Southern California Industrial Real Estate Blog

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

Just as you might expect, property-investment sales are way down. The numbers are in for all of 2008 and sales fell 68% from the previous year’s volume. The decline was particularly steep in Q4.

The $54.5 billion of commercial property-transactions that closed or went under contract last year were down from $170.4 billion in 2007, while the number of transactions dropped 54% to 846, according to the Commercial Real Estate Direct Property Sales Database, which tracks individual property sales of at least $10 million.

The $7.28 billion worth of deals in the fourth quarter was down 70% from the $29.42 billion of deals during the same period in 2007. This year’s fourth-quarter volume also was down 46% from the previous quarter, which was down just 16% from the $16.3 billion in the second quarter.

Full-year sales volumes were down from 2007 in every property type, with sector declines ranging from a high of 83% for hotels - $3.8 billion - to a low of 60% for multifamily - $8.38 billion - which was helped largely by the availability of debt financing from Fannie Mae and Freddie Mac.

Pundits predict that 2009 sales volume will increase 15% due largely to offerings from distressed sellers, particularly those who used floating-rate debt for acquisitions in early 2007 and 2006.

A continued stalled economy that is expected to cut tenant demand across all property types. Robert Bach, Grubb + Ellis’ chief economist, has predicted that the U.S. economy will lose another 2 million jobs in 2009, about the same amount lost in 2008, and will “dampen demand for all product types, resulting in negative absorption and increased vacancy.”

Info courtesy of

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=5720&sourcecode=1lntd009

RETAILERS ARE SELLING SOCAL WAREHOUSING

RETAILERS ARE SELLING SOCAL WAREHOUSING

The trend is for retail to consolidate, and that is why clothing retailer Pacific Sunwear has sold its 300,000-square-foot Anaheim warehouse to Panattoni Development Co. of Sacramento for $24.5 million. PacSun decided last year that it would consolidate all of its distribution operations to a 400,000-square-foot warehouse in Olathe, KS that opened in 2007. The Anaheim building was constructed in 2002.

Pacific Sunwear expects to record an after-tax gain on the sale of approximately $6 million in its results for the fourth quarter of fiscal 2008 as a result of the sale. The Anaheim distribution center, at 3454 E Miraloma Ave., is next to the Pacific Sunwear headquarters at 3450 East Miraloma Ave. The closing of the Anaheim warehouse last year and the consolidation into the one warehouse in Kansas followed a downsizing of Pacific Sunwear, which was growing by 100 or more new store openings before 2007.

Since then, PacSun has slowed new store openings dramatically and closed a large number of its outlets. As of Nov. 29, the chain operated 816 PacSun stores and 126 PacSun Outlet stores for a total of 942 locations in 50 states and Puerto Rico.

Get all the details @

http://www.globest.com/news/1319_1319/orangecounty/176081-1.html

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http://www.siordata.com/DC/Spring_08/Pan%20Logo_Tag_sm.jpg

Industrial Real Estate News is Neither Good or Bad

Industrial Real Estate – the News is Neither Good or Bad

Industrial real estate is doing not much of anything these days, according to the National Association of Realtors Commercial Real Estate Outlook. As you’ve notice, commercial lending has all but halted and with the exception of cash transactions. Investment activity in commercial real estate sectors is nearly at a standstill, while job losses are curtailing the demand for owner/user space. Default rates remain low.

“Although access to residential mortgages has improved, the opposite is true for commercial loans,” confirms Lawrence Yun, NAR chief economist. “We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space.”

The industrial sector has been holding up fairly well based on the strength of exports, but the global economic slowdown will take a toll. Nationally, vacancy rates in the industrial sector are forecast to rise to 12.1 percent in the third quarter of 2009 from 10.7 percent in the third quarter of this year. Los Angeles, of course, is among the industrial markets with the tightest vacancy rates of 6.8 percent or less.

Areas with the highest vacancies include Detroit, Stamford, Conn., and Phoenix, with vacancies of at least 15.7 percent.

Annual rent is estimated to ease down 0.8 percent this year and decline another 4.0 percent in 2009.

With vacancies rising and rents declining, “The pendulum has swung from landlords to tenants for the first time since 2003 as…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.”

http://www.realtor.org/RMODaily.nsf/pages/News2008121701?OpenDocument

http://www.626nlabreave.jodisummers.com

CHICAGO NEWSPAPER MOGUL PREDICTS SPRING 2009 RECOVERY

CHICAGO NEWSPAPER MOGUL PREDICTS SPRING 2009 RECOVERY

Financial mogul Sam Zell, owner of the Tribune Co., recently told an Israeli business conference that the U.S. real estate market will be in recovery by spring 2009.

Zell blamed the current crisis – at least in part – on ill-considered decisions. Optimistically he shared the fact that the U.S. population is growing and with fewer than 600,000 building starts in 2008, a million fewer than any of the last 10 years, demand for housing will rise.

“We are living through our first Blackberry recession where, literally, information is instantly disseminated around the world and people, in effect, respond to it, perhaps, often without any particular caution or attention,” he said.

Immediate communication gives new meanings to the terms buy and sell.

FYI…Zell’s Tribune Co., declared Chapter 11 bankruptcy last week.

