COMMERCIAL MARKETPLACE MAY BE STARTING TO IMPROVE

By Jodi Summers

The residential real estate market may be starting to stabilize in Southern California, but the industrial and office is still on the slide…but the rate of decline has not increased. In all its twisted logic, the Boxwood Means Inc. a research company that specializes in small-capitalization properties, concludes that the lack of an increased drop could signal that the market might be close to reaching its cyclical bottom.

Nationally, rents at office properties with less than 50,000 square feet fell by 27 basis points in May to $18.21/sf, per year, while industrial properties, fell 61 bp to $7.63/sf. Those rates of decline are similar to the drops in previous months. Boxwood Means Inc. reports that on a relative basis, that’s good news.

Even relatively positive news is better than what’s been happening in the recent past. Records show that rents have fallen at industrial properties for 18 months straight and at office properties for 12 months.

Statically, larger-cap properties have suffered greater declines in rent. According to Reis Inc., national office rents fell by 4.1% in the first quarter, to $24.08/sf, from their peak in the second quarter of 2008. During the same period, rents at small-cap companies fell by only 1.67 percent, to $18.31/sf.

FYI, Boxwood Means compiles property-level operating and sales data on small-cap properties through a partnership with LoopNet Inc. It has found a strong correlation between the performance of the residential housing market and small-cap commercial properties and noted that the residential market has been showing signs of stabilization of late. The same could be said of the small-cap commercial market.

(see  BUY SOON – THE SOCAL REAL ESTATE MARKET IS STABLIZING - http://www.santamonicapropertyblog.com/?p=1256) small-cap commercial properties “might also be finding a market floor,” Boxwood Means said, noting that such properties are “highly dependent on neighborhood-based businesses and residential communities.”

Of course there is a wide disparity among geographic regions, with the Southeast being especially hard hit and the Northeast relatively unscathed. These trends mirror the residential housing market.

“Financing availability has been a differentiator that has propped up the small-cap sector,” Boxwood Means said. The lack of financing, prompted by the shutdown of the CMBS market and a substantial pullback by other traditional lenders, such as life insurers, has put the larger-cap market into a tizzy.

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=8167&sourcecode=1lntd009

http://www.boxwoodmeans.com/

http://www.tradein.com/TrendForm-Office%20Workstation.jpg

FINANCAL IMPACT OF WIND AND SOLAR ON YOUR BUILDINGS

FINANCAL IMPACT OF WIND AND SOLAR ON YOUR BUILDINGS

 By Ernst Diener

People are asking for hard numbers on how wind or solar energy can impact building

and business values.

Financial Impact of Wind or Solar on your Building

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Increase Earnings with Wind Power

For Office Buildings:

Each dollar invested in energy performance improvements in commercial real estate

at a 20 to 30% savings rate, is equivalent to increasing Net Operating Income by

 3 to 4% and increasing Asset Value by $2.50 to $3.75. So consider the impact if

 you produce $250,000 per year for your building, with wind power.

For Supermarkets:

A 10% reduction in energy costs for the average supermarket is equivalent to increasing net profit margins by 15%, increasing Earnings Per Share by $.06, and increasing  sales per square foot by $71. Consider what it means if you produce $250,000 per year for your super-market in power savings.

For Churches:

If your church can create $48,000 in electricity savings through wind power or renewable energy it is equal to increasing your church membership by almost 50 members. If  your church can create $250,000 in renewable energy it is equal to increasing your membership by 228 members.

For Convenience Stores:

A 10% reduction in energy costs for your store, is equal to your increasing your

 net profits by at least 15%, plus the wind turbine will drive in additional traffic,

and increase your gross sales within a range of 11% to 19%.

For Schools and Universities:

2 80 kwh wind turbines that can produce a total of $120,000 per year in energy savings

can allow you to hire additional teachers, buy books, increase educational potential.

