Archive for March, 2011

Pension Funds Learn a Tough Lesson

Sunday, March 20th, 2011
When the California Public Employees’ Retirement System, America’s largest public pension fund, announced in February that it would radically change the way it invests in real estate, shock waves rippled throughout the institutional investing community.
Known by its familiar shorthand as CalPERS, the fund has long been considered a leading barometer of major pension fund trends. Its movements are closely monitored, and for good reason. Sacramento-based CalPERS controls some $228 billion in total assets under management, with a real estate portfolio valued at more than $16.6 billion as of Sept. 30, 2010.
Under the direction of CalPERS’ chief investment officer Joseph Dear, the fund’s strategy is to reduce risk and focus on steadier and more predictable income streams from its future real estate investments.
While CalPERS is certainly the largest and most visible fund to adopt such a strategy, others are joining the movement. In November, the $34.3 billion Maryland State Retirement System announced its own plan to invest in more conservative real estate assets.

See the entire story from National Real Estate Investor here.

10 to Watch in 2011

Sunday, March 13th, 2011

National Real Estate Investor magazine has just posted its annual “10 to Watch” feature, which names the 10 executives to watch in commercial real estate in 2011.

Check out the photo gallery here, and the full story here.

Sovereign Wealth Funds Top $4 Trillion

Sunday, March 13th, 2011

Talk about buying power… a new report finds that the world’s Sovereign Wealth Funds have now amassed more than $4 trillion in assets under management. That’s trillion with a capital “T”.

This is important to note because the SWFs continue to be a leading source of capital for the global commercial real estate market.

Check out the report here.

Tax Revenues, Retail Sales on the Up?

Saturday, March 12th, 2011

I like where Robert Bach is coming from with his latest installment of “Good News Friday,” and without a doubt Friday March 11, 2011 was a somber day when we could all have used a bit of good news to lighten the mood.

Bach is a senior vice president and chief economist with Grubb & Ellis, and has a knack for finding the silver lining in the commercial real estate industry, usually just when it is needed the most.

Here is Bob’s take:

State tax revenues are rebounding according to a recent report from the Nelson A. Rockefeller Institute of Government. Revenues increased 4.5% in the third quarter and 6.9% in the fourth quarter of 2010 compared with the same quarters in 2009.

 The fourth quarter performance is the strongest growth since the second quarter of 2006, indicating “new strength in state tax revenues.” States will still need to make budget cuts, but increasing revenues will mitigate the deficit problems.

 Retail sales increased a hefty 1.0% last month while core sales, which exclude autos and gas, increased 0.6%. Compared with a year ago, total and core sales increased 8.9% and 5.1%, respectively. Gas prices will be an issue going forward, but consumers are active again.

 Thanks for the Good News, Bob.

$8,300/sf Sets New U.S. Retail Record

Saturday, March 5th, 2011
A Spanish retailer just forked over a whopping $8,361 per sq. ft. for the former NBA Store on Fifth Avenue in New York City, setting a new record for most expensive retail building in the United States.
The deal eclipses the previous pricing record of $8,000 per sq. ft. set in 2008 for another Manhattan property at 713 Madison Avenue.
The total price tag of $324 million for the 38,750-sq.-ft. store represents a “new pricing benchmark” for a retail condominium on the island of Manhattan, according to Savills LLC, which represented the buyer, Spanish retailer Inditex Group.
The property is located at 666 Fifth Avenue, at the northwest corner of Fifth Avenue and 52nd Street. The trophy retail site is near Rockefeller Center, the Museum of Modern Art (MoMA) and St. Patrick’s Cathedral, and is on the same block as the Uniqlo and Hollister flagship stores.
Inditex Group is the purveyor of fashion brands Zara, Pull & Bear, Massimo Dutti, and Stradivarius, among others.
As part of the transaction, New York-based real estate investment banking firm Savills worked with the seller to negotiate the early termination of the NBA lease, allowing Inditex to move forward with plans for a new flagship Zara store.
“This deal proves that prime retail real estate remains in strong demand from investors and operators alike and that Savills has the international reach, expertise and discretion needed to coordinate and conclude sensitive and high value transactions,” said John D. Lyons, CEO of Savills LLC.
“There is no better retail in Manhattan and our client has reinforced this through their acquisition,” added Borja Sierra, CEO for Savills Europe, who lead the transaction on behalf of Savills. “Rather than committing to a $300 million long-term lease commitment, our client has clearly endorsed the Fifth Avenue shopping district by demonstrating it is prepared to maintain long-term ownership on the street.”

Skyscrapers on the Rebound

Saturday, March 5th, 2011
Remember all of the pundits who predicted the death of the modern skyscraper immediately following the 9/11 tragedy?
Well, apparently developers and architects alike have ignored those dire warnings. In 2010, no fewer than 66 new skyscrapers around the globe opened their doors, according to the Council on Tall Buildings and Urban Habitat (CTBUH). That figure broke the previous record of 48 new skyscrapers completed in 2007.
Even more surprising, the CTBUH predicts that another 97 new buildings over 650 feet tall will open in 2011. And 20 of those buildings will be nearly 1,000 feet high.
The tallest building expected to be completed this year is the 1,972-foot-tall Makkah Royal Clock Tower Hotel in Saudi Arabia.
In fact, the U.S. share of the skyscraper market has declined over the past few years, with only one of the buildings now underway – One World Trade Center in New York – actually located in the U.S. Today, most of the skyscrapers being built are in Asia and the Middle East.
Here are the world’s tallest buildings now under construction according to the CTBUH:
1. India Tower; Mumbai; 2,362 feet, 125 floors; Foster and Partners
2. Ping An International Finance Center Tower 1; Shenzhen; 2,165 feet, 115 floors; Kohn Pedersen Fox (KPF)
3. Shanghai Tower; Shanghai; 2,074 feet, 128 floors; Gensler
4. Makkah Royal Clock Tower Hotel; Makkah, Saudia Arabia; 1,972 feet, 95 floors; Dar Al-Handasah Architects
5. Goldin Finance 117; Tianjin; 1,959 feet, 117 floors; P&T Group
6. Doha Convention Center Tower; Doha; 1,808 feet, 112 floors; Murphy/Jahn
7. One World Trade Center; NYC; 1,776 feet, 105 floors; David Childs/SOM
8. Chow Tai Fook Centre; Guangzhou; 1,739 feet, 116 floors; KPF
9. Dalian Greenland Center; Dalian, China; 1,699 feet, 108 floors; HOK
10. Pentominium; Dubai; 1,692 feet, 122 floors; Aedas
11. Burj Al Alam; Dubai; 1,673 feet, 108 floors; Nikken Sekkei
      Qatar National Bank Tower; Doha; 1,673 feet, 101 floors; KEO/Peddle Thorp Architects

Be sure to check out the cool CTBUH database, which includes information on all of the existing and proposed tallest buildings in the world.

Life Without Fannie & Freddie?

Friday, March 4th, 2011

There is a great story in today’s New York Times on the potential demise of Fannie Mae and Freddie Mac, and the impact on American life as we now know it. It’s interesting reading. See it here.