Stonelake Buys 3.1M SF Industrial Portfolio

Stonelake Opportunity Partners III LP, a fund managed by Dallas-based private equity firm Stonelake Capital Partners, has purchased 35 industrial buildings in Dallas, Houston and San Antonio, assembling a $200 million Texas industrial portfolio. Stonelake assembled the industrial portfolio through 11 separate deals over the last 18 months without an operating partner, according to a BizNow report. The 3.1 million square foot portfolio will be the final investment for Stonelake's fund; the company will manage the portfolio in-house to boost the buildings' occupancy and rental rates.

Stonelake said it plans to continue acquiring 50,000-150,000 square foot industrial buildings. According to a Dallas Business Journal report, Stonelake plans to hold the properties for the next three to five years. In Dallas-Fort Worth, the portfolio includes nearly 1.3 million square feet in Valwood, the Great Southwest and the Turnpike submarkets. In Houston, Stonelake has more than 1 million square feet of industrial space. In San Antonio. the firm has acquired more than 750,000 square feet of space. The company — founded in 2007 — has over $2 billion of commercial real estate throughout Texas.

For more news and information visit Blumberg Partners.

Global Investor Report: Real Estate Continues to Appeal

Colliers International released its Global Investor Outlook for 2016, which gathers information from over 600 global investors, and revealed that investor sentiment toward real estate is projected to remain positive globally in the new year. Over half of the respondents said they will increase fund allocations to real estate in 2016, while only 11% plan for a decrease, which is on track for continued growth in 2016.

"Our global analysis in this report gives a unique macro-view, providing a comprehensive look at the health of the economy as well as in-depth views of market sentiment that serve as a useful bellwether for local markets worldwide," said John B. Friedrichsen, Chief Financial Officer at Colliers International, in a press release. "Our report suggests that the days of 'pass the parcel' are over, and long term secure investment in core markets will be the norm. At the other end of the risk spectrum, large volumes of capital already raised will increasingly seek out opportunities in tier-two cities and recovering markets."

Highlights from the report include:

Real estate continues to appeal.
Sentiment toward real estate remains positive, with global transactions set to exceed 2014 levels by year end and nearing pre-financial crisis levels. More than half of the respondents with multi-asset portfolios also said that they would increase their real estate allocations in the next 12 months.

Liquid markets still preferred.
While the “search for yield” has pushed some investors up the risk curve toward secondary assets and more peripheral markets, the most liquid markets (U.S., U.K., Germany, Australia and Japan) and global gateway cities (London, Paris, New York, San Francisco, Tokyo and Sydney) remain the primary target for global cross-border investors over the next 12 months. In entering peripheral, higher-yielding markets, liquidity is being seen as an obstacle.

Hot pricing.
2016 will see a greater emphasis on secure income and asset management to drive performance. For some investors, it’s getting harder to achieve return expectations, particularly in “overcrowded” core markets, which are seen as expensive and fully priced by many. Some fund managers cite a growing misalignment between their client return expectations and what the market offers.

Return of debt.
More investors will use debt to finance acquisitions, suggesting that the equity phase of the cycle is giving way to a debt phase. This is particularly true of Continental Europe, where interest rates are likely to stay low for longer and further QE rounds from the ECB are expected.

For more news and information visit Blumberg Partners.

Latest Beige Book Shows Moderate Growth

The U.S. Federal Reserve has released the latest Beige Book, more formally called the Summary of Commentary on Current Economic Conditions, which indicates that economic activity increased at a modest pace in most regions of the country since the previous Beige Book report. Fed policymakers are widely seen raising interest rates for the first time in almost a decade at their next meeting on Dec. 15-16, but continue to parse data and trends carefully given the uneven nature of the U.S. recovery.

"On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market," Fed Chairwoman Janet Yellen said in prepared text for a speech to be delivered in Washington today. "Continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2% objective over the medium term." A summary of the commercial real estate sectors follows:

Commercial construction strengthened modestly in most Districts since the previous report. The Minneapolis District saw continued strong growth, particularly in cities where commercial permitting increased. The Boston, Cleveland, Atlanta, Chicago, St. Louis, and San Francisco Districts reported moderate commercial construction growth. In the Boston District, office construction grew modestly in the greater Boston region. Demand remained strong in commercial building, multi-family housing, and higher education in the Cleveland District, while in the Atlanta District, non-residential construction was slightly up from a year ago and reports on apartment construction remained robust. The Philadelphia, Richmond and Kansas City Districts reported a modest pace of growth in commercial construction. Commercial construction increased in most major cities in the Richmond District. In contrast, New York reported little change since the previous report. The Dallas District reported that construction remained active, although construction started to taper off in Houston.

