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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Commercial Property Sector Update
Posted on 10/25/2006 00:42 AM | Link | Post Comment
1. Retail:
Rents at shopping malls rose in the second quarter at their fastest clip in nearly three years, and strip malls posted solid increases as vacancies decreased in both sectors, a survey shows.
Strip malls benefited from a lull in new centers opening. While 4.8 million square feet of new space opened in the quarter, space of 10.8 million feet is set to come on line in the fourth quarter.
Still, strip-mall rents rose 0.9% to $18.65 a square foot from the first quarter. Shopping-mall rents rose 1% to $38.89 a square foot, the survey showed -- the biggest quarterly rise in nearly three years.
2. Apartments:
Many multifamily real-estate investment trusts have been ramping up their development pipelines, but increasingly are building in only a handful of U.S. cities along the coasts.
About 96% of the new apartments being built by REITs at the end of the fourth quarter were concentrated along the East and West coasts, according to a Feb. 28 report by Morgan Stanley. That compares with about 87% in the fourth quarter of 2004.
United Dominion, based in Colorado, now owns apartments in 35 markets around the U.S., Chief Executive Thomas Toomey says. "The fundamentals are so good across the country," he says, "that if you are faced with 35 markets you are going to have more opportunity than if you are faced with just five."
click on to make larger:
Rents at shopping malls rose in the second quarter at their fastest clip in nearly three years, and strip malls posted solid increases as vacancies decreased in both sectors, a survey shows.
Strip malls benefited from a lull in new centers opening. While 4.8 million square feet of new space opened in the quarter, space of 10.8 million feet is set to come on line in the fourth quarter.
Still, strip-mall rents rose 0.9% to $18.65 a square foot from the first quarter. Shopping-mall rents rose 1% to $38.89 a square foot, the survey showed -- the biggest quarterly rise in nearly three years.
2. Apartments:
Many multifamily real-estate investment trusts have been ramping up their development pipelines, but increasingly are building in only a handful of U.S. cities along the coasts.
About 96% of the new apartments being built by REITs at the end of the fourth quarter were concentrated along the East and West coasts, according to a Feb. 28 report by Morgan Stanley. That compares with about 87% in the fourth quarter of 2004.
United Dominion, based in Colorado, now owns apartments in 35 markets around the U.S., Chief Executive Thomas Toomey says. "The fundamentals are so good across the country," he says, "that if you are faced with 35 markets you are going to have more opportunity than if you are faced with just five."
click on to make larger:
Of course, coastal cities, where home prices have appreciated the most, lead the list of apartment rental demand, as shown in the chart above.
3. Office: Office tenants in cities ranging from New York to Los Angeles are willing to pay more in rent to be located in the central business districts, or CBDs, according to a new study by Richards Barry Joyce & Partners LLC. But a CBD location can be a bargain in other cities such as St. Louis and Detroit, where suburban offices command higher rates.
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