Socal Multiunit Real Estate

SAN DIEGO MULTIUNIT MARKET MAY HAVE BOTTOMED OUT

SAN DIEGO MULTIUNIT MARKET MAY HAVE BOTTOMED OUT

Real Estate numbers are picking up in San Diego County. This is good guidance and good news, as the San Diego market was one of the first hit by the current real estate downtrend, and may dictate the breath and width of the real estate recession.

This news comes courtesy of a recently released study by Cushman & Wakefield, who note that investment transactions rose 27.6% between the third quarters of 2007 and 2008, marking the first year-over-year quarterly increase since San Diego market started softening back in 2004.

Institutional investors accounted for most of the significant transactions that took place in 2007, notes George Carlson, associate director with the San Diego office of Cushman & Wakefield “We are in the third year of a market correction that will likely continue for the coming year.”.

The three most significant sales of the quarter were the $71-million–$236,667 per unit– trade of the Cardiff by the Sea Apartments, a 300-unit complex at 2170 Carol View Dr. in Cardiff; the Loma Portal Bluffs in the Point Loma area of San Diego, a 113-unit project that was sold for $18.5 million–$163,717 per unit; and the $13.7-million–$122,321 per unit–sale of Arbor Village, a 112-unit community at 4914-4998 Logan Ave. in San Diego.

Broken down by submarket, the Inland North region of the county had the highest number of deals, 15 sales involving 329 units, followed by El Cajon, with 317 units trading in 12 sales. Pacific Beach also saw a dozen deals, but they involved just 56 units, while the Golden Hill-Southeast San Diego area had 11 sales of 15 units.

Through the year, the most active regions, in order, were Inland North–44 deals, 869 units; Golden Hill-Southeast San Diego–38 sales, 636 units; North Park–37 transactions, 363 units; and El Cajon–30 deals, 695 units.

http://www.globest.com/news/1323_1323/insider/176264-1.html
http://www.westcapcorp.com/images/transactions/apartment.jpg

BUY A HUD MULTIFAMILY + HEALTHCARE PORTFOLIO

BUY A HUD MULTIFAMILY + HEALTHCARE PORTFOLIO

The U.S. Department of Housing and Urban Development has launched its first offering of distressed multifamily and healthcare loans of the year and the first through its exclusive loan-sales adviser, KDX Ventures.

The agency, which guarantees loans through various Federal Housing Administration programs, will take offers on Feb. 4 for a portfolio of 19 loans with a balance of $144.4 million. While some loans might be performing, all are distressed in one way or another. FHA loans are originated by lenders that have the right to sell them to HUD in the event of a default. The agency either tries working them out or sells them quickly.

HUD long has been an active seller on the secondary market, offering loans through a series of advisers, generally alternating among advisers every two offerings. But last year, it changed tactics and tapped KDX Ventures, which was formed by DebtX and Kema Advisors of Washington, D.C., under a multi-year contract to sell loans.

The upcoming portfolio, MHLS, 2009-1, has 15 apartment loans with a balance of $125.2 million and four healthcare property loans with a balance of $19.1 million. The apartment collateral has an average of 183 units, while the healthcare collateral has an average of 166 beds. The properties are scattered around the country.

Get the whole story @ http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=5841&sourcecode=1lntd009

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

2009 INVESTMENT PROPERTY SALES WILL BE BETTER THAN 2008

Just as you might expect, property-investment sales are way down. The numbers are in for all of 2008 and sales fell 68% from the previous year’s volume. The decline was particularly steep in Q4.

The $54.5 billion of commercial property-transactions that closed or went under contract last year were down from $170.4 billion in 2007, while the number of transactions dropped 54% to 846, according to the Commercial Real Estate Direct Property Sales Database, which tracks individual property sales of at least $10 million.

The $7.28 billion worth of deals in the fourth quarter was down 70% from the $29.42 billion of deals during the same period in 2007. This year’s fourth-quarter volume also was down 46% from the previous quarter, which was down just 16% from the $16.3 billion in the second quarter.

Full-year sales volumes were down from 2007 in every property type, with sector declines ranging from a high of 83% for hotels - $3.8 billion - to a low of 60% for multifamily - $8.38 billion - which was helped largely by the availability of debt financing from Fannie Mae and Freddie Mac.