Commercial leasing activity generally grew at a moderate pace. Cleveland reported strong growth, while activity in the Districts of Boston, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas and San Francisco expanded at a moderate pace. Commercial real estate improved in the Atlanta District, with increased absorption and rent growth across property types. Improvement in the Chicago District was widely distributed across the retail, industrial, and office segments, with increased demand for both sale and lease properties. Contacts in St. Louis reported slightly higher demand across all sectors, and expected demand to remain the same or increase slightly in the first quarter of 2016. The Minneapolis-St. Paul retail, office, and industrial space had positive net absorption, along with lower vacancy rates. Demand for commercial leasing increased mildly in the Dallas District, while office space activity was strong in the Dallas-Fort Worth area. Commercial leasing activity in New York was unchanged since the previous report.

For more news and information visit Blumberg Partners.

Casey Brown Makes First Acquisition with $52M San Diego Property

Casey Brown Company, led by commercial real estate veteran Casey Brown, previously founder and president of BBL Commercial Real Estate, has acquired the San Diego Union-Tribune property in Mission Valley for $52 million from Manchester Financial Group. According to a CBRE Group Inc. announcement, the campus acquisition marks the first purchase under the newly launched company. CBRE will be leasing the 13-acre property, which includes a 170,000-square-foot, five-story office building and a 190,000-square-foot, three-story industrial building. Terms of the deal were not disclosed.

"I was drawn to the asset given its premier central location at the intersection of I-8 and SR-163, which is further enhanced by the walkability to the Green Line Trolley stop and Fashion Valley, San Diego's premier mall. I plan to make this an iconic landmark for all of San Diego," said Casey Brown. "I have a great deal of respect for Doug Manchester and the Union-Tribune and I look forward to celebrating the rich history of the campus while converting it to the next generation office environment."

Located at 350 Camino de la Reina, the complex housed the San Diego Union-Tribune staff since 1973, which moved production and distribution earlier this year after Manchester sold to Tribune Publishing for $85 million. Casey Brown Company says it has plans to upgrade the existing office building into an amenity-rich, Class A corporate campus, while the industrial building is currently being evaluated for alternative uses.

For more news and information visit Blumberg Partners.

Fed's Beige Book and Commercial Real Estate

The U.S. Federal Reserve's latest Beige Book, more formally called the Summary of Commentary on Current Economic Conditions, was released today with figures pointing to continued modest expansion in economic activity during the reporting period from mid-August through early October. Citing "generally weaker" manufacturing activity, "subdued" wage expansion and a "slowed" pace of growth in some regions, the Fed's report highlights a handful of concerns while offering a modestly optimistic economic assessment overall.

According to the report, commercial real estate markets have shown signs of strengthening in all twelve federal reserve districts. Most noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger, with Boston and St. Louis noting brisk construction in the health sector, including senior care facilities, and Cleveland also indicating strong demand for senior living structures. New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.

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

DTZ Shows US CRE Rise in Q3

DTZ's research and consulting services arm released its quarterly Investment Market Update for Q3 which shows that U.S. investment volumes reached $66 billion in Q3 2014, up 8% from the previous quarter. With the headline "Invest now while pricing remains attractive", DTZ notes that a big share of the activity in eight top markets such as Chicago, Manhattan and San Francisco came from cross-border investments, with signs that investors' interest in secondary markets has perked up.

"The size, attractiveness and liquidity offered by the key eight markets is very appealing to overseas investors," said Nigel Almond, Head of Capital Markets Research at DTZ. "International capital continues to dominate, but we have continued to see interest from Asian investors in particular from China, as well as growth from European sources, with German funds increasingly active alongside the Norwegian Government State Pension Fund."

Although domestic investors continue to dominate investment, over the last quarter the level of activity has dipped. In contrast cross-border investment grew both from the rest of North America, but also from outside of the region. Of note, Non-North American investors stepped-up acquisitions, taking rolling annual volumes to a new post-crisis record of $23.5 billion and net sales posting a record $3 billion over the last year.

