Commercial Property News - November 2008 - (Page 12)

MARKET INTELLIGENCE DATA/ANALYSIS Visit www.cpnonline.com/datacenter for additional market data. EYE ON INVESTMENT $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Q3 2007 (national quarterly pricing, per square foot) Garden Apartment Mid-/High-Rise Apartment Warehouse CBD Office Suburban Office Strip Shopping Center Office Uptick No property type is immune to the impact of the economic downturn, but activity and pricing within the apartment sector, on a relative basis, has held up. Much of that can be attributed to attractive financing that is available through Fannie Mae and Freddie Mac, both now in conservatorship. Nationally, the industrial sector has seen a slowdown in investment sales, but markets on the coasts and especially those that remain active points of entry for goods are among the top performers. While central business district office properties pulled in the highest price per square foot in the third quarter, lenders remain hesitant about engaging in huge deals. Q4 2007 Q1 2008 Q2 2008 Q3 2008 Source: Real Capital Analytics Inc. • www.rcanalytics.com • 866-732-5328 Data is believed to be accurate but is not guaranteed, is subject to future revision and is based on properties & portfolios $5 million and greater. (national industrial data as of Q2 2008*) Absorption (000 SF) 2007 National 117,132 East 15,941 Midwest 23,088 South 46,146 West 31,957 Vacancy 2007 National 8.8% East 10.8% Midwest 9.5% South 10.3% West 5.7% 2008 F 52,047 7,285 13,747 25,079 5,935 2008 F 10.1% 11.4% 10.6% 12.3% 7.0% 2009 F 88,017 12,484 20,368 34,673 20,492 2009 F 9.5% 10.9% 9.9% 11.4% 6.7% 2010 F 113,360 16,922 25,986 39,699 30,753 2010 F 8.8% 10.4% 8.9% 10.6% 6.1% LEASING OUTLOOK Warehouse Woes Declining employment and an insecure economy have weighed heavily on U.S. national warehouse demand, sinking 2008’s to less than half that of the previous year. Housing and financial industry struggles have caused fundamentals in the West to go through extreme changes since last year, which reduced the region’s warehouse absorption by 80 percent. The sudden change in the leasing environment came as unwelcome news to developers, which have delivered product into vacancy rates that were 20 percent higher than expected. However, the severely constrained nationwide supply pipeline could improve absorption and vacancy levels in 2009 and 2010. While recovery of the Eastern and Midwestern warehouse markets in those years will exceed 2007 levels, the South and West will not return to last year’s highs during that period. *monthly chart cycles among office, multi-family and industrial Source: PPR • www.ppr.info • 617-426-4446 DIRECTIONS IN DEVELOPMENT 140 (change in U.S. construction starts) Supply Checkers U.S. commercial real estate construction starts have dropped 120 dramatically this year. National figures show double-digit declines from the second quarter of 2007 to the second quar- 100 ter of 2008 in all major property types, according to Reed Con80 structionTrak. That includes a more than 50 percent decline in apartment starts and an almost 75 percent drop in warehouse 60 construction. Liquidity challenges to date have prevented developers from obtaining financing, while economic uncertainty has 40 curbed prospective tenants’ willingness to commit to new proj20 ects. However, the lack of new supply is a positive indicator, as oversupply in a down cycle would exacerbate weak fundamen0 tals. The longer the credit crunch constrains development, the Apartment stronger recovery could be. (000s of Units) Source: PPR/Reed Construction Data Change -52.8% www.ppr.info • 617-426-4446 12 Commercial Property News • November 2008 • www.cpnonline.com 3 Months Ending Jul-07 3 Months Ending Jul-08 Office (MSF) -20.0% Retail (MSF) -42.3% Industrial (MSF) -73.3% Hotel (MSF) -27.7% http://www.cpnonline.com/datacenter http://www.rcanalytics.com http://www.ppr.info http://www.ppr.info http://www.cpnonline.com

Table of Contents for the Digital Edition of Commercial Property News - November 2008

CPN - November 2008
Contents
Starting Line
Buzzyworthy
Seniors Housing
Data/Analysis
Conferences
Through the Fog
CPN’s Top Cities for Investment & Corporate Relocation
Finance
International
Sustainability
CPN-Nielsen Claritas Special Report

Commercial Property News - November 2008