NAI Global Partners With AuctionPoint

Earlier this summer, NAI Global announced that it has entered into an agreement with AuctionPoint to provide NAI agents with access to an online auction tool that empowers brokers to auction commercial properties online, under their name and brand. AuctionPoint realizes that the local broker is the key player in bringing together buyers and sellers, and is the first online auction platform built specifically for brokers.

AuctionPoint’s technology gives brokers the ability to customize auctions to handle a multitude of selling scenarios, from the most basic to the most complex. They also have the ability to set a date-certain window of time for interested parties to bid on the property, online and through AuctionPoint.

On NAI Global's blog today, Senior Vice President Patricia Faulkner interviews AuctionPoint CEO Joe Tang about AuctionPoint and current market conditions.

Is Commercial Real Estate the Next Storm?

Has the commercial real estate market reached bottom? Or do we have yet to see the worst? This is the question Denis O'Neill, an NAI NBS broker who specializes in the sale of retail properties and land, addresses in a column in today's Daily Journal of Commerce.

Here's an excerpt:

Just when it appears we finally have some good economic news, many investors wonder if another financial storm is brewing. The residential market, if not at the bottom, appears close to it. Though the number of residential foreclosures and loans 90 days past due are still rising in 2010, and unemployment is holding steady, few experts see significant additional drops in residential values on the horizon.

So is commercial real estate the next shoe to drop?

Of the $3.4 trillion in commercial debt outstanding, a congressional oversight panel in February estimated that $1.4 trillion will reach maturity between now and 2014; up to 50 percent is held by local banks. Residential defaults led the way, particularly development loans. With plummeting values and no income stream, these loans were the first to be turned back to lenders. Banks’ problem loans are near-term and dwarf the $380 billion of commercial mortgage-backed securities debt that matures from 2015 to 2017. Furthermore, the vast majority of bank exposure to these securities is held by large banks. The big banks have demonstrated the ability to both raise equity and generate profits.

Click here for the full article.

New Report Says CRE Industry is Leveling Off

A recent survey of senior real estate executives suggests that the commercial real estate market is leveling off, but uncertainty remains about how the recovery will play out.

The Real Estate Roundtable’s quarterly “Sentiment Survey” for Second Quarter 2010 was released this week, and provided some hope that commercial real estate has reached bottom. It also said more capital is available, but is limited by markets and property types.

Our friends at NAI Global posted this summary:

Of the 100+ senior real estate executives participating in the Q2 survey, 82% characterized market conditions today as better than a year ago (up from 73% in Q1), although only 17% said conditions are “much better.” The “Current Conditions” index hit a low point of 17 in Q4 2008 (during the near-collapse of U.S. financial markets); rose to 56 in the final months of 2009; and now stands at 74.

“Clearly, the sense of gloom that prevailed a year ago has eased, property values no longer seem to be in a freefall, and market participants are feeling more confident,” said Roundtable President and CEO Jeffrey DeBoer. “But, while sentiment is up, that’s not to say things are ‘good.’ Refinancing remains difficult for many and defaults are still rising, which means more pain ahead.”

In a sign that values may be leveling off, only 28% of those polled perceived asset prices today as lower than they were a year ago, compared with 57% in the previous quarter. Correspondingly, 46% said valuations today are better than a year ago, compared with only 22% in Q1. Looking ahead, 56% expect valuations to be “somewhat higher” a year from now and 35% expect them to remain “about the same,” compared to 42% and 35%, respectively, in the previous survey.

In another important metric, the Q2 survey shows “signs of life” in the debt and capital markets, although numerous respondents qualified their statements by saying improved availability is limited to certain parts of the market or types of properties (e.g., with positive cash flows). Of the 65% who said debt capital is more available today than one year ago, 27% characterized availability as “much better.” By contrast, only 19% of Q1 survey participants felt conditions were “much better” than a year earlier.

On the equity side, 76% said availability is better than one year ago (with 26% characterizing it as “much better”). However, the number of respondents predicting conditions will be better “one year from today” declined from 75% in Q1 to 66% in Q2, with a corresponding increase in the number who expect equity availability to remain “about the same.”

What do you think? Is your market seeing signs of life?

John's Incredible Pizza Coming to Portland

John’s Incredible Pizza, a family entertainment restaurant with ten locations in California, has leased space in the Portland metro area to open its first restaurant in the Pacific Northwest.

John’s leased 46,212 sf at the former Circuit City at Washington Green Shopping Center, 9180 SW Hall Boulevard, Tigard, Oregon. NAI Norris, Beggs & Simpson Real Estate Broker J.J. Unger and NAI Capital Senior Vice President Irwin Hyman represented the tenant. Hyman, out of NAI Capital’s Encino office, represents John’s in California, and through the NAI Global network teamed up with Unger when the company wanted to expand into the Pacfic Northwest.

A multitude of big box spaces have become available in the last two years with the closures of chains like Circuit City, Linens ‘n Things and Joe’s Sports, Outdoors & More.

