Category Archives: National

3rd Weakest

Map of USA with New York highlighted

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The Times Union reports:

New York state‘s economy contracted by 4.3 percent in 2009, the third worst performance among the 50 states and the District of Columbia.

Only Nevada, reeling from the real estate collapse, and Michigan, with its troubled auto industry, fared worse, according to new data on states’ gross domestic product.

The figures were released this morning by the U.S. Bureau of Economic Analysis.

Read the rest at: New York’s economy third weakest nationally – Times Union.

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Really?

New York State Capitol viewed from the south, ...

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The Business Review reports:

New York state’s recession likely ended in the first quarter of this year, state budget officials said on Tuesday.

That’s where the good news stops.

Read more: New York’s recession ended in 1Q | The Business Review

And the winner is…

Money

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The Highest Property Tax Burdens in America

Catherine Rampell reports in the New York Times‘ Economix blog:

The typical resident of Westchester County in New York, pays more in property taxes than the typical resident of any other major American county, according to a new analysis of Census data from the Tax Foundation.

Read the rest at: Property Taxes, by County – NYTimes.com.

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U.S. Commercial Real Estate Suffers Worst Fall on Record

From DSNews.com:

Commercial real estate in the United States has suffered its worst annual capital return on record, according to Investment Property Databank (IPD), whose data stretches back to 1978.

The global real estate analysis firm, headquartered in London, reported this week that the IPD U.S. Quarterly Property Indicator fell 23.9 percent in 2009. That dive pushes the total capital decline to 33.4 percent from December 2007, when commercial real estate values were at their peak.

While the pace of market value decline eased over the final quarter, IPD says continued cap rate pressure together with weakening rental fundamentals is curbing optimism that 2010 is the year of recovery for the commercial sector.

Read the entire story at:

U.S. Commercial Real Estate Suffers Worst Fall on Record: IPD.

Why Aren't Big Banks Lending?

Money!
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The Business Review reports an explanation from Hugh Johnson:

Hugh Johnson, chief investment officer for Johnson Illington Advisors in Albany, said there may be other reasons why big banks aren’t throwing open the purse strings, and he expects the tightness to continue as long as the Federal Reserve keeps short-term interest rates low.

He said low short-term rates, coupled with rising longer-term rates, “present an interesting opportunity for banks” by allowing them to borrow funds at bargain prices and then buy U.S. Treasuries with higher returns. According to the FDIC, banks increased their Treasury holdings by 49 percent in the third quarter.

“In other words, banks can be very profitable without taking any credit risk,” Johnson said. “The Fed is hoping that bank financial strength will be restored this way, and once that happens their appetite to lend will come back. That is the unspoken agenda, to get the big banks back on their feet financially.”

But Johnson believes inflation will force the Fed to raise rates later this year, making Treasuries less attractive.

“So to maintain those profit margins, banks will have to take the risk and start lending again,” he said. “My guess is that by mid-2010, banks will have to take more risk and will have to respond to stronger loan demand.”

Read the entire report: Finance: Cash or credit? Businesses weigh options as they jockey for the recovery – The Business Review (Albany):.

U.S. CRE Falls to Lowest in 7 Years

I spy empty office buildings
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Bloomberg.com reports:

Dec. 21 Bloomberg — Commercial property values in the U.S. declined in October to the lowest level in more than seven years as unemployment reduced demand for apartments, offices and retail space.

The Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September to the lowest since August 2002. Prices were down 36 percent from a year earlier and are 44 percent below the peak in October 2007, Moody’s Investors Service Inc. said in a statement.

Read the rest at: U.S. Commercial Property Falls to Lowest in 7 Years Update3 – Bloomberg.com.

Apartment Vacancy Rate A 23-year High

SAN FRANCISCO - JULY 08:  A sign advertising a...

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Reuters reports:

The U.S. apartment market in the third quarter turned in one of its weakest performances ever as the national vacancy rate hit a 23-year high despite being propped up by landlords willing to take lower rent to keep tenants, according to real estate research firm Reis Inc.

The U.S. apartment vacancy rate rose to 7.8 percent in the third quarter, its highest since 1986, according to the report released on Tuesday. Vacancies have been rising since the third quarter of 2007, according to Reis.

via Apartment vacancy rate hits 23-year high: report | U.S. | Reuters.

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Korpacz Survey Projects 2012 U.S. Comm Market Recovery

According to an Appraisal Institute newsletter, the latest PricewaterhouseCoopers Korpacz Real Estate Investors Survey anticipates further deterioration in the U.S. commercial real estate market through the remainder of 2009 and into 2010 before recovering in 2012.


The biggest problem is that commercial real estate lags what happens in the economy,” Susan Smith, director of PricewaterhouseCoopers’ real estate advisory service, told Bloomberg. “Companies are looking for ways to cut costs; many are continuing to reduce workers and are continuing to reduce their space needs.”


Survey respondents indicated that a wave of foreclosures and distressed sales may jump-start buying activity with investors seeking to purchase quality assets at cut-rate prices. “Some investors sense that near-term defaults with commercial banks will allow them to acquire quality assets at steep discounts, as banks may no longer be able to continue to ‘pretend and extend’ troubled loans and would be forced to place assets up for sale,” Smith said.


The 115 surveyed real estate firms noted that they expect commercial real estate prices to continue to fall or remain at their current level for at least the next six months. Respondents indicated that office rents in Manhattan and San Francisco, as well as suburban office rents across the country, may drop as much as 20 percent through 2010.


Office rents in Phoenix may drop 15 percent while rents in Boston, Chicago, Denver, Los Angeles and San Diego may drop as much as 10 percent. Strip malls built around big-box stores could see rent declines of as much as 10 percent, with regional mall rents falling by as much as 5 percent.


According to the survey, rental apartments are expected to lead the commercial market recovery starting in 2010 followed by the industrial and office sectors, which are expected to begin recovering in 2011 with a notable uptake in 2012. The retail sector, struggling in last place, is expected to lag behind with a slight recovery beginning in 2012.

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Moodys/REAL CPPI July 2009

Monthly National All Properties Index

Monthly National All Properties Index

July 22 , 2009 update:  The latest results of the Moodys/REAL CPPI show a return of negative 7.6% in May for the all properties national index.

Read the full story about the national and regional indexes:  MIT CRE : Moodys/REAL Commercial Property Price Index (CPPI).

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Falling Commercial Rents

Falling Leaves
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Boxwood Means released their national rent study:

Rents at small industrial and office properties continued to fall last month, according to Boxwood Means Inc.

But the rate of decline has not increased, according to the Stamford, Conn., research company that specializes in small-capitalization properties. And that could signal that the market might be close to reaching its cyclical bottom.

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