(note: None of the above take into consideration tax credits, incentives, grants,

or carbon credits, all of which increase your financial gain with renewable energy)

For Hospitals:

Each dollar saved in energy costs is equivalent to generating new revenues of $20

for hospitals, or $10 for medical offices and nursing homes. So if you produce $250,000 per year with a wind turbine it is equal to generating $5,000,000 in new annual revenues for hospitals or $2,500,000 for medical offices and nursing homes.

For Hotels:

A 10% reduction in energy costs for the average full service hotel is equivalent

 to increasing Average Daily Rate by 2.6% and increasing Occupancy Rate by 4.3%.

 For the average limited service hotel, a 10% reduction in energy costs is equivalent

to increasing Average Daily Rate by 1% and increasing Occupancy Rate by 2.4%. Now consider, what this means to your hotel if you can produce$250,000 per year of electricity per year with a wind turbine.

http://rs6.net/tn.jsp?et=1102603433038&s=4010&e=001owYh6s8MtLYbHlWEH7PlMKyKTQNgLqQKM-prqSpVCzJ14ef9r0z2UqjmCYn4KNlVeF-xSliDg5HNEaKWT8ttcAcTf_sus-uXpTw72aCyMjgga9J6Otk2YA==

http://www.ecofriend.org/entry/mixerejector-wind-turbine-to-produce-50-more-power/

http://whenhistoryattacks.wordpress.com/

http://www.ecofriend.org/entry/eco-architecture-solar-powered-laboratory-in-california-makes-the-forensics-green/

http://global.kyocera.com/news/2009/0502_iuoi.html

http://oc-aerial.com/small-aerials/saddleback-church-solar-electric-panels-1-large.jpg

http://www.americanprogress.org/issues/2009/04/img/solar_church_onpage.jpg

PHOTOS OF THE WORLD’S TALLEST BUILDING

Burj Dubai, the tallest building in the world (2,620 ft.)

The workers on the top girders can see the earth’s rotation.

OFFICE BUILDING BLUES

By Jodi Summers

The office market may be in pain Los Angeles but it’s a minor ache compared to the severe hurt other parts of the country are feeling.

Office prices have declined more than 20% this year in some parts of the country, according to the first quarter reports by Moody’s/REAL National All Property Type Aggregate Index. The index’s monthly decrease was 1.7%, and the index showed a year-over-year decline of 20.8% from March 2008. Fortunately, Los Angeles, being a Top 10 market has not seen the office market dive that deep.

“The national office market was down 18.6%” in Q1 2009 compared to Q4 ’08, Real Estate Analytics president Neal Elkin observed. “That was well beyond what you’d expect in one quarter…I personally underestimated how poorly the secondary and tertiary markets are doing, particularly in the office space.

“Comparing these national and top 10 office returns over the past quarter and the past year, that’s shocking. If the top 10 markets are down 6.8% and nationally it’s down 18.6%, which means the secondary and tertiary markets are down close to 30%. That’s an enormous drop in price over one quarter.”

It has been speculated that the sharp decline in the office sector is due in large part to investors who speculated in the office market. Overall, office property prices have declined 30% from their peak in October 2007, according to Real Capital Analytics. Regionally, the largest falloff was in the West, where prices sagged by 16%.

Speculation has in that the drop in the secondary and tertiary markets is due to the softening creditworthiness of the tenants, while in the primary market you’ve got a deeper tenant pool, higher quality tenants, and there’s a bigger lag time in tenant turnover.

Overall, selling prices for retail properties are off 13% from the October ’07 peak. Apartment and industrial prices remained flat during the quarter, although Western apartment prices gained by 2.7%. Sales volume for the market overall shows that both total dollar value and number of sales are down about 75% to 80% lower than the volume seen at this time last year.

http://www.globest.com/news/1421_1421/newyork/178955-1.html?type=pf

http://commons.wikimedia.org/wiki/File:Mammoet_office_building.jpg

http://fb.invisiblethreads.com/the_kodak_moment

http://www.pilkington.com/applications/case+studies/usa/grupe+brookside+office+building+stockton+california.htm

THE GEOGRAPHY OF JOBS

By Jodi Summers

According to this exploding Geography of Jobs map - http://tipstrategies.com/archive/geography-of-jobs/-

Southern California reached its peak in 2^nd quarter 2005, hit parity 3^rd quarter 2007 and then began our great economic slide…

Check it out:

October 2007

~~

 April 2005

~~

March 2009

~~

 Let’s hope we go green in more ways than one.