“Landlords can find interested tenants, but in this market it’s been a challenge putting together a deal that works for both parties, and most importantly, finding a tenant that’s a fit for the merchandising plan of the shopping center,” Unger said. “It is a great win for Portland to gain such a unique new tenant from out of the area.”

The restaurant is expected to open in the First Quarter of 2011 and will create about 110 full- and part-time jobs.

John’s chose Portland to expand because it saw the opportunity to fill a niche that’s traditionally been underserved for entertainment, Unger said. The restaurant also believes it will be a good fit because of the weather – rain or shine, it will give families an indoor entertainment option and be a venue with the capacity to cater to large corporate functions. Though the Portland location is John’s Incredible Pizza’s first foray out of California, it has plans for more.

“We are pleased to bring our family-focused restaurant and entertainment facility to Portland,” said John’s Incredible Pizza Owner and Founder John Parlet. “We have been eager to expand our concept outside of California and found the perfect site in Portland and are excited to become an integral part of the community.”

John’s Incredible Pizza offers an affordably-priced all-you-can-eat buffet. It serves pizza, including classic varieties and signature ones like spicy peanut butter, macaroni and cheese, and cheeseburger pizzas. It also has a full salad bar, soup, pasta, and dessert buffet. It has a number of themed dining rooms, and an array of rides and games, including carnival-style rides and video and ticket-dispensing games. John’s hosts birthday parties, business events, lock-ins and more.

NAI Global's Global Market Report Details Challenging 2009

Commercial real estate markets around the world experienced the full impact of the global economic recession in 2009, according to the 24th annual Global Market Report released by NAI Global. Rising vacancy rates and declining rental rates were evident in virtually every market sector and geography, with weak demand and a growing supply of sublease space further eroding market fundamentals.

After a turbulent 18-24 months since the market peaked, 2009 marked a year where transaction volume nearly came to a standstill as corporate tenants waited for clear signs of recovery and investors remained on the sidelines waiting for signs the bottom has been reached. As the year progressed, government intervention in the form of stimulus packages in the U.S., Europe and parts of Asia took hold and by year’s end many markets had begun to stabilize. However, with U.S. unemployment topping 10%, consumer demand and spending power at their lowest levels in decades and international manufacturing and trade proceeding at a crawl, the global recovery will take some time to truly stimulate economic growth.

“The past year was extremely challenging for commercial real estate, and we don’t anticipate much new demand in 2010,” said Jeffrey M. Finn, President & CEO of NAI Global. “We’re working with our corporate clients to help them take advantage of the current tenants’ market to reduce their long-term occupancy costs. Many tenants are able to negotiate more favorable lease terms today in exchange for a longer commitment. This ‘extend and blend’ practice is a trend we see continuing well into the next 18-24 months.”

Investors who have been sidelined by economic uncertainty will see tremendous acquisition opportunities in the coming year as banks and financial institutions clean up their balance sheets and move more aggressively to dispose of commercial real estate loans and financially distressed real estate assets, said Finn.

“The recession has been over for six months and job growth is just months away, but the fact remains it will be impossible to predict what will happen next,” added Dr. Peter Linneman, NAI Global Chief Economist and Principal at Linneman Associates. “With significant tax, healthcare and regulatory proposals still in the offing, there is little clarity as to the ultimate outcomes or costs. We’re concerned with commercial mortgage delinquency rates as they have been on the rise and could keep the commercial real estate industry in neutral for several more months.”

NAI Global is one of the largest real estate services providers worldwide. Headquartered in Princeton, New Jersey, NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries. Now in its 24th year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in over 200 property markets worldwide. To obtain a copy of the full report, contact psetaro@naiglobal.com.

Portland Industrial, Retail Vacancy Decreased During Fourth Quarter, NAI NBS Reports Show

NAI Norris, Beggs & Simpson has released its Fourth Quarter 2009 quarterly reports for office, industrial, retail and multifamily commercial real estate, as well as its economic report.

Office vacancy increased slightly to 11.81% in Central City and 20.95% in the suburban areas. The Northwest submarket saw some activity – the 87,976 sf redevelopment Soho 321 delivered, and a few leases were signed at Machine Works. Vancouver vacancy was flat at 18.56%, with positive absorption of 22,488 sf.

Industrial vacancy decreased to 14.85%, with 55,308 sf absorbed. This was the first positive absorption since Third Quarter of 2008. A number of sizeable leases were signed in North/Northeast, including MOR Furniture for Less leasing 156,000 sf at Kelley Point Distribution, and Rose City Printing & Packaging leasing 62,000 sf at Sandy Boulevard Business Park. Flex vacancy rose slightly to 16.16%.

The retail market saw some improvement this quarter as vacancy decreased more than half a percentage point to 7.4%, with 349,919 sf absorbed. The 140,000 sf Cascade Station Target delivered, and better than expected holiday retail sales results were encouraging.

Multifamily vacancy rose nearly a percentage point to 5.43%; a seasonal uptick in vacancy is to be expected, but this rise was more significant. Rents were largely flat. While multifamily permitting and construction is down, opportunities exist for developers to acquire buildable land at substantially lower prices. Yet barriers to development include lack of capital and uncertainty of future rental rates.

Click here for full reports.