Southern California Office Real Estate Blog

GREEN OFFICE AND INDUSTRIAL REITS SHOWING PROMISE

GREEN OFFICE AND INDUSTRIAL REITS SHOWING PROMISE

By Jodi Summers

Office and industrial REITs expect to remain tightly focused for the balance of the year –evaluating the damage to occupancy and rents twisted by current economic conditions.Expect REITs to be greening and negotiating sexier leases mitigate potential damage.

Buildings are responsible for 40% of emissions, and commercial sectors such as industrial and office are greening to cut costs and attract hipper clients.

Taking such savvy acts, coupled with the 2^nd + 3^rd quarter strengthening of the economy have motivated market observers to observe that the publicly traded REIT market at bottom or near bottom.

A recent CBRE Investors report noted that “the bottom of the capital market cycle may be close,” with pricing metrics on U.S. commercial real estate starting to look attractive again to buyers.

“Much of the recent negative press about commercial real estate reflects the experiences of distressed owners,” CBRE noted in their report. “However, from

prospective buyers’ perspectives, many pricing indicators look historically favorable,” based on the current widening spread between aappraised-value cap rates and risk-free 10-year U.S. Treasury bonds.

“Just as REITs led the private markets in 2007 and 2008, it is probable that the recent share-price recovery is an early indicator that a trough in private markets is coming soon.”

Energy saving upgrades such as timed lighting + cooling, white roofs and thin solar films to cover the windows of office buildings are cutting back on cooling costs and increasing user comfort.

CoStar’s office and industrial market report stated that average sale prices, while down significantly from their 2007 peaks, are at or close to their historical averages. Cap rates have expanded sharply during the same period but are also in line with historic averages.

REITs comprise just 10% of the commercial real estate market, but wield significance as a bellwether for future commercial real estate conditions.

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http://www.costar.com/News/Article.aspx?id=6A1CBF26B572D3A957377280529227C0&ref=100&iid=143&cid=383F14EEE265B182474DA2442BACBBBF

http://www.socalofficerealestateblog.com/?p=405

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http://www.dezeen.com/wp-content/uploads/2008/08/so_il120.jpg

http://equitygreen.typepad.com/blog/2007/01/green_reits_par.html

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GREEN WALLS KEEP OFFICE PROPERTIES COOLER

GREEN WALLS KEEP PROPERTIES COOLER

By Jodi Summers

We discussed green roofs, now let’s cover green walls. Covered in vegetation, green walls can be 25% cooler than regular building walls in summer, remove air pollutants, and they look great.

Historically speaking, green walls aren’t exactly a new idea: The Romans planted grape vines along building walls, resulting in faster growing and sweeter grapes for wine. The structures are also prevalent in Europe, where modern-day green roofs first took off.

What the ancient Romans devised is now be adapted for 21^st century applications. Steven Peck, president of Green Roofs for Healthy Cities, a Toronto industry association, observes that interest in green walls is growing, estimating that green roof installations have increased at about 30 percent a year over five years.

Locally, the Rainbow Apartments off San Julian Street in the heart of skid row has a 34-foot-long vegetable wall filled with strawberries, tomatoes, basil and other herbs and vegetables. Residents of this step up housing facility are surprised at how the garden has united them.

“It brings us together as a group, kind of like therapy, to see something growing and flourishing,” Jannie Burrows said.

The wall was installed with the assistance Urban Farming, as part of the nonprofit’s Food Chain project. Urban Farming also erected “edible” walls at the Los Angeles Regional Foodbank, the Miguel Contreras Learning Center and the Weingart Centidenter.

The Food Chain project, said Urban Farming founder Taja Sevelle, enables residents in some of the city’s poorest areas to grow food in underused spaces at a time when food prices are soaring. The walls, she said, “get people to think outside the box. You can plant food in so many different places.”

In the corporate world, PNC Financial Services Group Inc. recently installed a 2,400 square feet green wall on one side of its headquarters in Pittsburgh. It’s the size of two tennis courts and features more than 15,000 ferns, sedums, brass buttons and other plants that create a swirling pattern of varying hues of green above the company’s logo. They are divided among hundreds of 2-by-2-foot aluminum panels that were anchored onto the building’s frame after part of the granite facade was removed.

