

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Hines Buys Chicago Tower

          CHICAGO — The Chicago office of Hines, the international real estate firm, announced today that a subsidiary of Hines-Sumisei U.S. Core Office Fund, L.P. (Core Fund) has acquired an approximate 80 percent interest in 333 West Wacker in Chicago from Kan Am Grund Kapitalanlagegesellschaft MbH, a German investment firm advised by Westwind Capital Partners (“KanAm-Westwind”).  The remaining 20 percent interest was acquired by institutional investors advised by General Motors Investment Management Corporation.  Hines will manage and lease the property.

            The Core Fund is an investment vehicle organized by Hines and Sumitomo Life Realty (N.Y.), Inc., to acquire a geographically diverse portfolio of core office buildings in the U.S.  The fund also has an interest in 101 Second Street and the KPMG Building in San Francisco; Golden Eagle Plaza in San Diego; 600 Lexington, 499 Park Avenue and 425 Lexington in New York; One and Two Shell Plazas in Houston; 1200 19th Street NW in Washington, D.C., Three First National Plaza in Chicago, and 720 Olive Way in Seattle.

           333 West Wacker is a 36-story office building containing 867,821 sf located in Chicago’s West Loop submarket in the city’s central business district. The building is located on a bend in the Chicago River and is surrounded by an array of amenities. Designed by Kohn Pedersen Fox Associates, the building was completed in 1983 and includes a four-level subterranean garage. 333 West Wacker is approximately 95 percent leased to tenants including: Skadden, Arps, Slate, Meagher & Flom, LLC; Nuveen Investments, Inc.; and Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLP.

              "We are very pleased to have the opportunity to purchase a property with a superior location, timeless architecture, and a quality roster of tenants in a growing city like Chicago," said Hines Senior Vice President Tom Danilek.

              “This represents a unique opportunity for the Core Fund to acquire a perfectly located landmark asset in Chicago. We believe the attributes of 333 West Wacker position it to benefit from a growing demand in the market for view space and improving real estate fundamentals in the Chicago CBD,” said Charles Hazen, president of the Core Fund.

          KanAm-Westwind was represented in the sale by Eastdil Secured, LLC. Hines represented the Core Fund.

        Sumitomo Life Realty (N.Y.), Inc. is a wholly owned subsidiary of Sumitomo Life Insurance Company, one of Japan’s largest life insurance companies.

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Commercial Real Estate

Draws Big Investment Dollars

Investment in commercial real estate rose 44 percent in 2005 to a record $268 billion, (not counting transactions valued at less than $5 million), according to a study released by National Association of Realtors. Office: Nearly $100 billion of investment grade office buildings traded hands in 2005. The top suburban office markets for investment are Los Angeles; Northern Virginia; Orange County, Calif.; Dallas; and Northern New Jersey. Industrial: Investment transaction volume increased 65 percent in the industrial sector to $34.5 billion in 2005. The top industrial investment markets are Chicago, Los Angeles, Atlanta, Dallas and Seattle. Retail: Investment in retail space increased 16 percent to $46.4 billion in 2005, with strip centers accounting for two-thirds of the total. The top markets for strip center investment include Los Angeles, Phoenix, Houston, Chicago and Atlanta. Multifamily: Total investment in multifamily property rose 72 percent in 2005 to $86.9 billion, with $29.4 billion spent by condo converters who took 191,400 units out of the active rental market. The top markets for garden apartment investment are Phoenix, Tampa, Orlando, Los Angeles and Atlanta.

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Book Review                                

By Ralph Bivins                                                 

House Poor: Pumped Up Prices, Rising Rates and Mortgages on Steroids: How to Survive the Coming Housing Crisis. (Collins: $21.95) By June Fletcher

When you read the title of June Fletcher’s House Poor, you expect to see a futuristic scene  of real estate doom. I was looking for something like a cross between the tech-stock crash and the post-nuclear world of The Terminator.

