Southern California Office Real Estate Blog

A GLOSSARY OF GREEN LIVING TERMS

A GLOSSARY OF GREEN LIVING TERMS

by Jodi Summers

A glossary of green living terms. Be green + grow:

· 2000-watt society — The 2000-watt society (2,000-Watt Society) is a vision, originated by the Swiss Federal Institute of Technology in Zürich at the end of 1998, in which each person in the developed world would cut their over-all rate of energy use to an average of no more than 2,000 watts (i.e. 17,520 kilowatt-hours per year of all energy use, not only electrical) by the year 2050, without lowering their standard of living.

· Carbon Diet — A carbon diet refers to reducing the impact on climate change by reducing greenhouse gas (principally CO2) production.

· Carbon Footprint — A carbon footprint is a measure of the impact that human activities have on the environment in terms of the amount of greenhouse gases produced, measured in units of carbon dioxide gases produced by the burning of fossil fuels for our everyday living.

· Carbon Intensity — The ratio of Carbon Dioxide to energy: a measure of the “greenness” of different fuels.

· Chief Green Officer — A Chief Green Officer (CGO), or Chief Environmental Commitment Officer (CECO), is a corporate officer responsible for implementing and managing the corporation’s commitment to reducing its carbon footprint and protecting the environment.

· Dual-flush toilet — A type of water-conserving toilet that is relatively common in the commercial sphere but is only now becoming available for the home. After each use you have a choice of low flush (using as little as 0.8 gallon) or a more powerful flush (about 1.8 gallons).

· Earthcheck – An adaptable environmental benchmarking tool that measures an organizations environmental output. This is done across a variety of areas, including energy consumption, waste production and resource conservation for the core areas of an organizations operation.

· Ecological Footprint — a measure of human demand on the Earth’s ecosystems. It compares human demand with planet Earth’s ecological capacity to regenerate it. It represents the amount of biologically productive land and sea area needed to regenerate the resources a human population consumes and to absorb and render harmless the corresponding waste, given prevailing technology and resource management practice. Using this assessment, it is possible to estimate how many planet Earths it would take to support humanity if everybody lived a given lifestyle.

· Ecosharing – is an environmental ethic for people to live by: that their own impact on the Earth’s biosphere be limited to no more than their own fair ecoshare.

· Energy Neutral Design - an Energy Neutral Design is a design of any type (Website, Multi-media, Architecture, Art, Music, Entertainment, etc) that has the environment and low energy consumption practices in mind during all stages of planning and production.

· Energy Policy – The manner in which a given entity (often governmental) has decided to address issues of energy development including energy production, distribution and consumption. The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques.

· Energy Star (www.energy star.gov) — An energy-efficiency rating system sponsored by the Environmental Protection Agency. A high Energy Star rating means that the product — from small household appliances to entire homes — is designed to minimize its energy consumption. The theory being, using as little energy as possible helps protect the environment, conserves fossil fuels and saves you money on the electric bill.

· Forest Stewardship Council (www.fsc.org) — A third-party certification for wood, wood products and forests. The FSC tracks the wood from its forest of origin all the way through the chain of custody to where the product is sold. If a product is FSC certified, you can count on its having been harvested and produced in a stringently eco-sensitive manner.

· Formaldehyde — A toxin found in many adhesives, such as those in plywood and panel board; it also can be found in paints, caulks and other building materials. The World Health Organization recently upgraded it from a possible carcinogen to a known one. When present in the home, it tends to “off-gas” and pollute the indoor environment.

• Global Warming — The increase in the average measured temperature of the Earth’s near-surface air and oceans since the mid-20th century, and its projected continuation. In media, it is synonymous with the term “climate change.”

· Greenhouse Debt - The measure to which an individual person, incorporated association, business enterprise, government instrumentality or geographic community exceeds its permitted greenhouse footprint and contributes greenhouse gases that contribute to global warming and climate change.

· Leadership in Energy & Environmental Design (www.usgbc.org/leed) — Developed and administered by the U.S. Green Building Council, the LEED rating is the most widely known and accepted green certification program.

· Life Cycle Analysis — The process of tracing a product, material or practice from its origin through its final disposal or reuse, from factory to landfill or recycling plant.