“We think it’s the right thing to do for our community, for our customers and our shareholders,” said Gary Saulson, head of corporate real estate for PNC. “We wanted to add greenery to an area that didn’t have any. … We really view the green wall as public art.”

Green Living Technologies LLC, of Rochester, N.Y., designed the wall at PNC. The company has also installed walls in New York City, Los Angeles, Chicago and Seattle.

PNC bills its green wall as the largest in North America. On average green walls cost about $100 to $125 a square foot.

The Pittsburgh wall requires only 15 minutes a week of watering during peak growing season — less in winter — provided through the building’s plumbing system.

For non-edible green walls, according to Joanne Westphal, a landscape architecture professor at Michigan State University and part of the school’s Green Roof Research Program, the biggest benefit to green walls is their ability to help cool buildings through shading. They also help capture rainwater and release it more slowly into the atmosphere and stormwater systems. Additionally, green walls can offset the carbon output of one person a day.

http://www.agreenroof.com

http://www.greenroofs.org

http://www.socalgreenrealestateblog.com/?p=514

http://www.google.com/hostednews/ap/slideshow/ALeqM5hKS7UwnC8nR6j4kYQLu6m1X7nBbQD9B9DRK00?index=0

http://www.google.com/hostednews/ap/article/ALeqM5hKS7UwnC8nR6j4kYQLu6m1X7nBbQD9B9DRK00

http://www.insideurbangreen.org/green-wall/

http://www.edgelosangeles.com/index.php?ch=style&sc=home&sc2=&sc3=&id=97540

http://articles.latimes.com/2008/aug/14/local/me-garden14

http://arkitipintel.com/wp-content/uploads/2009/06/amelia_b_lima-green_wall.jpg

LOS ANGELES WINS THE ENERGY STAR GREEN PRIZE

LOS ANGELES WINS THE ENERGY STAR GREEN PRIZE

By Jodi Summers

Yeah for us! Los is the most Energy Star efficient city in the United States!

This information comes courtesy of our government. The latest U.S. Environmental Protection Agency (EPA) index of the 25 U.S. cities with the most Energy Star buildings. Los Angeles leads the list with more than 260 buildings encompassing 74 million square feet, or about as much floor space as 27 Empire State buildings.

“We’re setting the green standard in LA. Reducing our carbon footprint by 35 percent below 1990 levels is the most ambitious goal set by a major American city,” stated Mayor Antonio Villaraigosa.

The goal for the city’s GREEN LA imitative is to reduce Los Angeles’ greenhouse gas emissions by 35 percent below 1990 levels by 2030. This target is greatest reduction target of any large U.S. city. The core of GREEN LA is increasing the city’s use of renewable energy to 35 percent by 2020.

San Francisco, Houston, Washington, DC, and Dallas-Fort Worth round out the top five.

“Energy Star buildings typically use 35 percent less energy and emit 35 percent less greenhouse gases than average buildings,” noted EPA administrator Lisa Jackson. “They are saving energy, saving money and protecting our environment.”

The EPA noted that Energy Star buildings in just the top five cities have saved more than $315 million in energy costs.

The list did have some surprises. Big East Coast hubs did not fare well, with just two — Washington, DC, and Atlanta — placing in the top 10. In fact, the total number of Energy Star buildings in New York (#12), Boston (11), Philadelphia (17) and Miami (23) was less than the number in Los Angeles, EPA reported.

Also being savvy enough to make the list were several smaller, Midwestern cities where energy tends to be cheaper, such as Grand Rapids, MI, and Madison, WI.

Details courtesy of http://www.costar.com/News/Article.aspx?id=0F9ACA2C00BDA94C9DB4DED0A6B19C9B&ref=100&iid=123&cid=383F14EEE265B182474DA2442BACBBBF

http://www.ens-newswire.com/ens/may2007/2007-05-15-01.asp

http://www.daylife.com/topic/Antonio_Villaraigosa

CHINA’S OFFICE PROPERTY MARKETS ARE ABOUT TO EXPLODE!