Pundits predict that 2009 sales volume will increase 15% due largely to offerings from distressed sellers, particularly those who used floating-rate debt for acquisitions in early 2007 and 2006.

A continued stalled economy that is expected to cut tenant demand across all property types. Robert Bach, Grubb + Ellis’ chief economist, has predicted that the U.S. economy will lose another 2 million jobs in 2009, about the same amount lost in 2008, and will “dampen demand for all product types, resulting in negative absorption and increased vacancy.”

Info courtesy of

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=5720&sourcecode=1lntd009

2009 IS ABOUT HOW TO GO GREEN

2009 IS ABOUT HOW TO GO GREEN

In 2009, the U.S. Green Building Council (http://www.usgbc.org) plans to focus on why homeowners and multiunit property owners should go green.

“The message is…why to go green and how to go green,” confirms Nate Kredich, USGBC’s vice president of residential market development.

In 2009, the Washington, D.C.-based nonprofit plans to collaborate with local green home building programs and select 20 to 25 local home builder associations across the country to spread the green message.

Already the USGBC has successfully organized initiatives in New Mexico and Texas. Also in the first quarter of ‘09, USGBC expects to offer training courses to certify LEED for Homes accredited professionals.

Some statistics…since January 2008, 1,028 homes have received LEED for Homes certification with an additional 3,261 homes registered and awaiting certification. Notably, 45 percent of the certified units, which includes both single-family and multifamily homes, are affordable. Santa Monica’s Colorado Court is a fine example of green affordable housing.

USGBC also launched its REGREEN initiative, which includes guidelines for greening renovation projects. These guidelines are available
for free download online @ www.regreenprogram.org.

Sustainable development is also catching on in the multifamily sector,
“Multifamily is a market that knows LEED already as they have participated in the new construction program,” Kredich says. “They are starting to look at LEED for Homes as another option.”

The USGBC recently launched a new mid-rise test pilot initiative. The program will certify four- to six-story buildings that previously received certification
under the LEED for Homes initiative.

LEED for Homes Certification Breakdown
Certified: 24%
Silver: 40%
Gold: 22%
Platinum: 15%

Info courtesy of

http://www.ecohomemagazine.com/news/us-green-building-council-unveils-2009-plans.aspx

http://www.nahb.org/builderremodelerdirectory

http://www.car.org/newsstand/crem/current-issue/october2008/235686/

INVESTING IN THE DOWNTURN

INVESTING IN THE DOWNTURN

The 2009 Emerging Trends in Real Estate report released by the Urban and Institute and PriceWaterhouseCoopers LLP, suggests that real estate investors just sit and wait right now – soon opportunities will surface at big discounts. The first best batch of opportunities may not be in actually property, but in buying discounted loans and recapitalizing distressed borrowers and investing in maturity defaults, construction loans, or taking mezzanine positions and equity stakes in properties.

Other advice includes investing in publicly held REITs that will lead the market’s recovery, focus investments on “global pathway” markets — 24-hour coastal cities like Seattle, San Francisco, Los Angeles, New York and Boston.Other quick-hit suggestions from respondents in the ULI/PriceWaterhouseCoopers survey:

· Go green. Cutting energy and other operating cost is likely to be a growing priority for both landlords and tenants.

· Buy or hold multifamily; hold office. Hold hotels, buy residential building lots, but be prepared to hold.

· Purchase distressed condos in urban areas near transit.

· Focus on neighborhood retail centers with strong grocery anchors and chain drugstores.

http://www.costar.com/News/Article.aspx?id=41A9DE2D4E098EDEFBB56A05FBBB79A3

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

WHY COMMERCIAL PROPERTIES ARE BUYING INTO GREEN

Now that we’re living in a green age, we know that buildings are responsible for 40% of emissions - and the upside of this statistics is that it presents an enormous opportunity for builders. Even though the construction sector continues to struggle, sustainable building is growing at a 30% annual rate, hands down the fastest-growing sector in the building industry, noted David Gottfried, CEO of Berkeley, CA-based Regenerative Ventures and a founder of the U.S. Green Building Council. “The growth in this world right now is green.”