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

CRE in Florida Gets Foreign Investor Push

A new article from the National Real Estate Investor titled Lenders are Helping Foreign Investors Push Florida’s Real Estate Market to a New Peak examines the current international influx and impact bringing the market to a crest. An excerpt follows:

The established model is to pay all cash for the first property and leverage the income gained for the second deal. Now, they are joining with others to buy an apartment building, convert it to a condominium, and sell the units to individuals in foreign countries who agree to leave them in the rental pool run by the management company. Why? Foreign investors are more comfortable owning units than shares in an LLC. These transactions are all cash transactions from the seller’s standpoint.

Foreigners are also making regular use of syndicators who scout properties, which are often in the Miami area. Syndicators provide a second benefit of using their track records to help obtain financing. Due to the fact that these syndicators have or do own property in the country already, and have an operation, bank accounts, etc., a lender is able to qualify them in a traditional way. If a borrower approaches a bank and doesn’t have any assets in the states already, they know they will not be able to go outside the country to collect on any deficiency in case of a default. On top of that, they can’t know if the buyer or entity is getting their funds from drugs or other illegal affairs.

Lenders are also becoming much more accommodating than in recent years. The Florida banks that survived the Great Recession are returning the market. Their loan criteria put greater weight on the sponsor’s track record than the property as they seek to minimize risk and regulatory scrutiny.

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

Latest CCRSI Shows Property Price Gains

CoStar has released its latest Commercial Repeat Sale Indices (CCRSI), offering a review of commercial real estate pricing for April, which reflected strong property price gains as the price gap narrowed between buyers and sellers. The CCRSI measures the movement in the prices of commercial properties by collecting data on actual transaction prices. Some hilights from the report include:

The general commercial segment remains on an upward trajectory, despite recent price volatility. The equal-weighted U.S. Composite Index's General Commercial segment declined by 1% in April 2014. Despite the volatility in the monthly data, the overriding trend over the past 12 months for this segment has been outsized pricing gains as capital expanded into secondary markets. The 13.2% year-over-year increase in April 2014 was the largest such gain among the four major indices.

Increased investment activity reflects a healthy market for transactions. Repeat sales transaction volume year-to-date through April 2014 increased 25% from the same period in 2013, and is approaching 2006 transactions levels.

The price gap between buyers and sellers continues to narrow. The delta between sale prices and asking prices closed by more than one percentage point in the 12-month period ended in April 2014. This gauge of liquidity varies by region and property type, however. In the West region, sellers are achieving over 90% of asking prices, while in the Midwest this ratio is 82%, the lowest of the four regions. Multifamily properties are driving much of this improvement in liquidity. In the core coastal markets of Los Angeles, San Francisco, Boston and New York, for example, multifamily sale prices relative to asking prices are back to, or above, 2006-07 peak levels.

Other liquidity measures have also improved. The average time on market for for-sale properties fell 3% in the 12 months ending in April 2014, and the share of properties withdrawn from the market by discouraged sellers declined by more than two percentage points during the same period.

For more news and information visit Blumberg Capital Partners.

Avison Q1 Analysis Shows Manhattan Rates Soaring

Avison Young, the Toronto-based commercial real estate services firm, released its first quarter 2014 New York office market analysis, which shows that Manhattan office leasing is on pace to exceed the record levels achieved in 2013. According to the company's research, demand for class A office space has boosted rents in the market by an average of $5 per square foot. Avison Young's analysis shows healthy growth consistent with the recovering job market, as 18 deals were inked during the first quarter with starting rents in excess of $100 per square foot, compared with only 13 such deals during the same period a year ago.

"As the unemployment rate in New York City continued to drop during the first quarter, reaching 7.8%, we are seeing continuous demand for high-quality office space in the borough, particularly from the growing technology and media industries," said Arthur Mirante, Avison Young Principal and Tri-State President, in a company statement. "With new leases accounting for seven of the top 10 transactions during the quarter, Manhattan has shown encouraging signs of growth from a diverse group of new market players, and we've seen the immediate effect on asking rents."

"Tenants searching for space in Midtown South are faced with significantly fewer options than even a few months ago," said Avison Young Principal John Ryan. "Large deals completed in the area during the first quarter have solidified the district's position as the tightest submarket in Manhattan."

For more news and information visit Blumberg Capital Partners.