COMMERCIAL LOANS SHOULD BE EASIER TO COME BY

PERHAPS COMMERCIAL LOANS WILL BE EASIER TO COME BY

edited by Jodi Summers

The Federal Reserve authorized longer- term loans for investors buying securities backed by commercial mortgages in a $1 trillion emergency credit program, taking a step the industry said was needed to avert defaults.

The Fed now offers five-year loans at higher interest rates than the three-year loans previously approved for the Term Asset-Backed Securities Loan Facility, the central bank in a statement from Washington. The Fed will also accept securities backed by loans designed to help small businesses buy insurance.

Get all the details @

http://www.bloomberg.com/apps/news?pid=20601068&sid=asH8tMd6ss4c

FIGURE OUT HOW TO MAKE BUILDINGS NET ZERO BY 2025

FIGURE OUT HOW TO MAKE BUILDINGS NET ZERO BY 2025

By Jodi Summers

The DOE has taken a number of steps to encourage energy efficiency in the design of new buildings. EnergyPlus is an energy modeling tool, which is augmented by OpenStudio, a plug-in for the Google SketchUp 3-D drawing program that allows SketchUp to work seamlessly with the EnergyPlus program.

Both are available on the EnergyPlus page of DOE’s Building Technologies Program Web site.

http://apps1.eere.energy.gov/buildings/energyplus/

That site also features a selection of benchmark models for 16 types of building in 16 locations to help designers understand the energy use of similar new buildings- http://www1.eere.energy.gov/buildings/commercial_initiative/new_construction.html

EnergyPlus models heating, cooling, lighting, ventilating, and other energy flows as well as water in buildings. EnergyPlus includes many innovative simulation capabilities such as time steps of less than an hour, modular systems and plant integrated with heat balance-based zone simulation, multizone air flow, thermal comfort, water use, natural ventilation, and photovoltaic systems.

CLEANTECH L.A. AIMS TO LEAD THE GREEN DEVELOPMENT EVOLUTION

By Jodi Summers

As we move toward a more efficient world, collaborative alliances are the next wave of evolution. In the last administration, we saw the auto companies begin to share ideas. In leaner, greener times the Department of Energy created the Commercial Building Energy Alliance. Locally, our universities are pooling their knowledge through CleanTech Los Angeles, with goal of making L.A. THE city spearheading the green evolution.

“Los Angeles is leading the world with its commitment to reducing its environmental footprint and this collaboration will undoubtedly stimulate innovation in our region and provide opportunities to create and attract clean tech companies who wish to capitalize on the region’s enormous public demand for their innovative solutions,” said Bill Allen, CEO of the Los Angeles County Economic Development Corporation.

CleanTech Los Angeles, it is an alliance featuring prominent leaders from the City’s premier academic institutions, business community and local government. The big picture is to establish Los Angeles as a global capital of clean technology by leveraging the City’s strongest assets.

Publicly, the CleanTech L.A. Memorandum of Understanding was signed by Mayor Antonio Villaraigosa, California Institute of Technology President Jean-Lou Chameau, University of California Los Angeles Chancellor Gene Block, University of Southern California President Steven Sample, Los Angeles County Economic Development President Bill Allen, Los Angeles Business Council President Mary Leslie, and Los Angeles Area Chamber of Commerce President Gary Toebben.

“Broader recognition of Los Angeles as a global regional center of science and engineering research and clean technology development bodes well for its economic competitiveness in a rapidly changing world,” added Dr. Jean-Lou Chameau, President of the California Institute of Technology.