CHINA’S OFFICE PROPERTY MARKETS ARE ABOUT TO EXPLODE!

By Jodi Summers

China’s secondary and tertiary markets are beginning to play a greater and greater role in the country’s real estate market, and analysts are speculating that China’s property market could quadruple in size by 2020.

The information comes courtesy of a report from at Jones Lang LaSalle titled China40: The Rising Urban Stars report.

“China’s Tier II and Tier III cities are dynamic centers of economic development and continued growth,” says Michael Klibaner, head of research Shanghai. “Massive infrastructure investment makes these markets increasingly accessible at a time when interest in China has shifted from being export oriented towards a focus on the domestic market.”

Analyzed in the report were the 40 top Tier II and Tier III cities which will be a strong future investment value. Each city was further analyzed for it real estate strengths. For office, Tianjon, Chongqing and Nanjong made the list; in retail Changsha, Wuhan and Wenzhou; and in Logistics Chengdu, Qingdao and Zhengzhou.

“The future evolution of China’s cities and their real estate markets will be driven by a rich combination of factors that are strongly influenced by government policy,” the report states. These policies focus on urbanization, with plans in place to see the city population explode to 850 million people by 2020. “The government’s ideal end vision of the urbanization process is a country wide network of environmentally sensitive cities each with their own unique competitive advantages and strong trading connections.”

China’s grade A office supply is roughly the size of Washington, DC’s entire supply, averaging 39.4 million square feet by the end of the year. But by 2011, that supply is expected to expand to 68.9 million square feet, with half the increase due to development projects in the Tier II and Tier III cities. The demand in these cities is being created by real estate advisors, insurance services and the banking sector.

JLL lists Dalian, Chengdu, Hangzhou, Shenyang, Wuhan, Tianjin, Nanjing and Chongqing as having the greatest potential to become robust office hubs.

Info courtesy of

http://www.globest.com/news/1366_1366/asia/177432-1.html

http://travel.aolcdn.com/travdestguide/Tianjin-China_02-360a032407.jpg

http://www.visit-southampton.co.uk/xsdbimgs/May%20Breeze%20square.jpg

http://www.virtourist.com/asia/china/chengdu/imatges/01.jpg

INSTALLING SOLAR FILMS CUT UTILITY EXPENSES

INSTALLING SOLAR FILMS CUT UTILITY EXPENSES

   by Jodi Summers

Thin solar films are now covering the windows of office buildings around the country, reducing the temperature inside, cutting back on cooling costs and increasing user comfort.

The newer, thinner, solar films being placed over the building’s glass that is completely clear, yet cuts ultraviolet and infrared light. “This is a clear film that takes your window and makes it into a smart window,” says Dan Venet, executive vice president of CHB Industries. “It’s nice to have natural light coming in, and gives you an opportunity to reduce your lighting needs.”

Earlier versions of this film kept out heat, but the tint created a gloomy environment, something you don’t need more of in the northern part of the country. Newer solar films take advantage of technology that filters out UVA and UVB rays, while reflecting infrared radiation. That reflection reduces 55% of the sun’s heat without affecting the visible spectrum of light – a giant leap for mankind.

Key is the clarity of the new films, which allow in maximum light and decreases energy consumption.

“We’ve had tenants put no lighting in perimeter offices because of that,” notes Herb Gonzalez, a property manager at L&L Holding Co., about how the new film impacts office buildings. “We notice a significant heat rise in areas not yet filmed. We find it does cool the building.”

The technology has advanced to the point that some films not only will block light, they also contain ultra-thin photovoltaics to allow the film to produce energy. The payback period on solar films varies by region. In the West, payback can range from six months to three years, Smith observed.

The October 2008 Emergency Economic Stabilization Act allows tax credits for homeowners who install energy efficient improvements in 2009, with window films possibly qualifying, according to the International Window Film Association (IWFA), in Martinsville, VA. Commercial real estate, however faces greater economic challenges.