NAR'S Outlook on CRE Positive but Moderating

The National Association of Realtors® (NAR) quarterly commercial real estate forecast was released today, which reflects continued improvements in the commercial real estate markets, though at a slower pace. Lawrence Yun, NAR chief economist, said NAR's latest Commercial Real Estate Outlook shows that fundamentals are still on an uptrend. "Growth in commercial real estate sectors continues at a moderate pace from a very slow pace of absorption, despite job additions to the economy. Companies appear hesitant to add new space," he said. Highlights from the office market follow:

Vacancy rates in the office sector should decline from an expected 15.8% in the first quarter of this year to 15.6% in the first quarter of 2015.

The markets with the lowest office vacancy rates presently (in the first quarter) are New York City, with a vacancy rate of 9.5%; Washington, D.C., at 10.2%; Little Rock, Ark., 11.6%; Birmingham, Ala., 12.7%; and San Francisco and Nashville, Tenn., at 12.8% each.

Office rents are projected to increase 2.3% in 2014 and 3.2% next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 44.6 million square feet this year and 50.0 million in 2015.

For more news and information visit Blumberg Capital Partners.

Year-End CCRSI Confirms Broad Recovery in CRE

CoStar released its latest Commercial Repeat Sale Indices (CCRSI) this week analyzing property sales through December 2013, which confirms that the recovery in U.S. commercial real estate markets advanced in 2013 as broad gains in net absorption, rents, sales activity and pricing extended across markets and property types during the year. The CCRSI is based on 1,648 repeat sales in December 2013 and more than 125,000 repeat sales since 1996, and are constructed using a repeat sales methodology. An excerpt from CoStar's summary follows:

The upbeat performance was driven by relatively steady economic growth and job gains of 2.3 million or 1.7% in 2013. During the year, expanding businesses accounted for the highest aggregate net absorption across all four major commercial property types since the recovery began.

The increased demand for space, coupled with continued low construction levels (except for the multifamily property sector, which saw a notable increase in construction), vacancy rates fell across most markets at year-end 2013 from one year earlier, and the national average vacancy rate reached new cyclical lows in both the apartment and industrial sectors over the last year.

For more news and information visit Blumberg Capital Partners.

NAIOP Report on Commercial Real Estate's Economic Contributions to the Economy

The NAIOP Research Foundation has released its report on How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2012 which shows that commercial real estate is on the rise. The report quantifies the economic impact of new commercial real estate development and construction in the U.S. and states for 2012, including jobs created, income generated, GDP and the effect of multipliers. According to the report, development and construction of new commercial real estate – office, industrial and retail buildings – continued its climb in 2012, supporting approximately 2.3 million American jobs and contributing $303.4 billion to the nation’s economy, marking the second year that the sector posted gains since 2007.

Some key hilights from the report include:

• Commercial real estate alone supported at least 2.3 million American jobs in 2012
• Commercial real estate contributed $303.4 billion to U.S. GDP, a 16% increase from 2011
• Construction and development spending grows nearly 10% from 2011
• 307.5 million square feet built in 2012, a 29% increase from 2011

This video produced by the NAIOP Research Foundation further explains how commercial real estate development positively impacts the economy.

For more news and information visit Blumberg Capital Partners.

Asian Investors Making Moves in US CRE Markets

A new article from the Wall Street Journal titled Asian Investors Dig Into U.S. Property takes a look at the impact foreign investors are having on real estate development in the United States. Equity investments in the U.S. from Singapore, South Korea and China are already at all-time highs this year, for a combined total of $5.2 billion through mid-June, according to data from Real Capital Analytics. An excerpt from the article with investment information follows:

Singapore, the No. 1 Asian investor in U.S. property this year, has invested about $1.9 billion as of mid-June. That is more than the cumulative total that the city-state has invested in the U.S. over the past decade, Real Capital data show.

Singapore's recent deals include the Government of Singapore Investment Corp.'s acquisition of an office building in San Francisco's Financial District. GIC also bought a resort in Maui and four other hotels from hedge-fund manager John Paulson's real-estate fund. In June, Singapore property investor Overseas Union Enterprise completed its purchase of U.S. Bank Tower in Los Angeles, the tallest building in California, for $367.5 million.

China has invested more than $1.5 billion in 2013, compared with $300 million in 2012, according to Real Capital. Last year, the China Insurance Regulatory Commission paved the way for more deals by relaxing the rules for some big insurers to invest in certain types of overseas property.

Meantime, numerous South Korean investors are shopping in the U.S. For example, Mirae Asset Global Investments Co. recently agreed to pay $218 million to acquire an office tower on Chicago's West Wacker Drive.