Fletcher’s book does list some scary facts about the housing market. Somebody paid $250,000 over the asking price of $1.35 million for a two-bedroom apartment. And she notes the median price of a home in Orange County , Calif. recently hit $610,000.

But the book fails to really make the case that disaster is pending. Fletcher indicates that “fly-over” country in the middle of America will be spared from the crash, while the coasts might see troubled times.

Fletcher quotes a negative source, Dean Baker, co-director of the Center for Economic and Policy Research in Washington , DC . But she also quotes a more moderate economist, David Stiff of Cambridge , Mass. , who predicts a moderate flattening of the market, not a bubble bursting.

Fletcher goes on to note that overheated spots like Las Vegas , San Diego and Boston , are most vulnerable.

However, it seems like the “housing crisis” that is trumped up on the book’s cover, just doesn’t really match the writer’s manuscript.

From the negative beginning, the book shifts into more useful material, advice for the investors and help for homeowners. She covers broad ground ranging from investing in foreign real estate to making wise home improvements.

Fletcher also takes a side trip into economic statistics and terminology, offering the definition of gross domestic product, for example. There is informative material about various types of financing.

Fletcher knows her stuff and she packs a lot of valuable information into readable, compact paragraphs. This book is not a boring read and you can consume it without straining.

The reader is also given some useful reminders about finding good niches for real estate investment – REITs, land and commercial property. She also mentions investing in boat slips, a new concept for me. But there are 14 million boats in the nation and finding a place to dock a boat is not getting any easier.

Fletcher is a good reporter and it shows in this book. Her anecdotes are excellent and her writing is top-notch. You will find the book to be informative and useful. But I remain doubtful that a “housing crisis” is coming.

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Orbitz leases

in Chicago

Transwestern Commercial Services, one of the largest commercial real estate firms in the U.S., represented Cendant’s TDS’ Consumer Travel Americas Unit, including the U.S. based Orbitz.com, CheapTickets.com and Lodging.com brands, in its relocation of its global operations to 145,000 sf at Citigroup Center, 500 West Madison Street.

Currently located on seven noncontiguous floors served by two different elevator banks at 200 South Wacker, Orbitz, and other subsidiaries of Cendant Travel Distribution Network, will occupy the eighth, ninth and tenth floors at Citigroup Center. The office space will help accommodate and better organize the rapid growth of the Orbitz organization which, since its acquisition by Cendant TDS in November 2004, increased its Chicago-based employees from 400 to 800 personnel.

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Wastin' Away Again

in Martha-Stewartville

Some People Claim

There's a Woman to Blame

KB Home and Martha Stewart Living Omnimedia have begun collaboration on the design of new homes, bringing together the high-quality and innovative architectural designs of one
of the country’s leading homebuilders with the inspiration of the leading provider of ideas and products for both inside and outside the home.

The first community designed by KB Home and Martha Stewart Living Omnimedia (MSLO) – to be called KB Home Twin Lakes: Homes Created with Martha Stewart – will feature approximately 650 homes in the Town of Cary, N.C. The community will include single-family homes, ranging from 1,500 to 4,100 sf and priced from the low $200s to the mid $400s, inspired by Martha
Stewart’s own homes in New York and Maine. Martha Stewart’s influence will be evident in many aspects of the homes, including the floor plans, exterior design, interior floor plans and furnishings.
Homebuyers will have the added advantage of choosing Martha Stewart’s favorites among the flooring, faucets, light fixtures, cabinetry, countertops, and other items available at the KB Home
Studio in Raleigh, N.C.

“After years of designing high-quality and stylish products for the home, it is the right time for MSLO to turn to the architecture and design of the home itself,” said Susan Lyne, President and CEO of
Martha Stewart Living Omnimedia. “KB Home, an industry leader in home building, is the ideal company to work with in this endeavor.