· Linoleum – A natural and eco-sensitive alternative to petrochemical-based vinyl. Linoleum is typically made from the renewable materials jute (used for backing), linseed oil, pine resin and sawdust. Eclipsed by vinyl in the 1960s and ’70s, it’s now experiencing a revival; it comes in both sheets and tiles, in a wide variety of colors.

· Low Carbon Diet — A low carbon diet refers to making lifestyle choices to reduce the greenhouse gas emissions resulting from energy use.[1] More specifically, a low carbon diet refers to making choices about eating that reduce greenhouse gas emissions (GHGe) as a response to estimates that the U.S. food system is responsible for at least 20 percent of U.S. greenhouse gases.

· Low-flow faucets and shower heads – Installing low-flow fixtures is a simple and cheap way to conserve water. If you’re in love with your current faucets and shower heads, you can instead choose to amend them by installing aerators, which slow the flow and disperse water. These simple steps can reduce water use by about 10%.

· Off-gassing – Also known as outgassing, this is the emission of chemicals from building materials, furniture, textiles, bedding or other products in the home. Many of those “new house” smells that we’ve come to enjoy are actually hazardous to our health — they accumulate in the bloodstream and have been linked by some scientists to the increasing rates of asthma and some cancers, particularly in children. The best way to avoid off-gassing is to look for natural products that don’t contain toxins such as formaldehyde.

· Recycled content — Refers to the amount of recycled (reused) material in a given product. There is post-industrial recycled content, which refers to the use of scraps from industrial manufacturing, and post-consumer content, which is the reuse of products that consumers have used and thrown away.

· Solar — Simply put, solar processes harness energy from the sun. The solar panels that most of us associate with solar energy are called photovoltaic panels; they transform the sun’s rays into usable electricity. Solar thermal processes can be used to heat our hot water. Technological advances in recent years have made both photovoltaic and solar thermal systems amazingly effective. And prices are more affordable nowadays, in part because many utility companies and local governments offer rebate programs that lower the initial costs of purchase and installation.

· Water Footprint — an indicator of water use that includes both direct and indirect water use of a consumer or producer. The water footprint of an individual, community or business is defined as the total volume of freshwater that is used to produce the goods and services consumed by the individual or community or produced by the business. Water use is measured in water volume consumed (evaporated) and/or polluted per unit of time. A water footprint can be calculated for any well-defined group of consumers (e.g. an individual, family, village, city, province, state or nation) or producers (e.g. a public organization, private enterprise or economic sector). The water footprint is a geographically explicit indicator, not only showing volumes of water use and pollution, but also the locations.

· Weighted Average Cost of Carbon — A term used in finance to measure a firm’s specific cost of carbon. It expresses how much an organization is expending to either reduce carbon emissions internally (abatement) or offsetting externally (carbon offset). As such, the weighted average cost of carbon is the cost a company incurs to balance its carbon liability (carbon footprint).

· Volatile Organic Compounds — The toxic or noxious chemicals that are found in or released from paints, stains, adhesives and sealants. Whenever possible, look for products labeled as having low, no or zero VOCs.

Please help us add to this list.

Info courtesy of:

http://www.globalgreen.org/gbrc/

http://wikipedia.org

VARIETY RENTS OFFICE SPACE @ 5900 WILSHIRE BLVD.

VARIETY RENTS OFFICE SPACE @ 5900 WILSHIRE BLVD.

Show business newspaper Variety has relocated its West Coast headquarters to 55,000 square feet of office space @ 5900 Wilshire Blvd. – where they will have a vibrant, red “Variety” sign glowing from atop the 31-story building.

Reed Business Information, publisher of Variety, leased the top three floors at 5900 Wilshire to house its Variety, Marketcast and Home Entertainment Group staff. With more than 200 employees.

The Los Angeles-based Ratkovich Co. recently completed a $34 million renovation of 5900 Wilshire that began in 2005 to modernize the tower, which was designed by architect William Pereira in the late 1960s. It was designed as a companion to and across the street from the LA County Museum of Art, sharing the museum’s formal plan and water features.

The 31-story tower was developed by the Shorenstein Co. of San Francisco and completed in 1971 for Mutual Benefit Life, which occupied the tower until 1991. It remains the tallest building on the Miracle Mile.

The 5900 tower is the latest in a series of urban rehabilitation projects for the Ratkovich Co., including the Alhambra mixed use complex in Alhambra, the 800 Wilshire office building in Downtown LA and Mid-Wilshire’s Art Deco landmark Wiltern Theatre.