South Korea pension funds, flush with contributions from an aging population, increasingly have been looking for property outside the domestic market. Representatives of country's National Pension System are making the rounds in New York, looking to invest a mimimum $100 million in office buildings, hotels or shopping malls, commercial real-estate brokers say.

For more news and information visit Blumberg Capital Partners.

Kaneohe Ranch Portfolio Comes to Market

The Harold K.L. Castle Foundation and Kaneohe Ranch Co. LLC have put the entire Kaneohe Ranch commercial real estate portfolio, which includes the town center in Kailua in Windward Oahu, on the market with Eastdil Secured. According to a Pacific Business News report, the possible sale of Kaneohe Ranch could easily top $1 billion and is similar to what happened when General Growth Properties Inc., the owner of Ala Moana Center, closed on a deal in 2002 to acquire Victoria Ward Ltd. for $250 million.

The properties are reportedly being marketed in their entirety or as two geographic sub-portfolios, the price of which is not currently available. Many of the existing commercial properties in Kailua were developed as leasehold interests 40 to 50 years ago, and several of the long-term ground leases "have either expired or will be expiring by the end of this decade, providing ownership with the opportunity to continue to upgrade and reposition downtown Kailua," the listing said.

The Hawaii portfolio also includes the land beneath the Windward City Shopping Center and Servco Windward Toyota in Kaneohe, and three properties in Honolulu. The Kailua town center includes a mix of fee-simple and leased properties whose tenants include Whole Foods Market, Foodland, Safeway, Times Supermarket, Longs Drugs, Macy's and California Pizza Kitchen.

The Mainland portfolio includes five leased fee land interests, three single-tenant retail and office assets and one multifamily asset located in San Francisco, Seattle, Miami, Dallas, Phoenix and Portland, Oregon. Tenants in those properties include Lowe's in San Jose, California, a Kohl's department store in Phoenix, the Miami Marriott Biscayne Bay and the U.S. government.

For more news and information visit Blumberg Capital Partners.

Eastern Union Funding Arranges $70M Financing in Brooklyn

Eastern Union Funding, a full service commercial real estate company, announced that it had arranged approximately $70 million in financing for commercial real estate properties in Brooklyn, New York. For almost every property type, there's a bank today," said Ira Zlotowitz, president of Eastern Union Funding.

Select transactions include:

• $20 million to refinance a mixed-use property in Brooklyn, on a seven-year term at 3.75% and 30-year amortization.

• $19 million to refinance a four-building multifamily portfolio in Brooklyn on a 5+5-year term, starting at 3.25%, and 30-year amortization.

• $6.3 million to refinance a 24-unit multi-family property on Goodwin Street in Brooklyn, on a 10-year term at 4% and 30-year amortization.

"Pre-2008 we were doing a lot of condos, and land prices were elevated and the cost of construction to build them was high," said Abraham Bergman, a managing partner and co-founder at Eastern Union Funding, in a New York Times article. "But when you look at a new project today, the land has been recently purchased and it is being viewed in today's dollars so it makes a lot more sense."

For more news and information visit Blumberg Capital Partners.

Demand for U.S. Office Space Still Sluggish

As we start 2013, several reporting agencies have taken a look into the commercial real estate market and the demand for office space with a fairly consistent analysis: the office sector is still struggling for traction in the U.S. with occupancy rising at disappointing rates. The amount of occupied office space grew by 3.7 million square feet during Q4 2012, down from 4.8 million in both the third quarter and the year-earlier period, according to a report released by real estate research firm Reis Inc. Asking rents were up to an average of $28.46 per square foot, according to Reis, which looks at 79 metropolitan areas.

"Without a robust labor market recovery there will be no robust office market recovery," said Ryan Severino, senior economist for Reis. Severino explained that weak demand for space gives developers little reason to build, and expected that lenders will continue to impose more stringent requirements on developers before they will provide construction financing.

The cities with the tightest markets continue to be those with stronger technology or energy sectors in their economies. Rents in San Francisco, for example, rose 3.6%, the most of any of 79 markets, to $34.69 per square foot. The vacancy rate in San Francisco was 13.8%. Washington, D.C. has the tightest market of all at the moment, with a vacancy rate of 9.3%. But Severino expects New York to take that title soon as its increasingly important technology sector takes more space and as the government in Washington cuts employment.

For more news and information visit Blumberg Capital Partners.

