Commercial Real Estate Market Holds Steady, Improves: Fed

In its most current analysis, the Federal Reserve Board said commercial real estate market conditions have held steady or improved in nearly all 12 of its districts in recent weeks.

According to the Fed’s Beige Book released Wednesday, on the residential side, all of the districts cited increases in home sales, home prices or housing construction. Reports on commercial real estate markets were also generally positive, the report showed.

Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, Va., San Francisco and St. Louis make up the Fed’s12 districts.

New York, Philadelphia, Minneapolis and Kansas City all reported that commercial leasing increased and vacancy rates fell.

Chicago's report was mixed: office vacancy rates remained high, restraining demand for new office construction, but office leasing demand improved modestly and industrial construction picked up.

Atlanta reported rising apartment rents and small gains in office leasing with weakness in the retail and industrial sectors.

Boston reported that office fundamentals were flat on average, with rising rents in portions of Boston proper and muted but steady activity elsewhere in the district. Both Cleveland and Boston said nonresidential construction had picked up while office and industrial real estate markets remained healthy in Dallas.

The St. Louis report noted an increase in commercial construction across much of the district and varied reports on leasing across areas within the district.

In San Francisco, demand for commercial property was stable while commercial construction was limited.

Richmond reported a decline in office leasing volume in Washington, D.C., but some portions of the district recorded increasing sales and construction.

Meanwhile, based on data collected on or before Aug. 20, the Beige Book noted that overall, banks in the districts said credit conditions had improved with credit spreads decreasing and competition for high-quality borrowers among lending institutions on the rise.

The New York district noted that shrinking spreads were observed particularly in commercial and industrial loans as well as in commercial mortgages. Some bankers in the Cleveland district mentioned a moderate loosening of lending guidelines. The New York, St. Louis, and Kansas City districts reported unchanged credit standards while New York and Cleveland cited declining delinquency rates.

The Richmond and Atlanta districts reported generally low demand for loans, but some pockets of growth. The Chicago district noted that growth in business loan demand was generated mostly from small and mid-size firms and for the purpose of refinancing rather than financing capital expenditures.

Cleveland, St. Louis and San Francisco mentioned small positive or negative changes in business credit demand, and relatively strong demand for consumer credit. The Kansas City district reported stable demand for commercial and industrial loans and commercial real estate loans. Dallas noted softer demand for loans overall.

Source: http://www.cutimes.com/2012/08/30/commercial-real-estate-market-holds-steady-improve

REAL ESTATE LOG: Figarden project continues slowly

Developer John Allen has started making street improvements along 34 acres he owns in northwest Fresno where he still plans to build a commercial retail center known as the Commons at Figarden.

But don't get too excited; construction on the much-anticipated commercial project at Gates Avenue and Figarden Drive is at least a year away.

"It's been real slow," Allen said about the development. "It seems like it's been taking forever."

Allen introduced the project in 2004 when the housing market was booming, but the recession halted plans. Housing construction slowed and recruiting tenants to new shopping centers got tougher.

While the economy hasn't improved drastically since then, Allen said it's time to get some preliminary work done.

He's installed gutters and street lights. A roundabout is being built at the Gates Avenue entrance, and the street will be extended about 300 feet.

"We've been hanging on a long time with that property and we finally decided to put improvements in and record our parcel maps," Allen said.

Home sales up, prices are still falling

More homes in Fresno and Clovis were sold in December than the month before, but prices continue to fall.

In December, 630 homes -- which include single-family homes, condominiums and planned unit developments -- were sold, compared to 567 in November, according to the Fresno Association of Realtors.

That's a small increase over December 2010 when 607 homes were sold.

The median price, however, fell to $142,500 last month from $150,000 in November.

A year ago, the median price was $152,500.

Dan Hawkins, association president, was surprised to see median home prices fall after watching them edge up by $7,000 between October and November.

He said there are still so many distressed properties out there that buyers are bargaining harder for the lowest price they can get.

Grant for affordable housing loans

The Northern California Community Loan Fund, which has an office in Fresno, received a $2 million grant from Chase Bank to provide affordable housing loans to nonprofit housing agencies.

The loans, which have affordable rates and flexible terms, will help nonprofit housing agencies in the Central Valley and San Francisco build projects.