Info courtesy of

http://www.globest.com/news/1306_1306/losangeles/175760-1.html

DANCING PRESIDENTS TO DELIGHT U

As a holiday delight, please enjoy these disco dancing presidents courtesy of www.elfyourself.com

Click on

http://elfyourself.jibjab.com/view/9L025guZb3dngeLSREh0

and prepare yourself for some holiday cheer.

SMART OFFICE INVESTORS ARE BUYING L.A. COMMERCIALLY DISTRESSED PROPERTIES FOR CHRISTMAS

SMART OFFICE INVESTORS ARE BUYING L.A. COMMERCIALLY DISTRESSED PROPERTIES ON THE RISE

OMG! The commercial fallout is starting – great values to be had in the near future. Those of you who have been waiting, the time is soon at hand. Rising vacancies and declining operating cash flows and shrinking values are making it exceedingly difficult for over-leveraged landlords to make payments on the loans taken out to buy properties during the market frenzy of 2005-07.

The first of what some say may be a large number of portfolio distress sales was the recent acquisition of 31 Southern California office properties totaling 56 buildings and 4.5 million square feet by Houston-based Hine in a transaction valued at $1.35 billion.

Hines is a privately owned, international real estate firm with a 50-year history and a

presence in more than 100 cities around the world.

Creative deal that this was, all of the value associated with the sale is tied up in debt. The previous owners, Cabi Developers, defaulted on loan payments and were forced to turn over the properties to Hines or face foreclosure.

Miami-based Cabi, the U.S. affiliate of GICSA, Mexico’s largest developer, purchased the portfolio in July 2007 from Los Angeles-based Arden Realty Inc., a unit of GE Real Estate, for $1.51 billion at 90% loan-to-value — a fairly typical leveraged deal for that moment time as office vacancies were minimal and properties were skyrocketing.

Hines was among 11 lenders who purchased 14 pieces of debt collateralized by the office portfolio sold by Cabi’s lender, Wachovia, when the deal closed. According to an SEC filing in late October by KBS REIT Inc., which purchased senior debt in two mezzanine loans for $175 million, Cabi sold two assets in the portfolio to reduce the principal outstanding by about $45 million, leaving a payment of $105 million.

Cabi failed to make the payment, and Hines held the first-loss, or junior, portion of the mezzanine debt. Thus, the savvy real estate investor was first in line when Cabi defaulted on the $105 million piece of the mezz loan. Cabi and Hines negotiated a deal on Nov. 25 to turn over the assets in lieu of foreclosure. The $1.35 billion value of the transaction is essentially all debt assumed by Hines and the other lenders.

“It was an unusual deal for Hines, but the transaction probably does represent a state of things to come for the capital markets,” Colin Shepherd, senior vice president in the Hines Los Angeles office, told CoStar Advisor. “A lot of portfolios that were purchased with high leverage may have similar issues…”

CoStar notes that frozen credit markets and the recession drove up the 30-day default rate on loans held in commercial mortgage-backed securities (CMBS) 10 basis points in the third quarter to 0.63%, according to data from the Mortgage Bankers Association. In the big picture, the default rate on commercial loans is still well below 1%, and default rates remain historically low despite the market turmoil.

“Commercial/multifamily mortgages have not seen the same kind of deterioration in performance witnessed among other real estate loans, and at the end of the third quarter, delinquency rates for every investor group remained at the lower end of their historical ranges,” said Jamie Woodwell, MBA’s vice president of commercial real estate research, in a release. “[However], delinquency rates for nearly every investor group did see increases during the third quarter, and economic and credit market stress is likely to continue that trend.”

The main problem for owners, buyers and sellers is that capital markets are “completely upside down,” Shepherd noted. “Asset values have diminished quite considerably in the context of a complete lack of credit and the ability to get any leverage whatsoever in acquisitions, whether it’s real estate or any other hard or paper asset.”

Shepherd said Hines is bullish on the Southern California market in the long.  The buildings in the portfolio they purchased are spread widely across Los Angeles, Ventura, Orange and San Diego counties in multiple submarkets, with more than two-thirds in L.A. County.

