Rents at small-capitalization properties continued to fall last month, but the rate of decline has tapered off somewhat, which might indicate that the worst could be over for the sector.

According to Boxwood Means Inc., a Stamford, Conn., research company that focuses on small-cap properties, all sectors continued to see rental drops, with industrial and certain retail buildings seeing the biggest drops. But those declines are nowhere near as large as they had been during the market’s freefall during the middle of last year, when monthly drops in some subsectors were greater than 100 basis points.

Another reason for optimism: Boxwood has found a strong correlation between the performance of the residential housing market and small-cap commercial properties. And the residential market has seen an uptick in sales and potential stabilization of pricing, which could portend a period of stabilization for many small-cap properties, particularly retail.

Investor demand for the sector, commonly referred to as MOB, is slowing most markedly in the West/Pacific Northwest and Southwest/Mountain regions, where construction deliveries have bumped up vacancy rates and driven down rents. It expects investor interest to remain strong in the Southeast, Northeast and Midwest despite their own high levels of construction.

The study noted that nationwide, construction activity in the sector peaked at 17 million square feet last year. This year, another 14 million sf is expected to be added, increasing the total MOB inventory by 2.6 percent to 538.5 million sf.

The condominium project that the Sharp-Axiom joint venture has taken title to is at the corner of North Union Avenue and West Temple Street in Echo Park. The price that Sharp paid was undisclosed, but it’s been revealed that the joint venture bought the loan at a significant discount, then foreclosed on the property and took title.

This view is absolutely right — there is no justice here. Taxpayers should not be in this position. But the bailout isn’t about justice. It’s about survival. The central thesis of the article was that without government help, there was a good chance that our banking system would collapse, and that would result in unbelievable pain for all of us

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Computer Mortgage Corporation
818-887-3901
dan@computer-mortgage.com

The office vacancy rate in metropolitan Detroit climbed to 22.6% in Q2 from 22% during Q1. It is the region’s highest level of vacancy in almost a decade. Roughly 690,111 sf of space returned to the market in Q2. The vacancy rate in Detroit’s central business district remained flat at 28.2%, while Troy posted a 27% vacancy rate in the quarter. Dearborn was the region’s healthiest submarket with a 27% vacancy rate.