“There’s a tremendous amount of interest,” with the recent spikes in the price of oil, says Darrell Smith, executive director of the IWFA. “But the same people who are worried about energy bills also are worried about layoffs.”

http://www.globest.com/news/1342_1342/insider/176890-1.html

http://www.euroguard-spain.com/solar-film.html

http://www.protint.ca/ComResInd.htm

http://www.windowfilmdepot.com/blog/index.php

BUY WATERGATE – A INFAMOUS NIXON-ERA COMMERCIAL LANDMARK

BUY WATERGATE – A INFAMOUS NIXON-ERA COMMERCIAL LANDMARK

By Jodi Summers

Politicos will be intrigued to learn that the Watergate complex in Washington, D.C. is for sale.  To rattle your memory, the Watergate is famous for its role in the downfall of former president Richard Nixon, leading to his resignation.

Being offered is a 10-acre, mixed-use development is comprised of three luxury residential towers, two class-A office buildings, a 200-room hotel and a parking garage. The assets have been tentatively valued at north of $100 million.

What you get is 2600 Virginia Ave. - a 198,538-square-foot office building; 2500 Virginia Ave. - a 66,034-square-foot retail venue; and a 314-space underground parking facility.

The complex has an occupancy rate that averages in the low 90s, with the office occupied at around 96%. Office tenants include the Saudi Arabian Cultural Mission, Saul Ewing, the Washington Opera and PNC Bank. The US Postal Service, CVS Pharmacy and Safeway supermarket are among the retail tenants.

The property’s financing is assumable. With a term that ends October 2015, it has an initial blended rate of 5.43%.

The Watergate scandals were a series of American political scandals during the presidency of Richard Nixon that resulted in the indictment of several of Nixon’s closest advisors, and ultimately his resignation on August 9, 1974. The scandals began with the arrest of five men for breaking and entering into the Democratic National Committee headquarters at the Watergate Office complex in Washington, D.C. on June 17, 1972. The scandal has been immortalized with the trend of adding ‘gate’ to the phrases associated with scandals.

Info courtesy of:

http://www.globest.com/news/1366_1366/washington/177425-1.html

http://en.wikipedia.org/wiki/Watergate_scandal

http://ilikedginger.net/gtisongs/boyfriends/elvis_presley_and_richard_nixon.jpg

http://www.memphisflyer.com/binary/dd83/RichardNixonFarewell.jpg

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

Now that we’re living in a green age, we know that buildings are responsible for 40% of emissions - and the upside of this statistics is that it presents an enormous opportunity for builders. Even though the construction sector continues to struggle, sustainable building is growing at a 30% annual rate, hands down the fastest-growing sector in the building industry, noted David Gottfried, CEO of Berkeley, CA-based Regenerative Ventures and a founder of the U.S. Green Building Council. “The growth in this world right now is green.”

The latest reports confirm this trend, as California total nonresidential construction activity continued to slide in October with permit values declining by -35.5% to $1.3 billion (year-over-year), according to the Construction Industry Research Board. During the ten-month period of 2008, nonresidential permit values totaled $16.9 billion – a decline of -10.2% from the comparable period in 2007.

While commercial sectors such as industrial and office are greening to cut costs and attract hipper clients, retailers have an added benefit. Retailers are strongly adopting green commercial, because it results in net profits, observed Joseph Feldman, managing director and senior research analyst Telsey Advisory Group, noting that the pioneering ‘green’ Wal-Mart in Lawrence, KS, posted higher-than-average sales for the chain. Target has started placing motion sensors in their stores that will dim lights in unoccupied aisles. The Gap and the Limited also are making efforts at energy efficiency, with the latter replacing roofs at three distribution centers to make them more energy efficient.

Even comparatively small efforts, such as Lowes’ decision to replace all of the lights in its stores with energy-efficient models, add up over time. “It’s relatively easy to become green,” Feldman said, noting that “green” retailers “mostly are the leaders in their spaces.” But the extra interest could be a double-edged sword.

