Southern California Office Real Estate Blog

TO LIVE AND BUY IN THE CITIES – URBAN DEVELOPMENT IS A NATIONAL REAL ESTATE TREND

By Jodi Summers

The Environmental Protection Agency has confirmed that the inner city is making a comeback.

The EPA analyzed residential building permit trends in the nation’s 50 largest metro regions from 1990 to 2007, offers quantitative evidence that city neighborhoods are growing in popularity.

“We’ve had anecdotal evidence for a while about successful infill projects, but we were curious to see how they fit into the big picture,” notes John Thomas, an EPA policy analyst and author of the report. “The big question was whether those examples added up to a fundamental shift in the geography of residential construction.”

Think of the development of the downtown L.A. loft district and consider that in Los Angeles, the number of housing permits issued for city lots jumped from 19% to 37% during the 18-year study period. More impressively (or because of less space) inner city redevelopment now accounts for more than half of residential new construction in New York, up from just 15% in the early 1990s. In Chicago, urban core redevelopment now accounts for 40% of all residential building permits in the region, up from 7% in the early 1990s.

In total, more than half of the markets in the study saw a dramatic shift away from exurban greenfield development and an uptick in urban core redevelopment over an 18-year period. In 15 of those markets, the central city more than doubled its share of housing permits, with the most accelerated spikes occurring in the past five years…

Among the cities posting notable downtown growth are Miami, Atlanta, Seattle, San Diego, Denver, Portland, Ore., Sacramento, and Milwaukee.

The study attributes these trends in reverse migration to continue to baby boomers and echo boomers – who are driving housing preferences. Additional factors weighing heavily on the shape and location of housing include increased immigration, smaller households, concerns over energy usage and climate change, and downsized consumer expectations in the wake of the current recession.

“…What you’re seeing now is the result of pent-up demand for mixed-use, urban housing near jobs, and transit. The market pendulum is swinging from drivable suburbanism to walkable urbanism,” observes Ed McMahon, a specialist on sustainable development at the Urban Land Institute.

The trend may be far more expansive than the EPA study, which is limited to new construction and does not include housing created through the rehabilitation or adaptive reuse of existing structures.

“There are deep expectations among Americans that this volatility [in fuel prices] will continue,” shares David Goldberg, communications director for Smart Growth America. “Combine that with an aging population and a drop in household size, and all signs point to a desire for more convenient locations with transportation options.”

http://www.builderonline.com/infill-development/housing-migrates-back-to-cities.aspx?cid=BLDR090319002

http://wwp.greenwichmeantime.com/time-zone/usa/new-york/new-york-city/images/new-york-city.jpg

http://blogs.venturacountystar.com/motorhead/epa.jpg

http://www.uoregonlaw.com/s/293/images/editor/PortlandOregon.jpg

http://www.neosmartgrowth.org/

Energy to Sell - States with Renewable Portfolio Standards

States with Renewable Portfolio Standards

Edited by Jodi Summers

A nifty map and chart from the U.S. Department of Energy shows states with renewable portfolio standards - a state policy that requires electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date.

You can find the map @ this link - http://apps1.eere.energy.gov/states/maps/renewable_portfolio_states.cfm?prin

You’ll notice that California is stellar with the objective of 33% renewable energy by 2030, but not nearly as aggressive as Maine, which is shooting for 40% renewable by 2017.

Currently there are 24 states plus the District of Columbia that have RPS policies in place. Together these states account for more than half of the electricity sales in the United States. Five other states, North Dakota, South Dakota, Utah, Virginia, and Vermont, have nonbinding goals for adoption of renewable energy instead of an RPS.

The chart below gives a rough summary of state renewable portfolio standards and links to organizations that are administering these standards or explain the details involved. Percentages refer to a portion of electricity sales and megawatts (MW) to absolute capacity requirements. Most of these standards phase in over years, and the date refers to when the full requirement takes effect.

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http://apps1.eere.energy.gov/states/maps/renewable_portfolio_states.cfm?prin

TWO SOCAL BUILDINGS ARE EPA EFFICIENCY CONTEST FINALISTS

By Jodi Summers

The U.S. Environmental Protection Agency (EPA) has picked 14 commercial buildings for their first national energy efficiency contest – and two of the finalists are in Southern California. Kudos to the Courtyard by Marriott San Diego Downtown - San Diego, CA and JCPenney Store # 1778 - Orange, CA will be competing with 12 other commercial structures around the country to best streamline their energy usage and be heralded the winner.

Two hundred buildings entered the competition, which will run through October 26, 2010. Fourteen finalists were chosen for undisclosed reasons. (Meet the contenders @ http://www.energystar.gov/index.cfm?fuseaction=buildingcontest..contestants)

Each entrant was tagged with an energy use intensity (EUI) number portraying the building’s energy use. A building’s EUI is calculated by taking the total energy consumed in one year (measured in kBtu) and dividing it by the total floorspace of the building. The winner is the one who lowers their EUI by the greatest percentage. Obviously a candidate such as the Van Holten Primary School - Bridgewater, NJ (EUI 150) will use relatively little energy (particularly when school’s out) compared to the Solon Family Health Center in Cleveland, OH (EUI 318) or an office building 522 5th Avenue - New York, NY (EUI 242) . Each building will be judged on the percentage of reduction they achieve in their EUI.