We know about L.A. commercially distressed market. If we can help you, email jodi@jodisummers.com

Info courtesy of:

http://www.costar.com/News/Article.aspx?id=101E5BBD912954C042EB49DC9E699664&ref=100

http://www.hines.com/home/default.aspx

http://www.swamplot.com/…/2008-05-08/

INVESTING IN THE DOWNTURN

INVESTING IN THE DOWNTURN

by Jodi Summers

 The 2009 Emerging Trends in Real Estate report released by the Urban and Institute and PriceWaterhouseCoopers LLP, suggests that real estate investors just sit and wait right now – soon opportunities will surface at big discounts. The first best batch of opportunities may not be in actually property, but in buying discounted loans and recapitalizing distressed borrowers and investing in maturity defaults, construction loans, or taking mezzanine positions and equity stakes in properties.

Other advice includes investing in publicly held REITs that will lead the market’s recovery, focus investments on “global pathway” markets — 24-hour coastal cities like Seattle, San Francisco, Los Angeles, New York and Boston.Other quick-hit suggestions from respondents in the ULI/PriceWaterhouseCoopers survey:

·  Go green. Cutting energy and other operating cost is likely to be a growing priority for both landlords and tenants.

·  Buy or hold multifamily; hold office. Hold hotels, buy residential building lots, but be prepared to hold.

·  Purchase distressed condos in urban areas near transit.

·  Focus on neighborhood retail centers with strong grocery anchors and chain drugstores.

http://www.costar.com/News/Article.aspx?id=41A9DE2D4E098EDEFBB56A05FBBB79A3

INDICATORS FROM THE USC LUSK CENTER ECONOMICS FORECAST SHOW NOW IS A TIME TO BUY OFFICE PROPERTIES

INDICATORS FROM THE USC LUSK CENTER ECONOMICS FORECAST SHOW NOW IS A TIME TO BUY OFFICE PROPERTIES

The light is not shining at the end of the tunnel just yet, according to the latest report from the USC Lusk Center’s Economics Forecast. This quarter’s analysis projects a continued slump in the Southern California office and industrial markets, noting that the region’s “weak office and industrial performance will continue…”

If you’re in the office market, it’s a great time for buying an owner/user property or negotiating a lease agreement, as the USC Lusk Center economic forecast point to persistent high vacancy rates and weaker office demand through the end of 2009. With vacancies rising and rents declining, “The pendulum has swung from landlords to tenants for the first time since 2003 as an abundance of office space and reduced demand is putting pressure on rents across the region,” director Delores Conway of the Casden Real Estate Economics Forecast observes. Conway says, “Credit-worthy tenants should be able to renegotiate leases to their advantage, and all-cash buyers will find well-priced properties in prime locations.”

In Los Angeles County, companies are reevaluating their needs for office space in light of rising unemployment, but limited office construction in recent years tempered the rise in vacancies, the forecast notes. Rental rates are under pressure from the large volume of office sublease space.

In Orange County, where the subprime mortgage industry collapse hit especially hard, high office vacancy rates and a large volume of sublease space will continue. Minimal new construction should help vacancies level off toward the end of 2009, according to the forecast.

Conway cautions that any forecast for next year’s office market must be tempered by the economic recession and tight commercial credit conditions. “The full depth of the financial crisis remains to be seen as companies struggle to meet their payroll while paying the rent or mortgage,” she says. “There is considerable uncertainty in the region’s economic outlook until the credit markets begin functioning normally again.”

In the Inland Empire, “Abundant new office buildings are still attracting tenants from healthcare, but it will take time for that space to be absorbed,” the forecast states. Rising vacancy rates will persist due to high unemployment, but the trade-based submarkets near Ontario Airport should recover more quickly than the rest of the region, it says.

The annual Casden Real Estate Economics Forecast analyzes economic data on rents, vacancies, transactions, and employment for office and industrial markets in Los Angeles, Orange, Riverside and San Bernardino counties.

The original story can be found @

http://www.globest.com/news/1305_1305/losangeles/175727-1.html

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

OFFICE MARKET RENT UPDATE

OFFICE MARKET RENT UPDATE

Optimists had hoped to counter depreciation from rising cap rates with rising property net operating incomes (NOI). But the lackluster economy dashed those hopes. Instead of rents rising or at least holding steady, owners are resigned to deteriorating leasing, rife with concessions and tenant inducements. Falling demand for space won’t affect real estate markets severely until 2009.

http://www.costar.com/News/Article.aspx?id=41A9DE2D4E098EDEFBB56A05FBBB79A3