"Martha’s homes are warm, functional, and full of innovative
details that inspire our product design. The model homes at Twin Lakes will provide the opportunity for a broad base of consumers to see those home products in a total environment for the first time.”
Stated Martha Stewart, MSLO Founder: “I’m delighted to team with KB Home to create beautiful and functional homes that are filled with the design, colors, and high-quality materials that have
been the inspiration for my homes over the years. Each room in the home will be carefully constructed and handsomely appointed. We look forward to presenting them to communities across
the country.”

Model homes are scheduled to be completed in early 2006. At that time, prospective buyers will be able to view the model homes and select their favorite home site, floor plan and design studio
options. Although the homes will not come furnished, the models will be dressed and decorated with Martha Stewart Living Omnimedia products. Earlier this year, the Town of Cary, N.C. topped Money magazine’s rankings of the “most desirable
places to live in the eastern United States.” This beautiful town has 14 major universities within an
hour’s drive and North Carolina’s famed Research Triangle Park, whose tenants include Cisco,
Ericsson, IBM and Nortel.
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Hines To Build Fla. Tower

Hines, the international real estate firm, along with South Shore Group Partners, is proceeding with plans to develop Northeast Florida’s tallest residential tower and the tallest building in the Southbank area of downtown Jacksonville .

The St. John will contain 261 condominium units within 43 stories and will rise 478 feet with the building’s west facade twelve feet from the edge of the river.

Hines’ Senior Vice President Michael Harrison said, “We are seeing a sustained trend towards urban living in all major U.S. cities, including Jacksonville , Miami , Orlando and Tampa . Empty nesters and younger professionals in particular are looking for a change in lifestyle and are moving back into downtowns where cultural and entertainment activities are plentiful.”

Designed by the world-renowned architecture firm Arquitectonica, all units will have floor-to-ceiling, tinted-glass exterior walls and clear-glass balcony railings that will frame spectacular views of the length of the St. Johns River as it winds its way through Downtown.

Preliminary plans call for one to three bedroom units ranging from 1,080 to 2,800 sf and 15 penthouses up to 3,750 sf. . The developers currently expect to offer pre-construction pricing from $380,000 to $1.3 million, excluding the penthouses.

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Multi-Fam sold for $73,000 per unit

PHOENIX - Transwestern Commercial Services, one of the largest privately held, full-service commercial real estate firms in the U.S. , today announced the sale of the Villa Vallejo Apartments in Phoenix , Ariz.. The vintage property, built in the 1970’s, is located next to the Piestewa Peak Mountain Preserve, Biltmore Fashion Park and Resort, and one mile from 24 th Street and Camelback, Phoenix’s largest business district. G.M. Realty purchased the property for $5.25 million or $73,000 per two bedroom/one bath unit. Transwestern vice president of multi-family investment sales, Bobby Bull, exclusively represented the seller, Villa Vallejo and managing member Norman Roberts, and the buyer G.M. Realty.

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Hines Lands Tenant for 60-story Tower

CHICAGO – The Chicago office of Hines, the international real estate firm, announced today that the international law firm of Kirkland & Ellis LLP has signed a 600,000-sf lease, and will serve as the anchor tenant for 300 North LaSalle, a new downtown office tower to be developed by Hines. Located on the north bank of the Chicago River , the 60-story, 1.3-million-sf tower will break ground in Spring 2006. Upon project completion in early 2009, Kirkland & Ellis will relocate its 1,400 Chicago office employees to 300 North LaSalle from 200 E. Randolph Drive , where they have officed since 1973.

“We are fortunate to have partnered with a renowned developer on one of the last great development sites on the River, and are genuinely excited to provide a truly world-class new home for Kirkland lawyers and staff, one that will provide an environment in which the needs of our clients and people will be very well served,” said Stephen G. Tomlinson, a partner at Kirkland.

The firm will occupy 24 floors in the low-rise and mid-rise sections of the building leaving more than 400,000 square feet of high-rise space for speculative leasing.

“Since the vacancy rate for high-rise space is about two percent, we feel confident that we can attract other premier users to the building,” said Hines Vice President John McDermott.