The latest reports confirm this trend, as California total nonresidential construction activity continued to slide in October with permit values declining by -35.5% to $1.3 billion (year-over-year), according to the Construction Industry Research Board. During the ten-month period of 2008, nonresidential permit values totaled $16.9 billion – a decline of -10.2% from the comparable period in 2007.

While commercial sectors such as industrial and office are greening to cut costs and attract hipper clients, retailers have an added benefit. Retailers are strongly adopting green commercial, because it results in net profits, observed Joseph Feldman, managing director and senior research analyst Telsey Advisory Group, noting that the pioneering ‘green’ Wal-Mart in Lawrence, KS, posted higher-than-average sales for the chain. Target has started placing motion sensors in their stores that will dim lights in unoccupied aisles. The Gap and the Limited also are making efforts at energy efficiency, with the latter replacing roofs at three distribution centers to make them more energy efficient.

Even comparatively small efforts, such as Lowes’ decision to replace all of the lights in its stores with energy-efficient models, add up over time. “It’s relatively easy to become green,” Feldman said, noting that “green” retailers “mostly are the leaders in their spaces.” But the extra interest could be a double-edged sword.

That is supported by the growth of the USGBC, and the soaring interest in LEED certification or equivalents worldwide, Gottfried said. LEED is now developing a specific designation for retail; currently retail stores and shopping center developers can apply under the new construction or existing building standards. The standard will be up for member ballot this month, with a market launch expected in spring 2009.

The interest in standards also is expanding worldwide, with 13 countries–including India, Mexico, Brazil, Japan and Australia–now having green building councils. Another 50 nations are creating councils.

“It’s a United Nations of councils,” Gottfried said. Even the Chinese government is trying to impose more green regulations on its manufacturers, Feldman reported.

Info courtesy of

http://www.globest.com/news/1296_1296/insider/175575-1.html

http://laedc.org/eedge/index.html#4

The MultiUnit Market is Still a Good Investment – Buy Some

The MultiUnit Market is Still a Good Investment – Buy Some

The multiunit market is one of the few bright spots on the current real estate landscape. The apartment rental market—multifamily housing—continues to benefit from weak home sales and the foreclosure exodus. Multifamily vacancy rates are forecast to remain stable at 5.8 percent through 3^rd quarter 2009.

According to the National Association of Realtors Commercial Real Estate Outlook, multiunit market rents will continue to grow in 2009. As you’ve notice, commercial lending has all but halted and with the exception of cash transactions. Investment activity in commercial real estate sectors is nearly at a standstill, while job losses are curtailing the demand for owner/user space. Default rates remain low.

“Although access to residential mortgages has improved, the opposite is true for commercial loans,” confirms Lawrence Yun, NAR chief economist. “We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space.”

Markets with the tightest vacancies include San Diego, northern New Jersey, and Boston, with vacancy rates of 4.2 percent or less. Areas with the highest vacancies include Jacksonville, Fla., Phoenix, and Orlando, Fla., with vacancies of 8.5 percent or higher.

Average rent is projected to grow 2.9 percent in 2008 and 2.8 percent next year.

http://www.realtor.org/RMODaily.nsf/pages/News2008121701?OpenDocument

CHICAGO NEWSPAPER MOGUL PREDICTS SPRING 2009 RECOVERY

CHICAGO NEWSPAPER MOGUL PREDICTS SPRING 2009 RECOVERY

Financial mogul Sam Zell, owner of the Tribune Co., recently told an Israeli business conference that the U.S. real estate market will be in recovery by spring 2009.

Zell blamed the current crisis – at least in part – on ill-considered decisions. Optimistically he shared the fact that the U.S. population is growing and with fewer than 600,000 building starts in 2008, a million fewer than any of the last 10 years, demand for housing will rise.

“We are living through our first Blackberry recession where, literally, information is instantly disseminated around the world and people, in effect, respond to it, perhaps, often without any particular caution or attention,” he said.

Immediate communication gives new meanings to the terms buy and sell.

FYI…Zell’s Tribune Co., declared Chapter 11 bankruptcy last week.

Source: http://www.realtor.org/rmodaily.nsf/pages/News2008121505