Seattle is where Amazon’s main headquarters is based and is known as a fairly tech savvy market. It is a perfect launch location to get some hands on experience in the retail sphere. Amazaon appears to be going the boutique route and stocking the shelves with only high margin and high-end items. Their intention is to mainly hustle their entire line of Kindle e-Readers and the Kindle Fire. They also will be stocking a ton of accessories such as cases, screen protectors, and USB adapters. GoodEReader) READ MORE…

Our annual Borrower Trends Survey, had more than 300 respondents this year, including both borrowers and lenders. Overall, borrowers are expecting to take out more loans and lenders are anticipating placing more debt. That, in turn, should lead to a further rise in investment sales volumes.

The biggest question remains the CMBS sector. In 2011, more than $35 billion in new issuance occurred. That was more than 2007, 2008 and 2009 combined. But it fell short of what some expected when the year began, thanks to some problems in the summer that led to a slow end to the year. In 2012, expectations are for issuance to rise to perhaps $50 billion. That would put the industry roughly on par with 2002, when $54.03 billion in issuance occurred. But it is a far cry from 2006 and 2007 when $202.69 billion and $230.17 billion in issuance took place, respectively. So there remains a big financing gap in the market.

On the other hand, life insurance companies, historically the most diligent commercial real estate lenders, had a record year in 2011. In the first three quarters alone, life companies placed $34.66 billion—a 71 percent jump from 2010 and a number greater than any previous full year figure. Life insurance firms have their sights set on placing another $45 billion to $50 billion in debt in 2012.

Commercial banks, the largest source of financing for the sector, also are in solid shape. Many firms anticipate placing more debt in 2012 than in 2011 and are increasingly willing to take on higher levels of risk.

Lastly, mezzanine financing is increasingly returning to the picture. That means borrowers facing lower loan-to-value ratios on senior debt (60 percent to 70 percent today vs. 75 percent to 85 percent at the market’s peak) will have options in building capital stacks that go beyond trying to raise additional equity.

Questions remain, however. How long will low interest rates last? Will austerity measures and government budget cutting slow the economy? How will the European sovereign debt crisis affect capital markets? Will commercial real estate fundamentals improve further? And there is the ever-present issue of Fannie Mae and Freddie Mac. Reform of those institutions would alter the financing picture for multifamily properties.

In the end, the picture for 2012 is one of a slow recovery. It will build on 2011, but don’t expect any miracles. (NREI) READ MORE…

In the West average retail cap rate dropped to 7.81%.

READ THE FULL REPORT HERE

The state-owned office complex, which the government bought in 1996 and tried to sell in 2008, is headed for the open market with an asking price of $25 million. It’s the priciest of a handful of properties the state is trying to shed to help reduce the projected budget deficit.

The complex is two office buildings and a parking garage, all connected by skybridge, along South 11th Street between Market and Broadway. 

However, many of the state tenants in the Rhodes don’t have traditional 10-year commercial leases. Many of the state leases are two-year renewables, tied to the state’s budgeting process.

The Rhodes Center comprises the former Rhodes Department Store on Broadway, built in 1903; a building on Market Street and a 1969 parking garage.  After Rhodes left downtown for the Tacoma Mall, the building became the University of Puget Sound Law School.

UPS then sold the building to Seattle University, which moved the law school to Seattle. The state bought the building in 1996, renovated it in 1999, and tried to sell it to the Tacoma Housing Authority in 2008.

That sale ultimately didn’t close because of THA’s concerns about deferred maintenance.

According the the State, The Market Street building needs a new roof; dozens of heat pumps replaced; and the lights use bulbs that aren’t made anymore.

Ground floor retail space on Broadway has been vacant for years, though the Sundance Cafe recently opened.  (Tacoma News Tribune)  READ MORE

Klahanie Shoping Center is approximately 66,895 square feet and sits on just over 7 acres.  According to CoStar, the center was 97% occupied at the time of the sale.

The report is based on surveys of 950 real estate professionals. Release of the rankings is a big day in the industry, and this year’s results were warmly embraced yesterday by a standing-room only crowd of more than 500 people in Seattle. 

Washington, D.C., is the top market, followed by Austin, San Francisco, New York and Boston. Following Seattle are San Jose, Calif., Houston, Los Angeles and San Diego. Most other areas of the country are a different story, according to Emerging Trends, which predicts real estate faces a “long grind” before recovery.

“We think [commercial real estate] is out of the water,” said Charles DiRocco of PwC. “We are breathing, but we are concerned about taking another dip.” One survey respondent said Seattle is “starting to fire on all cylinders.” That’s a turnaround from last year’s Emerging Trends, which summed up Seattle as “crawling out, but running on empty.”

Seattle has the top industrial and retail markets, the second best office market and ranks No. 3 for apartments. The weaknesses are the prospects for building houses and hotels; Seattle ranks seventh for both. Survey respondents said Seattle is blessed to have Amazon, Microsoft and Google, along with “other formidable employers” such as Boeing, Costco and Nordstrom. Emerging Trends also is high on the region’s infrastructure projects, including the tunnel that will replace the Alaskan Way Viaduct and transform the waterfront. “This city gets better and better,” states the report.

The Seattle panel talked about challenges and threats to the Puget Sound market. Jim Gallagher of Cornerstone Real Estate in Santa Monica, Calif., said foreign investors view Seattle as a secondary market and favor San Francisco and Los Angeles. Apartment developer Brian Fritz of AvalonBay Communities worries about an oversupply of new apartments. Douglas Howe, president of the Seattle office development firm Touchstone, said Seattle will see build-to-suit projects start next year but won’t see speculative development for five years.

Seattle’s strength is being “a talent magnet” among high-tech and other creative companies, Howe said. “I think we’ve got a good 10 years in front of us.” Gallagher predicts growth will continue in the region’s urban cores. Employers know that to attract talent they must be in lively, walkable areas where people want to live. “Increasingly convenience counts as more people shy away from car-dependent places,” the report states.  (Daily Journal of Commerce)

Average US retail capitalization rates were effectively flat in Q2 2011 at 8.14% (after we revised Q1 from 7.79% to 8.16%). It is unclear what impact the recent global bond market turmoil will have on real estate as of this writing. We expect some upward pressure on cap rates, at least in the short term. The data is from the CBRE Valuation & Advisory Services (VAS) database from 2003 through Q2 2011.

CBRE Retail Vaulation Group measured increases in the East, Midwest and West, and a decrease in the south. Average rates remain near Q4 2008 levels. The highest quality institutional quality retail centers and net leased investments (such as Walgreens, McDonalds, etc.) continue to achieve significantly lower cap rates than market averages.

The data points used are confirmed closed transactions, adjusted for assumed financing, and reflect overall market trends. Contact a local CBRE appraiser for a detailed overview of a specific market.

US Retail :: Cap Rate Trend – Quarterly Average

Source: CBRE

For months market watchers have been waiting for this deal. It will result in South Puget Sound’s second significant industrial development in what has been a very slow three years. Both of the new projects are in the Hawks Prairie area of Lacey and have come a year after the city lifted its long-time ban on distribution centers larger than 200,000 square feet.  Earlier this year, Teutsch completed a $15 million build-to-suit industrial facility and headquarters on 12.5 acres for Harbor Wholesale Grocery, which moved from Tumwater.

Lifting the ban was expected to alter the makeup of the South Puget Sound’s industrial market, and the two Hawks Prairie deals show that it has. When the moratorium was in place, companies were moving south of Lacey despite being farther from the port.  (DJC) READ MORE…