Designed by the internationally recognized architectural firm Pickard Chilton, 300 North LaSalle will continue the extraordinary tradition of Chicago architecture. The tower will rise to 775 feet, making it one of the city’s tallest buildings.

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TIC Buyer Pays Big Price

For Memphis Office

Transwestern Commercial Services recently brokered the sale of Renaissance Center in Memphis, Tenn. Located in the East Memphis Poplar corridor, the eight-story, 189,644 sf office property was 84% occupied at the time of the sale which included an attached, three-story parking deck. Developed in 2000 by Memphis-based The Weston Cos., the tower is primarily occupied by a mix of professional services firms.

Weston sold the property to DBSI Discovery Real Estate Services (DDRS), a full-service real estate investment company based in Boise , Idaho . A prominent Tenancy-In-Common (TIC) buyer, DDRS, acquired the property for $27,100,000 or $143 psf. Transwestern’s Jon Kleinberg and Kevin Markwordt represented The Weston Co.in the transaction.

Investor interest in the property was significant. According to Kleinberg, “Properties of this quality in any market are extremely attractive to investors and Renaissance Center is a real jewel in the Memphis market. Weston is a high-quality developer and they’ve been involved in all aspects of the property since its delivery which ensured that its value was not only sustained but heightened by the execution of a strategic lease-up program and an intensive property management program. Achieving a sale price of $143 psf is really a testament to their successful formula.”

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Beame Designs Miami Project

Coral Gables, FL - Beame Architectural Partnership (BAP) has been commissioned to design the renovation of Miracle Market Place.  Located on Miracle Way in Miami, Florida the project is being developed by Talisman Companies, LLC of Miami, Florida, and involves the renovation of an existing vacated multi-level shopping center with over 900 parking spaces at the upper four
floors. David Herbert AIA is the design architect for Miracle Market Place; Richard Vanderburg AIA is the project manager.

A complete interior and exterior remodel will include a new helical ramp to access the parking levels and the lower four floors, which will be converted to a 263,000 sf, three-level, "big-box" retail shopping center. The project is an important component of the revitalization of the Coral Way corridor, the link between downtown Miami and Coral Gables, where significant residential construction is underway.

Included in the project will be a relocated, two-level 42,000 sf
Bally's Health Club, Bed Bath & Beyond, PetsMart, Office Max, DSW, Ulta Salon and Cosmetics, as well as other big box and restaurant tenants. Construction is expected to begin this fall and should be complete by the end of 2006.

Beame Architectural Partnership (BAP) is an architecture and planning firm whose corporate history dates back to 1935.

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Weingarten Updates Buying and Selling

Weingarten Realty Investors announced that it has purchased five shopping centers adding 307,800 sf to the portfolio representing a total investment of $53.5 million. The Company also sold five shopping centers for a total of $71.1 million resulting in gains of over $36.8 million.

           The acquisitions include Lake Washington Crossing, purchased in May, located at the northwest corner of Wickham Road and Lake Washington Road in Melbourne, Florida, approximately 60 miles southeast of Orlando. The center is 118,800 sf and is currently 94.8% leased.
        Weingarten acquired Marshall's Plaza, a 78,800 sf shopping center located at the southeast corner of McHenry and Sylvan Avenues, in the city of Modesto, California, and is anchored by Marshall's. This 100% leased shopping center represents Weingarten's 25th acquisition in California.
       Weingarten also purchased a package of three properties in North Carolina.