The nominees will measure and track their building’s monthly energy consumption using Portfolio Manager, the EPA’s online energy tracking tool. The building that demonstrates the greatest percentage-based reduction through October 26^th will be recognized as the winner.

Now, a little about our local contestants -

The team name for the Courtyard by Marriott San Diego Downtown is “Money in the Bank” – appropriately named because the hotel is located in the historic San Diego Trust & Savings Bank building in the city’s Gaslamp district. Ten years ago, the building went through a spectacular adaptive reuse, transitioning from a bank and office building to the Courtyard by Marriott Downtown San Diego hotel with 245 guest rooms. The 1920s bank building has guest rooms and common areas retrofitted with efficient sensors and technology. The hotel lists four reasons why it is important for it to save energy, money, and reduce greenhouse gas emissions: 1) Its guests expect it, 2) Its owners require it, 3) Its employees know it is the right thing to do, and 4) It owes it to their community. MSD’s starting EUI is 162.

JCPenney Store # 1778 - Orange, CA is calling their crew the Orange Power Rangers. That JCPenney Store opened in 1977. The store covers 100,853 gross square feet with a net sales floor space of 69,723 square feet. The Orange store is part of a group of 63 JCPenney stores that participate in the company’s Advanced Energy Management (AEM) Program, which focuses on energy awareness on both the facility maintenance and store associate level. With the help of an Interval Data Recorder (IDR) meter, the energy usage of this store is monitored on a next-day basis, and daily store energy use reports for all associates to see. JC Penny Orange is already using 35% less energy than it was last year. 1778. Their starting EUI: 165

Good luck to all of the finalists, may you make the world a better place. Btw, does anyone else know what the winner gets, other than a trophy and/or plaque to proudly display?

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http://www.energystar.gov/index.cfm?fuseaction=buildingcontest.contestants

http://www.bustler.net/index.php/article/14_finalists_picked_in_epas_national_building_competition/

http://www.energyboom.com/emerging/epa-and-energy-stars-new-national-building-competition?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A%20energyboom%20%28EnergyBoom%20Daily%20Briefing%29

http://blog.syracuse.com/storefront/2009/09/large_penney.JPG

http://brandmediaweek.typepad.com/.a/6a00d834519bc269e20120a694b62a970b-580wi

http://oldstockshop.com/willstock/eBay/jcpennyru11705.jpg

http://images.hotelplanner.com/hotelimages/s/047000/047845A.jpg

SOCAL OFFICE REAL ESTATE SNAPSHOT – JULY 2010

by Jodi Summers

Yup, it’s been confirmed again, the office sector will be stagnant for the rest of the year. The state “will grow slower than the US and a slow recovery in jobs will leave unemployment at 12.1% for the year,” notes UCLA Anderson senior economist Jerry Nickelsburg, in the midyear forecast.

Statistics confirm this. According to Clarus Market Metrics, comparing Jun-08 vs. Jun-10, the median price of for sale properties is down 14% in Los Angeles County. Yet, sellers do not quite understand the depth and breadth of the market drop, as the median price of sold properties for the same period is down 58%.

Sure, office building owners are whining, but things will look up. According to the Los Angeles County Economic Development Corporation, California’s unemployment rate dropped in May. Not a lot mind you, we dropped to 12.4% from 12.5% in April, but we’re moving in the right direction.

The L.A. County office building market can be proud that comparing Jun-08 vs. Jun-10, The number of sold properties is up 200% - from 1-3…whoopeee!

Additionally, three properties went under contract in June, compared with zero two years ago.

Think positive. Keep in mind, we also live and own in one of the most desirable cities in the world. As bad as the office sector may feel in the Los Angeles area, it can always be worse. According to CoStar.com, there are parts of the country like Lansing, MI, where commercial loans back more than 50 properties, and nearly 1 in 5 loans are in the process of defaulting. Heavily impacted commercial loan markets in metro areas like Las Vegas, Phoenix, Detroit, Orlando, Tampa and Atlanta all show probability of default ratios of 10% to 14% and loss severities on loans of 8.6% to 15.4%.

Los Angeles falls into the category of lucky megalopolises. Major metro areas - including Los Angeles, San Diego and Orange Counties - as well as Washington DC, Boston, New York and Seattle, show defaults and losses are running at less than 4%. In the stronger cities, distressed sales account for just 6% to 11% of the activity, according to the CoStar analysis.

“By and large, these distressed transactions have been in suburban submarkets,” observes Stephanie Hession, a real estate economist with CoStar Group. “Since the beginning of 2009, suburban assets accounted for 63% of total office sales volume but 75% of distressed volume.”

If you can stick it through this year, the future is looking bright. “The latter part of our forecast (through 2012) calls for health care, professional and business services, exports, construction and technology-related manufacturing sectors to generate a bit more robust growth in California,” optimistically concludes Nickelsburg, in the midyear Anderson Forecast.

We’re here to help you with commercial properties. Please contact Jodi Summers – jodi@jodisummers.com or 310.392.1211 for details.

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https://www.terradatum.com/agentmetricsonline/property_type_selection.td

http://www.edd.ca.gov/About_EDD/pdf/urate201006.pdf

http://www.globest.com/news/1684_1684/losangeles/300380-1.html?ET=globest:e22415:277110a:&st=email

http://www.laedc.org/eedge/index.html#1