Bubblenomics

If nothing else, people who care about commercial real estate in greater Phoenix can take cold comfort in this: the worst is probably over.

But Karl Guntermann, professor of real estate at the W. P. Carey School and author of the ASU-Repeat Sales Indices (ASU-RSI), cautions that renewed good times -- including lower vacancy rates and rising property prices -- are probably several years away. In commercial real estate, Phoenix isn't skipping toward another boom but rather crawling back to normalcy.

If the residential real estate market is having problems, so is the commercial real estate market – perhaps even more so. Commercial real estate properties – like apartments, shopping malls, hotels, and office buildings – were at a peak until 2007 but devalued 36% in the last two years. The real estate market has incurred debts in the past years and may still incur more debts in the coming years.

By Danielle Douglas

Proposed changes to an accounting rule, requiring companies to place the expense of operating leases on their balance sheets, is raising alarm within the commercial real estate community. Opponents say the restructuring of Financial Accounting Standards 13, or FAS 13 as the rule is called, might upset debt ratios, making it harder for companies to secure loans. Supporters of the changes, however, say they will make financial statements more transparent.

By Charles Mosley

By STEVE BROWN

The North Texas employment market has turned the corner this year, but companies are still holding back on office leasing.

Through the first nine months of 2010, net office leasing in the Dallas-Fort Worth area declined by about 700,000 square feet, according to preliminary numbers from Cushman & Wakefield of Texas.

By Chris Bourke

Europe’s commercial real estate owners, saddled with 1.9 trillion euros ($2.5 trillion) of debt, may be forced to make billions of euros in cash payments under planned laws that would treat them like hedge funds.

By Stuart Pfeifer and Robert Faturechi

Los Angeles real estate mogul Ezri Namvar, an Iranian immigrant who amassed and then lost billions of dollars of commercial real estate holdings, has been indicted on wire fraud charges, his attorney said.

Namvar, former owner of such high-profile properties as the Marriott hotel in downtown Los Angeles and the Cal Neva resort in Lake Tahoe, was accused of five counts of wire fraud related to a company, Namco Financial Exchange Corp., that sheltered proceeds from real estate transactions, said defense attorney Marc Harris.

by JON PRIOR

Troubled commercial real estate loans brought down five of the six bank failures reported by the FDIC over the weekend, according Trepp, an analytics firm.

There were six bank closings over the weekend, totaling 126 for the year. The Federal Deposit Insurance Corp. estimated the six closings this week to cost the Deposit Insurance Fund (DIF) a total of $347.6 million.

BY ANDREW TANGEL

As tenants cut back on space in a sprawling warehouse in Wood-Ridge last year, the property's owner did what many strapped homeowners have done: stopped paying the mortgage.

By August, the 2.2-million-square-foot site — a former World War II bomber engine factory owned by New York real estate company Cammeby's International Inc. — was in foreclosure. The balance on the mortgage backed by the property: $42.5 million.

By MARK JEWELL

BOSTON • Real estate investors don't have to own property to make a buck. They can invest in stocks of real estate investment trusts, which own and sometimes operate commercial, industrial and retail properties.

In good times, it's kind of like enjoying the milk without having to buy the cow. You can pocket the gains when REIT stocks rise, without the burden of a mortgage or property upkeep.

More important, investors in REITs and real estate mutual funds can expect steady dividend payouts — the trickle-down of operating income generated by REIT properties.

By STEVE BROWN

While the worst of the commercial real estate downturn may be in the rearview mirror, industry analysts say cleaning up the mess left behind won't be easy.

"We may be seeing the peak of the cycle," said Greg Leisch, chief executive of the Delta Associates real estate research firm. "For the first time in the cycle, we've seen a decline in construction loan delinquencies.

"And commercial mortgage-backed securities delinquencies have stopped their upward spiral as well," he said. "We've got a rebound in property values, only after two years of a downturn in values."

by Sonny Goldreich

The weak commercial real estate market nationwide continues to dampen sales activity in the Maryland suburbs of Washington and the few deals taking place reflect a sharp fall in property values, according to the third-quarter findings of PricewaterhouseCoopers' national Korpacz Real Estate Investor Survey.

While Investment Activity is Up Sharply Over 2009's Historic Lows, Sovereign Wealth Funds and Other International Investors Find Few Buying Opportunities for High-Quality U.S. Property

By Randyl Drummer

Foreign investment in the U.S. real estate has nearly doubled in the first half of 2010 over the dismal numbers from one year ago, but overall activity remains muted by the slowly recovering economy and a lack of high-quality property available in large U.S. metro markets.

By John Helyar and Steve Matthews

For the workers at 3630 Peachtree, a new Atlanta office tower that sits 98 percent empty, life can be both lonely and gratifying.

“They treat you like a king,” said Andy McCartney, a vice president at Mansell Group, as he walks into a building where the digital marketing firm’s name is prominently displayed at the entry and its 27 employees enjoy prime space on a floor served by both elevator banks.

By Sarah Mulholland

Monthly losses on commercial property debt bundled into bonds have doubled since April as loan specialists gave up trying to restructure smaller mortgages, Deutsche Bank AG data show.