        The company has also announced the disposition of five shopping centers in Texas; Bingle Shopping Center, Cypress Village Shopping Center and Williams Trace Shopping Center all located in the Houston area, McDermott Commons Shopping Center and Murphy Crossing are both located in the Dallas market. The sale of these properties aggregated 435,900 square feet and generated proceeds of $71.1 million, resulting in gains of $36.8 million.
        According to Drew Alexander, President and Chief Executive Officer of Weingarten, "We are pleased with both our success in finding quality acquisitions in such a competitive environment as well as our accelerated disposition program. Thus far in 2005 we have purchased eleven properties with a total investment of $232 million. Additionally, our disposition process is critical to improving the internal growth of our existing portfolio. Including the recent sale of the five properties mentioned above, we have sold over $141 million of non-core properties, thereby improving the growth potential of our existing portfolio. Year-to-date these sales have produced gains of approximately $63 million."
        Weingarten Realty Investors is a Houston, Texas based real estate investment trust with 352 income producing and new development properties in 20 states that span from coast to coast predominantly in the southern half of the United States. Included in the portfolio are 289 neighborhood and community shopping centers and 59 industrial properties aggregating 46.7 million sf.
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Calif. Buildings Sold

A joint venture partnership of Sterling American Property. and Hines bought four San Francisco Bay Area office properties from Equity Office for $329 million.

The four properties, which contain six buildings are:

· 301 Howard Street, a 23-story, Class A office building located in the South Financial District and built in 1988. The 307,396-sf property is approximately 70% occupied.

· Foundry Square II, a 10-story, Class A office building located at 405 Howard Street in the South Financial District and built in 2002. The 502,424-sf property is approximately 59% occupied.

· Parkside Towers, a 398,460-sf office complex with two, 5-story buildings located at 1001-1051 East Hillside Boulevard in the Peninsula community of Foster City. Completed in 2001, the complex is 16% occupied.

· San Rafael Corporate Center, a 155,318-sf Class A office complex with two, 3-story buildings and 4.37 acres of land for potential development of an additional 230,000 square feet is located at 750 Lindaro and 781 Lincoln Avenues in the Marin County community of San Rafael. The property was completed in 2002 and is currently 38% occupied.
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Mayor Rudy Giuliani of NY

Appealing to Building Owners

By RALPH BIVINS

Washington, DC -- Former New York City Mayor Rudy Giuliani leading a group that provides building owners with protection from acts of bioterrorism, such as the release of anthrax.

"The threat of bioterrorism is a real one," Giuliani said at the recent National Association of Real Estate Editors annual conference in Washington. “The anthrax attacks were a shocking and difficult time for the country. It’s now possible to quickly restore buildings that were affected by bioterrorism attacks.”

Building owners reportedly have been slow to accept that insurance from terrorism is a necessary expense.

Even though a building owner may think that the chances of his building being targeted are small, ignoring the risk is not a wise option, Giuliani said. “We have to prepare relentlessly,” Giuliani said.

Giuliani Partners and Sabre Technical Services together formed Bio One Solutions, an Albany, N.Y.-based group that specializes in decontamination technologies based on treatment with chlorine dioxide gases. Bio One has formed an alliance with the AIG Environmental insurance firm to provide insurance coverage for environmental clean-ups from acts of biochemical terrorism.

The new program is designed to give building owners protection from contamination arising the release of anthrax and other biological agents. The insurance policies can guarantee that a targeted office building can reopen within less than 90 days after a biological on microbial attack.

The insurance also covers bodily injury, legal defense and the possibilities that the biological contamination could spread to other buildings, said Joseph Boren, president of AIG Environmental.

Bio One recommends that building owners store architectural plans and engineering documents off-site. Those documents can be damaged or contaminated, causing long delays in starting to clean-up the property.

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Crescent & Hines Developing Office

In Orange County Calif.