CleanTech LA will focus on four key areas: Testing, R&D, and Commercialization; Advocacy for Funds; Education and Outreach; and Economic Development Strategy. The partnership is currently working together on initiatives such as www.cleantechla.org, the California Climate Change Institute, the CleanTech Manufacturing Center, and theClean Technology Research Center. Planned future programs include the CleanTech Corridor, advocacy for federal and state funding, and greater collaborations and partnerships.

PARTNERS:

* City of Los Angeles

* University of California, Los Angeles

* University of Southern California

* California Institute of Technology

* Los Angeles Business Council

* Los Angeles Economic Development Corporation

* Los Angeles Area Chamber of Commerce

“Clean technology is one of the bright spots in our future economy,” said Gary Toebben, President & CEO, Los Angeles Area Chamber of Commerce. “The L.A. Area Chamber is pleased to work with the City of Los Angeles and other partners to help make Southern California the hub of the emerging clean tech sector and the jobs and economic growth associated with it.”

For more information visit www.CleantechLA.org.

http://www.ioe.ucla.edu/news/article.asp?parentid=3347

http://www.today.ucla.edu/portal/ut/la-to-become-the-capital-of-green-88893.aspx

http://cleantechlosangeles.org/

http://preaprez.files.wordpress.com/2009/04/villaraigosa-latimes-blog.jpg

http://valuecarpetonline.com/ucla-ar.jpg

http://blog.ingamenow.com/wp-content/uploads/2008/09/hot-usc-cheerleaderspcc3.jpg

ECONOMISTS BELIEVE THE RECOVERY IS UNDERWAY

ECONOMISTS BELIEVE THE RECOVERY IS UNDERWAY

By Jodi Summers

In the 4^th quarter of last year, our economy slid like a beginning skier on an ice patch…completely out control. Because we went down so hard and so fast, there are a number of economists who feel the U.S.  is beginning our recovery.

Here’s what smart people have to say about our economic recovery -

Lakshman Achuthan, managing director of Economic Cycle Research Institute: The economy could be as close to four months away from a recovery.

He says his firms’ readings on long-term and short-term economic indicators give him significantly more hope that the economy is closer to a turnaround than he had thought… Among the more than dozen different things his firm looks at are home prices, the jobs picture and stock prices.

“These readings don’t really turn unless something is happening,” he said.

**

Mark Zandi, chief economist of Moody’s Economy.com:  Believes that a recovery could be closer than most people think.

“We’re starting to see some pent up demand for goods. But first things first, we need to see job losses moderate,” he said.

Zandi said just a slowing rate of job losses should help make people more confident about their own job outlook, as will a continuation of the recent gains for stocks.

Those two factors, plus a sign that home price declines have ended will help to turn around consumer confidence, Zandi said. That should help spur more spending.

**

Robert Brusca of FAO Economics:  There will be a fairly sharp recovery, mainly because this recession was so much worse than the ones in 1991 and 2001.

A slow, jobless recovery took place after those recessions, which were both fairly mild by historical standards. But the economy has often bounced back sharply following more severe recessions.

Brusca points out that, prior to the 1991 and 2001 downturns, the nation’s gross domestic product has gained about 7%, on average, during the first year of a recovery.

For this reason, he is predicting strong growth in at least one of the year’s final two quarters as well as a quicker return to health for the labor market.

“You’ve lost 5 million jobs. It shouldn’t be hard to put 2.5 million jobs back on rather quickly after you hit bottom,” he said.

**

Joseph Carson, chief economist at AllianceBernstein: The economy is already showing early indications of turning around. In addition to improving home sales and positive signs from the stock and bond markets, retail sales in February and March were stronger than expected.

“Stimulus has a much better chance of working if trends are already turning up than if it needs to halt a decline,” he said.

