Bradenton.com | 03/03/2010 | Hometown democracy debate set.

LAKEWOOD RANCH — Manatee County Republican Commissioner Joe McClash and Sarasota County Republican Commissioner Jon Thaxton are set to debate the merits of Amendment 4, a proposed change to the Florida Constitution that will be on the ballot Nov. 2.

The Florida Hometown Democracy Land Use Initiative would require voter approval of all changes to a community’s comprehensive plans.

The commissioners’ discussion will be before the Lakewood Ranch Democratic Club at 7 p.m. Tuesday at the Lakewood Ranch Town Hall, 8175 Lakewood Ranch Blvd.

The meeting is open to the public.

Show your support if you’re available, and be sure to get out the vote on this issue.

>> The Lakewood Ranch Business Alliance’s March 10 luncheon will focus on Amendment 4, frequently referred to as “Hometown Democracy,” and what it means to businesses and the community. Scheduled speakers include: Ryan Houck, executive director of Floridians for Smarter Growth; Jon Thaxton, Sarasota county commissioner, and Ward Friszolowski, former mayor of St. Petersburg Beach. The meeting will begin at 11:30 a.m. at the Polo Grill, 10670 Boardwalk Loop. The cost is $20 for members and $30 for nonmembers. Register online at www.lwrba.org.

Commercial-Property Sales Jump – WSJ.com.

Debate Over Reaching Bottom Follows Two Months of Gains

By CHRISTINA S.N. LEWIS

The number of commercial real-estate sales rose sharply in December, triggering fresh debate about whether the sector has reached bottom.

Property sales, a gauge of market health, rose 75% in December from the prior month, according to Real Capital Analytics. The end of the year traditionally sees an increase in volume. But the recent increase is significant even after adjusting for that, says Neal Elkin, president of REAL, a research firm that analyzed the data.

The Moody’s/REAL All Commercial Property Price Indices, or CPPI, which track values, measured a 4.1% increase in December. This followed an increase of 1% in November, which was the first time since 2007 that there were two consecutive months of rising values.

But Moody’s and REAL agreed that it is too soon to conclude that the market has hit bottom.

“It makes me feel very confident that the dramatic violent price movement that we saw in the first part of 2009 is over,” says Mr. Elkin of REAL. “But I would never be so bold to say that we are going straight up from here.”

Cushman & Wakefield / One Brigham Circle in Boston

There were 716 transactions in December, according to the CPPI. That compares with more than 1,600 deals in December 2007.

Sales activity has been in the doldrums for months because of a dearth of financings and sellers’ unwillingness to put property on the block when prices are down sharply from a few years ago. That means competition can be fierce when prime buildings are put up for sale.

Earlier this month, an institutional real-estate fund run by J.P. Morgan Asset Management bid on a large $100 million-plus rental-apartment property in Washington. Seventeen other buyers submitted offers, says Kevin Faxon, head of U.S. Real Estate for J.P. Morgan Asset Management.

“We are actively in the market seeking to acquire properties,” Mr. Faxon says. “We are not on the sidelines. We’re not taking a view that prices are going to be cheaper tomorrow than they are today.”

Also, some healthy properties are still commanding decent prices. In Boston, a nearly 200,000-square-foot office and retail property called One Brigham Circle is in contract to sell for $97 million to AEW Capital Management, according to a person with knowledge of the deal. Brokers for Cushman & Wakefield are representing the seller, the Rappaport family’s New Boston Fund.

The cap rate, an industry term for the buyer’s nonleveraged yield on the property at current net rents, is less than 6.5%, a return that is comparable to property prices in 2005 and 2006, according to local brokers. The building is fully leased.

The conflicting market signals come at a time when the commercial real-estate sector faces significant challenges. The economic fundamentals, such as anemic hiring, mean that office rents are likely to continue falling while vacancies continue to rise. Meanwhile, apartment rents also are low, driven down by record low home prices and increased supply from investors stuck with unsold properties who have put them on the rental market.

In addition, many top-of-the-market real-estate deals are still expected to go bad, like Peter Cooper Village and Stuyvesant Town, a sprawling Manhattan residential complex that is in default on $4.4 billion in debt.

Market bulls agree that the sector continues to perform badly. But they argue it is doing better than people thought it would. Therefore, real-estate assets are undervalued and prices are going up, they say.

“No one believed me that values were going to go up so soon,” says Dan Fasulo, head of research for Real Capital Analytics. “But there’s enough anecdotal evidence now that we’ve come well up off the bottom already.”

Write to Christina S.N. Lewis at christina.lewis@wsj.com

Lakewood Ranch firm buys lots … $81 million worth | Section Home | HeraldTribune.com.

HERALD-TRIBUNE ARCHIVE

Mike Moser, Starwood Land Venture’s east regional president.

This story appeared in print on page A1

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Commercial Real Estate Bottoming?

Moodys’ Commercial Property Price Index Increases 4.1% In December | Square Feet Commercial Real Estate Blog.

Moody’s CPPI registered another gain for December. The index rose by 4.1% in December, following a 1% increase in November, marking the second consecutive month of increases.