That is supported by the growth of the USGBC, and the soaring interest in LEED certification or equivalents worldwide, Gottfried said. LEED is now developing a specific designation for retail; currently retail stores and shopping center developers can apply under the new construction or existing building standards. The standard will be up for member ballot this month, with a market launch expected in spring 2009.

The interest in standards also is expanding worldwide, with 13 countries–including India, Mexico, Brazil, Japan and Australia–now having green building councils. Another 50 nations are creating councils.

“It’s a United Nations of councils,” Gottfried said. Even the Chinese government is trying to impose more green regulations on its manufacturers, Feldman reported.

Info courtesy of

http://www.globest.com/news/1296_1296/insider/175575-1.html

http://laedc.org/eedge/index.html#4

Survey: The World’s Next Great Cities

Survey: The World’s Next Great Cities

1. Shanghai, China
2. Beijing, China
3. Budapest Hungary
4. Kuala Lumpur, Malaysia
5. Santiago, Chile
6. Guangzhou, China
7. Mexico City, Mexico
8. Warsaw, Poland
9. Bangkok Thailand
10. Shenzhen, China 

http://www.realtor.org/RMODaily.nsf/pages/News2008102804?OpenDocument

HOW GREEN RENNOVATIONS PAY OFF

 

HOW GREEN RENNOVATIONS PAY OFF

 

 

 

 Green remodeling can pay off — not only in lowered utility bills, but also in buyer appeal when the property is sold.

Green Seal Certified

  

Here are some green things to consider:

 

 

 ~ Energy-efficient products. Choose Energy Star appliances, double-paned windows, low-flush toilets, and compact fluorescent light bulbs.

 ~ Spray foam insulation. Seal the home with insulation that doesn’t let the heat or cooled air leak out.

 ~ Sustainable wood flooring. Select flooring certified by Forest Stewardship Council, which protects forests by managing the amount of wood harvested annually.

 ~ Locally made products. Buy products made less than 250 miles away to reduce transportation costs. Granite, for instance, is generally imported from afar.

 ~ Nontoxic paint. Use paint that is low in volatile organic compounds (VOCs) — chemicals that evaporate into the atmosphere. Look for Green Seal certified brands.

 Source:

http://www.realtor.org/RMODaily.nsf/pages/News2007123106?OpenDocument

 

$40M FOR ONE OF THE LARGEST MULTI-USE TENANT CAMPUSES IN SOCAL

$40M FOR ONE OF THE LARGEST MULTI-USE TENANT CAMPUSES IN SOCAL

Koll/PER, a partnership of the Newport Beach-based Koll Co. and the Public Employee Retirement System of Idaho, has acquired the 313,367-sf College Business Park from the Newport Beach-based Wohl Investment Co. for $39.9 million. The property consists of 17 single-story industrial, office and flex buildings in a 24.55-acre business park that straddles the county line between Los Angeles and San Bernardino counties in Upland, CA.

College Business Park is situated at the northeast intersection of Foothill Boulevard and Monte Vista Avenue. The county line traverses through the property along Monte Vista.

According to Armando Enriquez, acquisitions manager for Koll Co., the investment firm was attracted to the property by its “exceptional location in a strong market area, great visibility, outstanding curb appeal and functional site layout.”

The concrete tilt-up buildings at College Business Park range from 13,369 to 22,426 sf, with tenant sizes ranging from 600 sf to 14,000 sf. The project comprises more than 200 suites, with 13 of its buildings offering small-unit warehouse and flex space with varying percentages of office-build-out. The other four buildings include 100% build-out. With 1,067 total parking stalls, the project has a parking ratio of 3.4 spaces per 1,000 sf of building space.

Enriquez notes that the property is one of the largest multi-tenant business campuses in Southern California, providing the flexibility of offering 100% office build-out and flex and industrial space in one project. This variety of product appeals to a diverse set of tenant types and the diversification “helps limit risk exposure to any one tenant type,” Enriquez says.

Lack of available large land parcels coupled with high land prices, creates barriers of entry that may minimize, if not prevent, future development of comparable properties nearby.