Crescent has committed to co-develop a 260,000 sf office property with Hines Interests in Orange County, Calif. Crescent and Hines recently acquired a land parcel in the John Wayne submarket of Orange County, the same submarket as Crescent's Dupont Centre. The building will be constructed on that site. The structure is such that Crescent holds a 40% interest in the project. Upon completion of the project, Crescent expects to have invested approximately $9 million in equity. The development project is anticipated to break ground in the first quarter of 2006, with delivery scheduled for mid-2007. "We selected Hines as a co-developer based on its reputation and development experience on the West Coast," John C. Goff, Vice Chairman and CEO of Crescent, commented. "Orange County, particularly the John Wayne submarket, continues to be attractive to us due to the anticipated employment growth and demand for high-end office space. That, coupled with the fact that this site is one of the best in the area, makes this a good investment for us."
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Commercial Real Estate Outlook:

National Picture Bright

for Next Two Years

WASHINGTON – The four major sectors of the commercial real estate market – office, retail, industrial and multifamily –can expect improvement over the next two years, according to a forecast presented at a commercial real estate forum at the National Association of Realtors® Midyear Legislative Meetings & Trade Expo.

David Lereah, NAR’s chief economist, said there are pluses and minuses affecting the projection for the uptrend in the commercial market. “Corporate profits are strong, but business spending has been hesitant of late,” he said. “On the other hand, jobs have been growing since the beginning of 2004.”

Lereah said some uncertainties could potentially impact commercial sectors. “The U.S. federal budget deficit poses a risk for the economy, as does the trade deficit and performance of the dollar,” he said. Other concerns include high oil prices and the possibility of inflation.

On balance, Lereah said the fundamentals for all of the commercial real estate sectors are improving. “We’ve seen a strengthening in the job market, capital has been flowing into commercial real estate at record levels, the modest rise in interest rates is not impacting long-term investment, and there’s been a healthy restocking of business inventories.”

So far this year, investment in office buildings has increased 30 percent over 2004. Ports and major distribution centers are leading the industrial sector. Commercial lending is up while delinquencies are down, and construction levels have stabilized.
Office vacancy rates have been falling with a slowdown in new supply. This sector has benefited greatly from the growth in jobs, and rents are gaining traction. “There’s strong investor interest in the office market, both for real estate investment trusts (REITs) and foreign investors – the strongest investment areas are in the West and Northeast,” Lereah said.

Vacancy rates in the office sector should average 14.1 percent this year, and 13.2 percent in 2006. Office rents are forecast to grow 2.3 percent in 2005, and 3.4 percent next year.

Net absorption of office space, which includes leasing of new space coming on the market as well as space in existing properties, is projected at 61 million square feet in 2005, and 56 million next year.

In the industrial sector, performance is divided by age and location; some markets have high vacancy rates as a result of obsolescence. “Rents are struggling in some areas but rising in others, such as in Southern California, while port markets – both traditional and inland – are showing the strongest performance,” Lereah said. Overall, the pace of restocking is barely keeping up with shipments.

Industrial vacancy rates are expected to average 10.3 percent in 2005 and 9.8 percent next year. Industrial rents should rise 0.7 percent this year and 1.8 percent in 2006. Net absorption of industrial space is forecast at 133 million square feet this year, and 153 million in 2006.

In the retail sector, merger activity is continuing while there’s been a growth in retailers targeting the youth market. Rent gains are strong, as consumer spending growth is holding steady. Most new construction is in strip malls and power centers. “REITS also have been very active in the retail market, which offers the best long-term investment return,” Lereah said.

The average retail vacancy rate is projected to average 6.3 percent this year and about the same during 2006; rent growth is forecast at 4.4 percent in 2005 and 4.0 percent next year. Net absorption of retail space is estimated at 34 million square feet in 2005, and 29 million next year.

The apartment rental market – multifamily housing – can expect a higher number of renters as modestly rising mortgage interest rates cause a slight slowdown in home sales over the next year, and job growth fuels demand and helps to support higher rents. “New construction is focused in markets that can support additional supply, while conversion to condos has surfaced as a big trend in areas such as Miami, Northern Virginia and San Diego,” Lereah said.

The apartment vacancy rate is expected to average 6.2 percent in 2005 and 5.2 percent in 2006. Average rent is forecast to rise 2.5 percent this year and 3.0 percent in 2006. Multifamily net absorption is projected at 237,000 units in 57 metro areas tracked in 2005, and 262,000 next year.
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