Savills Studley Buys Real Facilities

Real Facilities, a Toronto-based full-service commercial real estate firm, has been acquired by international real estate advisor Savills Studley as part of the company's continued expansion in North America. While terms of the deal were not disclosed, in a press release Savills indicated that Stan Krawitz, who founded Real Facilities in 2000, will oversee the operations for Savills Studley as Executive Vice President, Founder and Head of Canada. The newly acquired office will continue to provide tenant representation, transaction management, capital markets, project management and design services to companies across multiple industries, including office, industrial and retail.

"It was important that Savills Studley create a strategic presence in Toronto, the fourth-largest commercial real estate market in North America," Michael Colacino, President of Savills Studley, said of the deal. "We are very excited by the opportunities this acquisition presents for our clients as many multinational firms have targeted the Greater Toronto Area for growth. Stan and the Real Facilities team share our steadfast commitment to the tenant representation model and providing best-in-class service to clients."

Stan Krawitz added: "Savills Studley and Real Facilities have collaborated on numerous large transactions for clients on both sides of the border for more than five years. In many ways, this is just the formalization of the great partnership we've enjoyed. Joining Savills Studley provides us with a true global platform for our clients. Many Canadian companies are expanding to the U.S, as well as seeking locations in Europe and Asia. The transition has been seamless."

For more news and information visit Blumberg Partners.

Vanbarton Closes on 31 Penn Plaza

Vanbarton Group, a privately owned real estate investment and advisory firm launched last month by Gary Tischler and Richard Coles, completed the acquisition of 31 Penn Plaza in New York for $265 million. Savanna sold the 18 story, 450,000 square foot building after paying $130 million for the property in 2011, then adding around $20 million in capital improvements. Douglas Harmon, Adam Spies, Joshua King, Adam Doneger and Michael Saclarides of Eastdil Secured represented Savanna in the sale transaction, according to a citybizlist article. Attorneys Christopher Price and Adam Kopald of Goodwin Procter served as the seller's counsel.

"31 Penn Plaza has been a transformative case study that we are proud of," said Kevin Hoo, Managing Director at Savanna. "Savanna has significantly repositioned the property's infrastructure and tenant profile, and in the process, restored its attraction and reputation in a submarket that has experienced tremendous growth over the past few years. We are grateful to our entire team of partners and service providers who helped us achieve the turnaround."

"Landlords in these buildings are holding out for top dollar and can scrutinize the firms competing for their space more rigorously," said Bill Montana, Savills Studley's senior managing director in a prepared statement. "Class A tenants seeking 10,000 to 40,000 square feet, particularly those who are geographically flexible, have a wealth of options. Informed tenants who do not have a very limited geographical or floor requirement can take a calculated approach to leasing."

For more news and information visit Blumberg Partners.

Q2 National Office Sector Report from Savills Studley

Savills Studley Research has released its National Office Sector Report for the second quarter of the year, which found that the national overall office availability rate ticked down to 16.4% after three consecutive quarters at 16.5%. While availability inches lower, Savills Studley found that the US national overall rental rate rose for the 15th consecutive quarter, rising by 1.2% from the prior quarter.

"Availability has barely budged so far in 2015 as new construction expands in more markets and leasing slows. Deal volume in the first half of 2015 has fallen by more than 15% compared to the first half of 2014 in most major markets, with very sharp decreases in Boston, Manhattan, Atlanta and Dallas." said Keith DeCoster, Savills Studley Research.

An excerpt from the report follows:

Slow Start to 2015
Weaker demand in markets such as Houston and Washington, DC is to be expected considering the pullback in the oil and gas industry and constrained government spending. More surprising is the decreased demand in markets that registered strong leasing in 2014, such as Atlanta, Boston, Chicago and Dallas/Fort Worth. Some drop-off in the fastest-growing markets like Dallas/ Fort Worth was inevitable – there are only so many 500,000-sf tenants looking for space, after all. Despite very strong demand from the biopharmaceutical sector in Cambridge, tenants in the Boston region leased only 21.8 msf in the last four quarters, down by 17.6% from a year ago. As of midyear 2015, deal volume in Downtown Chicago and Manhattan was down by 24.0% and 31.7%, respectively, compared to the first six months of 2014. In contrast to these markets, leasing in Denver, Phoenix, Los Angeles and San Francisco and Silicon Valley shows little sign of cooling.

Multiple Factors Impacting Leasing
Slower leasing so far in 2015 in many markets (a decline of more than 15% in two-thirds of major markets) can be attributed to several factors. For one, the breakneck pace of job creation in high-growth markets such as Atlanta and Dallas/Forth Worth has decelerated just a bit – from 4.0%-5.0% to 3.0%-4.0% (still well above the national average). Also, the surge in 2006 and 2007 leasing created a cyclical peak in 2016 and 2017 rollovers, which was boosted by companies signing early renewals. The very largest of the tenants in this cohort have satisfied their space needs. Additionally, during 2013 and 2014 many of the very best bargains were spoken for. In Lower Manhattan, for example, the sub-$45 Class A space that was still out there a few quarters ago has been snared. As traditional tenants in more markets a bit of a standoff is emerging particularly between landlords and traditional space users unwilling to ante up. Biotech companies in Cambridge may be willing to pay 70 or even $80 but banks and law firms are not. It remains to be seen whether this slowdown in leasing is just a lull, or if the concern expressed by some analysts – that the recovery is getting long in the tooth – is becoming a reality. Of note, Boston, Chicago, Los Angeles and Manhattan (in contrast to San Francisco and Silicon Valley) still depend on traditional space users for most of their leasing. Banks and law firms remain firmly rooted in the reality that their profit margins and revenues are still below pre-recession norms. Consequently, resistance to rental rate escalation in Boston’s Back Bay, Downtown Chicago and Midtown Manhattan still prevails.

To read the full report, click here. For more news and information visit Blumberg Partners.

Studley Merging with Savills in $260M Deal

In a deal expected to close next month, New York-based Studley, the real estate brokerage company with 25 offices in the U.S., will merge with London-based Savills PLC, one of the world's largest real estate advisory firms. According to a company press release, Savills is expected to pay $260 million for Studley, renaming its U.S. operations to Savills Studley. The merged entity will have more than 500 locations worldwide.

"This is a great opportunity for us to build on our strong position in the market and benefit from being part of one of the leading global brands in the industry," said Mitchell Steir, Chairman and CEO at Studley. "We are delighted that we will have a stronger platform to continue our growth with a partner that shares our commitment to exceptional client service. Studley and our clients will benefit from being part of an international firm with the ability to capitalize on cross border opportunities in Europe and Asia."

"Studley is recognized for its exceptional tenant representation expertise and is the leading player in markets throughout the United States," said Jeremy Helsby, Group Chief Executive of Savills. The combination of Studley and Savills represents a unique opportunity which not only provides us with a significant platform for growth in the US, but also enhances our offering to clients worldwide allowing us to provide a truly global service."

For more news and information visit Blumberg Capital Partners.