Beige Book Shows CRE Activity Improved in November

The latest Beige Book from the Federal Reserve Board, based on information collected before November 14, 2012, summarizes comments received from businesses and other contacts outside the Federal Reserve to provide a snapshot of the U.S. economy, and its outlook. The results are culled from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources in twelve major market sectors: Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.

The summary for real estate and banking across all twelve sectors follows:

Real Estate and Construction
Overall, markets for single-family homes continued to improve across most Districts with the exception of Boston and Philadelphia. Residential real estate markets in the New York District were mixed but generally firm prior to the storm. Selling prices were steady or rising. Boston, New York, Richmond, Atlanta, Kansas City, and Dallas noted declining or tight inventories. The Cleveland District indicated that the number of single-family housing starts had increased since our last report and from a year ago; most sales contracts were in higher price-point categories. Similarly, Richmond noted more residential work in the high-end home category for the first time in three years, and builders cited significant pent-up demand in the first-time buyer segment. Atlanta indicated that existing home sales were up slightly compared to a year ago and reported that investors were more active in Florida than in the rest of the District. In Chicago, residential construction increased at a slow but steady pace in October and early November, and construction increased for single-family as well as multi-family homes. St. Louis reported that residential real estate market conditions continued to improve, and Minneapolis indicated that segments of construction and real estate were growing at a double-digit clip. Kansas City characterized residential real estate activity as brisk and noted that a solid rise in home sales had reduced home inventories. Dallas noted that single-family housing activity remained strong, with both new and existing home sales activity increasing. San Francisco reported that home demand continued to strengthen and that home sales continued to grow on a sustained basis in most areas, spurring new home construction. However, sales growth generally slowed for both the condominium and single-family home markets in the Boston District, and the Philadelphia District noted that October began as a disappointing month for some Realtors, only to be punctuated by Hurricane Sandy.

Construction and commercial real estate activity generally improved across Districts since the last report. Gains, albeit modest in most cases, were reported by Philadelphia, Richmond, Chicago, and Minneapolis. The gains among Cleveland's contacts were tempered by reports in recent weeks of a slowdown in inquiries and a decline in public-sector projects. Kansas City described activity as holding firm and noted that real estate markets remained stronger than a year ago. Demand for office and industrial space continued to increase in Dallas, although contacts at some businesses said they were "holding back on expansions due to uncertainty." Several Districts noted segments of little change in commercial real estate activity. Boston described market fundamentals as flat, and San Francisco depicted market conditions as stable but with pockets of strength for large infrastructure projects such as roads and bridges. Commercial and industrial conditions were mixed in the St. Louis District and throughout most of New York prior to the hurricane. New York added that, while office markets across upstate New York were unaffected by the storm, there were some signs of recent softening.

Banking and Financial Services
Loan demand generally was either mixed or slightly stronger across most Districts in recent weeks. Among those noting mixed results, New York reported that demand for consumer and especially commercial and industrial loans weakened, but commercial and residential mortgage demand was steady. Richmond said that a small commercial banker was encountering a slight improvement in overall loan demand but added that consumer loans were unchanged from "meager" levels and small business loans were virtually non-existent. Chicago noted that small business loan demand experienced modest growth, but a decrease in credit demand occurred among middle-market customers. According to St. Louis contacts, overall lending activity was essentially unchanged over the period. St. Louis added that, while credit standards for commercial and industrial loans were largely unchanged, both the demand for these loans and the number of inquiries ranged from moderately lower to moderately higher. Used car loan demand was weak in the Dallas District, although first mortgage and energy-related lending increased. San Francisco cited weak-to-moderate business loan demand, but consumer lending expanded further with the help of auto loans and home mortgage refinancing; however, San Francisco noted that lending activity as a whole was unchanged. Most remaining Districts, including Philadelphia, Cleveland, Atlanta, and Kansas City reported moderate increases in total loan demand. In the Philadelphia District, banks reported widespread bank and ATM closings due to Hurricane Sandy.

Credit standards and credit quality were somewhat improved, on net, since the last report. Chicago, St. Louis, and Kansas City noted that credit standards on most types of loans were unchanged, and Dallas cited a loosening of credit standards, which contributed to very competitive loan pricing. Atlanta cited contacts who reported that underwriting standards had become more restrictive and burdensome since its last report, both in terms of credit scores and information requests. With respect to loan quality, New York reported that delinquency rates increased in the consumer and commercial and industrial segments but held steady in the residential and commercial mortgage segments. Philadelphia contacts cited moderate improvement. Cleveland and Richmond noted improvements in delinquency rates across consumer and business loan categories. Richmond added, however, that some contacts were concerned that banks were increasing their risk exposure by making longer-term loans in an effort to get higher yields. Kansas City and San Francisco also mentioned moderate improvement in loan quality.