Average losses on loans packaged into U.S. commercial mortgage-backed securities totaled $501 million in August compared with $245 million in April, according to Harris Trifon, a Deutsche Bank analyst in New York who based the estimate on a three-month average. In August 2009, the number was $41 million.

By: Antonia Oprita

The danger of a collapse in the commercial real estate sector seems to have been overcome due to he low interest rates, but investors are still waiting for the second shoe to drop in the downturn, Richard LeFrak, the LeFrak Organization president, told CNBC Friday.

In September last year, analysts said that commercial real estate was in danger because trillions of dollars of loans needed to be rolled over and the funds to refinance them would not be available.

Paul Partyka, Editor

WASHINGTON — If you’re considering adding a new laundry, now may be the time. Commercial real estate sectors, hurt by weak job growth, are offering incentives in many areas that are conducive to business expansion, according to the National Association of Realtors® (NAR).

250 bank failures since 2007 worsens on-going liquidity crisis
SCOTTSDALE, Ariz., Sept. 1 /PRNewswire/ -- The recent surge in bank failures is worsening the nation's liquidity crisis and may trigger more bankruptcies for commercial real estate owners in need of financing, according to Andy Bogdanoff, chairman of Remington Capital.

"With $1.2 trillion in commercial real estate debt scheduled to mature over the next few years and most U.S. banks unable or unwilling to extend new credit, the need for large amounts of private commercial capital has never been greater," Bogdanoff said.

By Pooja Thakur

Everstone Capital Management, the private-equity and real-estate fund adviser started by two former Goldman Sachs Group Inc. executives, may raise as much as $350 million for a new fund to invest in warehouses in India.

By SHERYL JEAN

Ann Strain walks Junebug, a Boston terrier, past a ghost town – hundreds of abandoned apartments with broken windows and weeds.

Neighbors think squatters have lived at times at the Signature Pointe apartments on Lovers Lane, just east of North Central Expressway. The Dallas police SWAT team trains there.

The apartments were emptied of tenants at least 2 ½ years ago to make way for new rental units and retail, but that never happened. Now a bank owns the 13 acres.

by Llenrock Group

As a follow-up to my piece last week regarding the impending political season, I want to refine my position regarding Tea Party Impact. I’ll start by reiterating that the “Tea Party”, at this point, is not a cohesive entity. A google search for Tea Party yielded over 65 million results, including the following web sites:

http://www.teapartypatriots.org/

https://www.jointheteaparty.us/

http://www.teaparty.org/

http://teapartypatriots.ning.com/

The slump in the U.S. commercial property market didn’t quite plumb the depths of the downturn in residential real estate, but although we see signs that home prices are nearing the bottom, commercial real estate could fall further.

By Rob Swenson

Job growth is painfully slow and weighing down the pace of economic recovery.

That seems to be the bottom line in many national assessments.

The health of the employment market gets prominent billing even locally in Bender Commercial Real Estate Services' midyear real estate report.

Bender's rather gloomy mid-2010 assessment of Sioux Falls' commercial real estate report starts with encouraging news about employment: After two straight years of job losses, unemployment in the Sioux Falls area might have bottomed out and started rising again.

This is a new repeat sales index for commercial real estate. Previously I've only been using the Moodys/REAL Commercial Property Price Index (CPPI) for commercial real estate.

The commercial real estate market’s pricing has been a tale of two worlds with the largest metro markets attracting significant institutional capital and forcing prices upward over the first two quarters of 2010, while the broader market has continued to soften.

By Roger Yohem

Despite some encouraging economic signs, the commercial real estate industry is still desperately seeking stability.

At the midpoint of 2010, local and national industry experts agree that the worst misfortunes of the Great Recession appear to be over. For the near future, overall vacancies will continue to rise and rental rates will continue to slide in all sectors.

By Harold Meyerson

All things considered, American big business is doing just fine, thank you. Profits, productivity and exports are up. New hires, rehires and wage increases, as I have written, are nowhere to be seen. They're no longer part of the U.S. corporate business plan, in which higher profits are premised on having fewer employees. Sell abroad, cut costs at home -- the global marketplace that American business has created is paying off big-time.

By William Alden

Commercial real state, apparently, is best understood in terms of baseball. CB Richard Ellis, the city's biggest commercial brokerage, once again beat out the competition in the struggle for Manhattan's top office leasing deals, according to the annual mid-year list published in Crain's with data from CoStar (it came out today). It's a three-peat for big-leaguer CBRE, which topped both the year-end and mid-year lists in 2009 and in 2008.

Why is CBRE so dominant? Matt Van Buren, CBRE's executive managing director, enlightened us.

By JAMES C. McKINLEY Jr.

GULF SHORES, Ala. — Nick Wilmott bent down on the beach near the high-tide mark and touched one of the reddish-brown pads of oil. It had washed up overnight from the BP spill off Louisiana and had yet to be cleaned up by the machines that sweep the beaches here every night.

“Here’s your problem,” said Mr. Wilmott, president of the Baldwin County Association of Realtors. “Imagine we’re on the balcony of a condo that I’m trying to sell you, and you look out and see this.”

We'll never again see the sort of guaranteed high returns on real estate that defined the last 50 years, say experts. Time to retire the phrase "safe as houses"?