Info courtesy of:

http://www.realtor.org/RMODaily.nsf/pages/News2009040701?OpenDocument

http://money.cnn.com/2009/04/06/news/economy/recovery/index.htm

http://www.davickservices.com/flag.jpg

http://i2.cdn.turner.com/cnn/2008/US/10/10/economy.qanda/art.achuthan.cnn.jpg

http://www.theepochtimes.com/n2/images/stories/large/2009/02/23/zanccc84579816.jpg

http://www.pbs.org/newshour/images/economy/july-dec98/dw3.jpg

http://www.alliancebernstein.com/CmsObjectABD/images/people/full_size/carson_joe.jpg

STRANGE TIMES MAKES FOR STRANGE TRANSACTIONS

STRANGE TIMES MAKES FOR STRANGE TRANSACTIONS

by Jodi Summers

As you’re aware, the New York Times Co. recently sold its portion of its headquarters building at 620 Eighth Ave. to investment firm W.P. Carey & Co. and two affiliates in a $225-million sale-leaseback. In this custom-crafted transaction, W.P. Carey bought the 21 floors, totaling 750,000 square feet, which the Times Co. uses as headquarters space. The transaction does not include the six floors which the Times Co. leases to other tenants.

In another unique transaction, Global information technology firm Unisys Corp. disposed of a 356,000-square-foot suburban Philadelphia office property in a $19.5-million sale-leaseback transaction with Exeter Property Group and Strategic Realty Investments LLC.

Interesting to note that in this transaction,  Unisys leased back only about half of the space at the Malvern, PA asset. Partial sale-leasebacks aren’t an entirely new phenomenon, but they appear to be on the rise, at a time when increased interest in sale-leasebacks in general are up.

“A lot of corporations have identified that using a sale-leaseback is a great way to take capital they have tied up in real estate and invest that in their business,” says Jones Lang LaSalle capital markets senior vice president Suzanne Martinez.

In many instances, flexibility is a key motivator behind companies pursuing partial sale-leasebacks, Martinez notes. In the case of Unisys, “doing a partial sale-leaseback in this instance allowed them to lower their operating expenses, and at the same time capitalize on the fact that that was great real estate in a good market.”

Motorola’s five-building, 1.1-million-square-foot Arlington Heights campus in suburban Chicago are being sold either as a portfolio or individually. As part of its right-sizing effort, Motorola will continue to occupy three buildings with long-term staggered lease terms.

Given the inherent repositioning aspect of partial leaseback deals, traditional sale-leaseback investors are not typically attracted to these kinds of transactions,  observes Martinez. Rather, value-add players are the more likely bidders, but they are attracted to having a stabilized rental income stream component while repositioning efforts for the remainder of the space are undertaken.

Market experts foresee that sale-leasebacks will be an increasingly used corporate real estate strategy this year as companies look for ways to shave costs, raise capital and otherwise strengthen their balance sheets.

Expect  to see sale leaseback transactions trickle down into small business. Bill Reynolds recently sold off a 6-tenant automotive facility in Gardena, keeping one space for his muffler supply business. “I did a seller-carryback,” he offers. “The ongoing cash flow is nice.”

New York City-based market research provider Real Capital Analytics notes in its February Capital Trends Monthly reports that owner/occupiers are likely to be parties to an increasing share of transactions this year, both as buyers and sellers. On the sell side, “the increase in deal making stems not only from dispositions of excess/vacant property, but also from sale-leasebacks,” RCA notes. “For some companies, sale-leaseback may be the preferred–or only–method for raising capital at present.”

http://www.globest.com/news/1365_1365/insider/177413-1.html

http://byfiles.storage.live.com/y1pBgEx1qEZ0E5wwsBWLlMC7jOCArmtti2zGadk6gHY6E3jOmlSgdbe9CHkDlnA_K9HNbYj7aY_JFQ

http://www.nytimes.com/2009/03/10/business/media/10paper.html?_r=1

http://www.globest.com/news/1362_1362/newyork/177327-1.html

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=6755&sourcecode=1lntd009