For more news and information visit Blumberg Capital Partners.

CBRE Reports Moderate Improvement in U.S. Commercial Real Estate

The latest analysis from CBRE Group Inc. showed that U.S. commercial real estate market continued to show moderate improvement across all property sectors in the third quarter (Q3) of 2012. The analysis, according to a Sacramento Business Journal report, is based on surveys of buildings more than 10,000 square feet, excluding government owned and medical. Hilights of the results include:

Vacancy in the nation’s office buildings continued to decline, falling 20 basis points (bps) during Q3 to 15.5%.

National industrial availability1 dropped 10 bps during Q3 to 13.1%, continuing a two-year favorable trend.

Retail properties continued to see modest improvement in availability, which fell 10 bps to 12.9%, during Q3.

Demand for the nation’s apartment buildings continued to be strong, with vacancy in Q3 at 4.6%, a decrease of 40 bps from a year ago.

For more news and information visit Blumberg Capital Partners.

Commercial Property Vacancies Decline in Q2

A new report from CBRE shows that the U.S. commercial real estate market showed improvement across all sectors as vacancy rates in the second quarter of 2012. With office building vacancies at its lowest level since 2009 during Q2, the 15.7% vacancy rate "is still well above its pre-recessionary low of 12.4% and the recent headwinds facing the office markets have not gone away,” said Jon Southard, Managing Director, CBRE.

The office and industrial market summaries from the report follow:

Office Market
The national office vacancy rate fell by 30 bps to 15.7% in Q2 2012 marking the first quarter since 2009 in which the vacancy rate has been below 16%.

The national suburban vacancy rate fell by 40 bps while the national downtown vacancy rate fell by 20 bps. Occupancy improved in almost two-thirds of markets nationwide. Vacancy rates fell by 100 bps or more in seven markets: Albuquerque, Boston, Charlotte, Norfolk, Richmond, San Diego and Seattle. Technology and energy driven markets continued to be among the top performers as vacancy rates in San Francisco, Houston, Seattle and San Jose fell by 50 bps or more in the second quarter and remain well below their year-ago vacancy rates.

Industrial Market
Q2 2012, with an availability rate of 13.2%, is now the eighth consecutive quarter in which industrial availability has declined. During the quarter, 34 markets reported falling availability rates, 18 reported increases, and eight reported no change. Among large markets, Indianapolis (-130 bps) Memphis (-120 bps), Detroit (-100) and Seattle (-60bps) all saw significant drops. Chicago and Riverside were both down by 50 bps while, Los Angeles, the nation’s second largest market after Chicago, reported a decrease of 20 bps. With most markets reporting improvement in availability rates, it appears that slowing but continuing economic growth, is still leading to increased demand for industrial space.

For more news and information visit Blumberg Capital Partners.

CCRSI Shows CRE Price Index Up, Seventh Month in a Row

CoStar released the CoStar Commercial Repeat Sale Index (CCRSI) reflecting that the CoStar National Composite Index of commercial real estate pricing rose for the seventh straight month. In November, the Index increased by 0.6%, with prices for commercial property an average 1.8% higher than compared with the same period a year ago.

Monthly CCRSI Results

CoStar's Composite Commercial Repeat Sales Index increased by 0.6% in November 2011. It is now 1.8% above the same period last year and 31.8% below its peak in August 2007.

CoStar's Investment Grade Repeat Sales Index increased by 2.2% in November 2011 and is now 6.4% above the same period last year and 29.2% below its peak in August 2007.

CoStar's General Grade Commercial Repeat Sales Index increased by 0.3% in November 2011 and is now 1.1% above the same period last year and 32.5% below its peak in August 2007.

"This modest-but-steady recovery largely reflected the impact of improving market fundamentals, which have continued to attract investors and buyers despite a lending environment for smaller properties that has remained constricted," according to the CoStar report.

The CoStar indices are constructed using a repeat sales methodology that measures the movement in the prices of commercial properties by collecting data on actual transaction prices. The CCRSI tracks sale pair transaction data through Nov. 30.

For more news and information visit Blumberg Capital Partners.