Source: http://www.realtor.org/rmodaily.nsf/pages/News2008121505

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

TRAINS ARE A GREAT WAY TO GREEN INDUSTRIAL PROPERTIES

TRAINS ARE A GREAT WAY TO GREEN INDUSTRIAL PROPERTIES

As oil prices remain uncertain, growing numbers shippers, suppliers and retailers throughout the world are looking at rail as a more efficient and reliable alternative to container ships and trucks for long-distance freight transport. Freight trains are said to be three times more fuel-efficient than over-the-road trucks and have less impact on greenhouse gas emissions than trucks. Train lines are gearing up worldwide.

In North America, the US Surface Transportation Board granted Canadian Pacific Railway regulatory approval for its estimated $1 billion acquisition of the Dakota, Minnesota & Eastern Railroad Corp. The acquisition was initiated in September 2007 but delayed a full year due to opposition from US political interests. The purchase, which received final approval early in the 4th quarter, includes the Sioux Falls, SD-based companies two subsidiaries: Iowa, Chicago & Eastern Railroad and Cedar American Rail Holdings.

The DM&E, which connects with Canadian Pacific at Minneapolis, Winona, MN and Chicago, is the largest regional railroad in the US and the only Class II railroad that connects and interchanges traffic with all seven Class I railroads.

A Class II railroad in the United States is a mid-sized freight-hauling railroad, in terms of its operating revenue. As of 2006[update], a railroad with revenues greater than $20.5 million but less than $277.7 million for at least three consecutive years is considered a Class II railroad. Switching and terminal railroads are excluded from Class II status. Railroads considered by the Association of American Railroads as “Regional Railroads” are typically Class II railroads. A Class I railroad is a large freight railroad company, as classified based on operating revenue.

The Dakota, Minnesota & Eastern Railroad Corp. serves eight states, including Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Wisconsin and Wyoming. In addition to Chicago and Minneapolis, it provides access to Kansas City and key inland ports. The railroad has 2,500 miles of track, including approximately 500 miles of track rights, and rolling stock consisting of 7,200 rail cars and 150 locomotives. The acquisition enables Canadian Pacific to get containers more quickly and efficiently from the ports of Vancouver and Prince Rupert, BC to the central US.

As CP was receiving the transportation board’s blessing, rival Canadian National Railway pressed a US federal court to force the same board to speed its decision regarding the railroad’s proposed $300 million acquisition of the Elgin, Joliet & Eastern Railway. The Montreal-based railroad wants to secure the suburban Chicago rail line to bypass rail congestion in the central Chicago area and shorten its delivery times. Like its rival, Canadian National serves Vancouver and Prince Rupert, but it also links to Halifax and the St. Lawrence Seaway ports, including Montreal and Toronto.

Also in North America, at the US-Mexico border, New Mexico Gov. Bill Richardson met with Mexican communications secretary Luis Tellez to iterate support for a new railroad bypass and international rail crossing that would shift some rail traffic from the congested border cities of El Paso, TX and Ciudad Juarez, Mexico west to Santa Teresa, NM. According to Richardson, the bypass and crossing is essential to increasing US-Mexico trade.

Meanwhile, in Europe and Asia, DB Schenker, Germany’s leading forwarder, announced plans to launch scheduled rail cargo service between China and Germany in response to requests from its client Fujitsu Siemens Computers. According to Schenker, a unit of German state railway Deutsche Bahn, the computer company favors rail because it is a quarter of the cost of airfreight, takes much less time than the 30 to 35 days required to ship by sea and reduces CO2 emissions by 95%.

According to the Adam Smith Institute in London, which is sponsoring a European rail conference in Brussels in November, rail currently accounts for just 2% of freight traffic between Europe and Asia. But it says the significantly shorter transit times compared to shipping by sea is attracting the attention of retailers.

Train line evolution now include outposts outfitted with solar panels, a small windmill and communications equipment, representing part of a $12 million Federal Railroad Administration funded Collision Avoidance System now being developed and implemented by some railroads. The system is designed to optimize train operations by automating many dispatch, train crew, and on-track equipment operator functions that will ultimately make the rails safer for locomotive engineers, track workers, passengers and freight transport.

Info courtesy of:

http://www.globest.com/news/1263_1263/insider/174511-1.html

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

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

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http://www.turnagaintimes.com/current%20issue/4-17-08/Solar-Wind2.jpg

http://www.uprr.com/she/emg/

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GREEN COMMERCIAL REAL ESTATE WEBSITES

GREEN COMMERCIAL REAL ESTATE WEBSITES

Building Owners and Managers Association - www.boma.org - provides goals with its 7 point challenge, plus links to resource sites.

California Sustainability Alliance - www.sustainca.org ­- offers a toolkit to help tenants evaluate the greenness of buildings.

The Environmental Protection Agency’s Energy Star Program - www.energystar.gov- offers an energy assessment matrix and online portfolio manager software to help assess energy and water consumption in a building.

Institute of Real Estate Management - www.irem.org - publishes A Practical Guide to Energy Management, a primer on buying and

saving energy.

National Association of REALTORS® - www.realtor.org - offers an online “Field Guide to Commercial Green Buildings,” through its

Information Central.

U.S. Green Buildings Council - www.usgbc.org - provides an operating and maintenance rating system and checklist for existing Buildings to benchmark building performance–a first step toward achieving a

Leadership in Energy and Environmental Design (LEED) certification

Wind Power - www.windustry.com - This web site provides an overview of the basics of land specifics that are needed to produce wind energy.

Manufactured Housing - www.manufacturedhousing.org/default.asp -

Low cost housing developments; investing, green buildings

Info courtesy of http://www.realtor.org/NCommSrc.nsf/files/RCA_Report_summer2008.pdf/$FILE/RCA_Report_summer2008.pdf