Source: http://www.fresnobee.com/2012/01/19/2690088/figarden-project-continues-slowly.html

Real estate leader

New York - The United States will remain the top choice of most global commercial real estate investors in 2012, but the country has lost ground to Brazil which ranked No 2 this year, according to a survey released Sunday.

While the United States offers the most stable and secure option in commercial real estate, investors said improvement in rent and occupancy growth and the repeal of a 1980 foreign investment tax would have the strongest impact on their investment decisions, according to the 20th annual survey of Association of Foreign Investors in Real Estate (AFIRE) members.

For about the past year or so, investors in US commercial real estate have focused on gateway cities such as New York, Washington, Boston, San Francisco and Los Angeles, driving prices up and yields down.

Meanwhile commercial property in Brazil, with its bubbling economy and safer investment environment, has become a hot spot for global investors. Sao Paulo, Brazil's largest city, jumped to the fourth best city for real estate investment dollars in 2012, up from 26th place last year.

The United States is still very desirable and was second behind the UK in attracting cross-border investment in 2011, according to Real Capital Analytics preliminary figures.

"The negative is it doesn't promise a whole lot of capital appreciation because the prime markets are already fully priced," AFIRE CEO James Fetgatter said.

"By no means will Brazil replace the US, at least not in the forseeable future. Brazil is considered now a much safer place to invest and a place where you can get capital appreciation and good yield."

AFIRE'S survey respondents hold more than $874bn of real estate globally, including $338bn in the United States.

Sixty percent of respondents said they plan to increase their investment in US real estate in 2012, down from a record 72% last year, according to the 20th annual survey.

Some 42.2% said they believed the United States in 2012 would offer the best opportunity for the price of their commercial real estate investments to increase, down from 64.7% last year's survey.

The United States lost ground to Brazil, with 18.6% saying Brazil's property market offered the best growth opportunity for their investment dollars. That's up 14.2 percentage points, moving Brazil up to second place from fourth, and pushing China down to No 3, according to the AFIRE survey.

Seventy percent of respondents picked one of the three countries as their favourite, while the remaining 30% had top choices from 13 other countries on five continents.

Respondents said they would invest more in US commercial property if the fundamentals of rent and occupancy growth were stronger.

Another US barrier respondents cited was the Foreign Investment in Real Property Tax Act (FIRPTA). The 1980 act, originally designed to protect farm property from foreign ownership, subjects foreign buyers to both their domestic and US taxes when they sell their investment, unless their home country has a taxation treaty with the United States.

FIRPTA opponents have argued that the act unfairly penalises foreign investors of real estate. Such double taxation does not apply if they buy US stocks or bonds.

As for the top cities for foreign investment in 2012, New York remained No 1. London moved up to No 2 from No 3, swapping ranks with Washington. Sao Paulo was fourth, and San Francisco moved up to No 5 from No 10 last year.

Europe's sovereign debt problems and looming recession pushed most of the countries there - except for a few such as Switzerland and Poland - off the map for real estate investors. Germany lost about half its support among respondents in terms of stability and price appreciation, according to the survey.

Emerging markets also seem to be getting more popular among potential investors. Respondents identified 25 countries they would consider for investment, up from 18 last year.

Brazil topped the list, with China in second place, as each did last year. Turkey moved up to No 3 from No 7 last year. India and Vietnam each dropped down one spot, to No 3 and No 4 respectively. Appearing for the first time were Colombia, at No 10, Hungary at No 12, and Qatar at No 17.

As for US commercial real estate, respondents said that this year they would most likely invest in apartment buildings, the fourth consecutive year multifamily topped the list. Of all the types of US commercial real estate, the multifamily sector has not only recovered from the post-2007 real estate slump but rents and occupancy are even stronger than before.

Warehouse and distribution centres ranked second, up from No 5 last year. Office properties were third, up a notch from No 4. Retail properties - shopping centres and malls - slipped to No 4 from No 2. Hotels ranked No 5, down from No 3 last year.

The survey was conducted in the fourth quarter by the James A Graaskamp Center for Real Estate, Wisconsin School of Business.

Source: http://www.fin24.com/Companies/Property/Real-estate-leader-20120103