Despite transaction volumes up dramatically over previous lows, and prices beginning to rise, Moody’s remains cautious on the future, citing in its report that “it would be naïve and aggressive to say that we’ve seen the worst”.

Though prices may be off their lows, there remains a lot of distress to work out in the marketplace. We’ve continue to emphasize the impact that resetting rents will have on property values, and we’ve all seen just how much it is costing landlords to land new tenants.

The good news is that the amount of fat left on deals is quite minimal, which will lend to stabilizing rental rates, at least in Silicon Valley. We’ve already seen some big deals signed, but over the next quarter we will see several high-profile lease transactions close as companies begin to make a “land grab” on the quality large chunks of space in the market.

The bad news is that the net absorption from these deals will be minimal, and as we’ve indicated will keep the pressure on the landlords of the B assets. As a value-add investor, one of the opportunities is therefore in the A asset (at the right price of course) with a large chunk of contiguous space as there will be takers for this space over the next 3-12 months. We’ve seen EOP and Lane Partners make some acquisitions over the past 2 months along these lines.

Falling Retail Cap Rates Indicate Growing Investment Opportunities.

The retail sector has endured more distress over the last two years than any other property type, with the possible exception of hotels. As consumers in the U.S. have cut back on discretionary spending, thousands of establishments ranging from retailers like Circuit City and store operators such as Mervyns have closed shop or filed for bankruptcy.

However, as the economy stabilizes and retail sales figures begin to rise, lenders and investors are looking for signs that retail property prices have bottomed out. And as each quarter passes, compelling evidence is emerging that the next six to 12 months may provide a great window of opportunity for lenders and investors with funds to deploy.

Indeed, negative fundamentals have already been building for more than two years. Rents and occupancies deteriorated in record amounts across retail property types in 2008 and 2009. Regional mall vacancies hit 8.8% by year-end 2009, the highest level on record since Reis began covering malls in the first quarter of 2000.

Even the stalwart neighborhood and community center property type — long perceived to be stable given its association with grocery and pharmacy anchor tenants — has come under assault. Negative absorption was recorded in the first quarter of 2008, in lockstep with an economic contraction. By the end of 2009, vacancies had hit 10.6%, a level unseen in 18 years.

Pricing and transaction volume patterns followed accordingly. The average price per sq. ft. for strip malls fell by 42.6% from a peak of $216 in the second quarter of 2008 to $124 by the end of 2009. Over the same period, quarterly transaction volume fell by 64.8%, from $4.6 billion to just $1.6 billion, as risk aversion amid the credit crisis prompted investors to flee to safer havens.

Got hope?

Where then is the resurgence of hope that might prompt investors and lenders to begin investing in retail properties? Not in fundamentals like rent growth in the near-term, which will remain depressed until well into 2011.

Given typical cycles in commercial real estate, a recovery in rents and occupancies will lag stabilization in the domestic economy and labor markets by at least 12 months. The critical question is whether the low level of transaction prices reflects this expectation of depressed income over the next two years, or if prices will fall further.

Capitalization rates, a key measure of expectations of property income and values, have begun to fall, one indication that investor appetite for retail properties has begun to turn. In fact, cap rates fell from a high of 10.0% in the second quarter of 2009 to 8.7% by the end of the year.

This is partly driven by selection bias: transactions that occurred in the latter half of 2009 tended to be between well-capitalized buyers and sellers, with high quality properties boasting stable tenant rolls.

But this is precisely the job of the astute investor: to select properties that survived the devastation, purchasing them at bargain prices. And lenders — like investors — are now on the prowl for Class-A properties at Class-C prices, lending at conservative levels to properties that have weathered Darwinian conditions and emerged intact.

Interestingly, the biggest challenge that lenders and investors may face over the next six to 12 months is fierce competition for the best assets. Since we’re in for a few more years of distress, there are a scant number of investors that are willing to gamble on lower grade properties. This singular focus on better assets means that anywhere from 20 to 40 banks are competing to provide financing for higher quality properties.

Buyers also may need to compete with other interested parties for the most prized deals. The biggest example in the market today is Simon Properties, which recently publicized its bid for General Growth Properties. The offer has drawn much attention from analysts, with speculation that bids higher than the initial $10 billion may be placed given the quality of GGP’s assets.

And though retail rents and occupancies will continue to deteriorate over the next two years, current prices may already reflect this. The window of opportunity will close faster than expected if greater competition results in higher prices that depress returns. Now may indeed be the time to seriously consider investing in retail properties.

Dr. Victor Calanog

Dr. Victor Calanog is director of research for New York-based research firm Reis Inc. His monthly column delivers up-to-date assessments and expert analysis of property level fundamentals.

Lakewood Ranch’s First Watch adding Oklahoma | Section Home | HeraldTribune.com.

Lakewood Ranch’s First Watch adding Oklahoma

HERALD-TRIBUNE ARCHIVE / 2009

The breakfast-and-lunch restaurant on Sarasota’s Main Street is one of four in the area and 28 in the state.

This story appeared in print on page D1

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