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Federal Reserve ready to dispose of empty downtown building

GardnerGlobal — Wed, 18 Apr 2012 20:52:07 +0000

The Federal Reserve Bank of San Francisco, whose bid to sell its old downtown Seattle building to developers was stymied two years ago by historic-preservation advocates, is turning it over to the GSA for sale or other use.

The Federal Reserve Bank of San Francisco, whose bid to sell its old downtown Seattle building to developers was stymied two years ago by historic-preservation advocates, has decided to transfer the property to another federal agency for disposal.

But the transfer to the General Services Administration, the government’s real-estate arm, doesn’t necessarily mean the empty, 62-year-old building will be preserved.

“It continues to leave the door open” for demolition, said Art Skolnik, a former state historic preservation officer who heads a committee that has fought to save the building on Second Avenue between Madison and Springs streets.

GSA spokeswoman Stephanie Kenitzer agreed: “At this point there are no restrictions on disposal of the property,” she said.

The building could be sold if no government agency wants it, according to GSA rules.

The Federal Reserve, which moved its regional office to Renton in 2008, agreed to sell the building to a developer after city officials decided it didn’t qualify as a historic landmark.

But Skolnik’s committee challenged the sale in court and in 2010 a federal judge blocked it, ruling the Fed had violated procedural requirements of environmental and historic-preservation laws.

The building has since been nominated for the National Register of Historic Places by the state Advisory Council on Historic Preservation.

-Seattle Times

Hansen buys rest of Sodo property needed for sports arena

GardnerGlobal — Fri, 13 Apr 2012 00:44:12 +0000

Chris Hansen, the hedge-fund manager who wants to bring a basketball and hockey arena to Sodo, says he has locked up the remaining property needed for the arena, and the sales should start closing this week.

Most should close within the next three months, the San Francisco investor said late Tuesday.

Hansen also revealed for the first time that he is buying “a considerable piece” of the block just north of the arena site, and is considering ancillary uses there. He wouldn’t identify the properties or say more about the plans for them.

Some possible uses could include parking, a team practice facility or a team store.

Hansen also said he could buy still more Sodo property before he’s done.

The proposed arena site is between South Massachusetts and South Holgate streets, First Avenue South and the Burlington Northern railroad tracks, and is bisected north-south by Occidental Avenue South. Hansen purchased the property on the east side of Occidental in December.

There are seven parcels, with four owners, on the west side of Occidental. Hansen said all seven were either under sale contract or otherwise under his control when he unveiled his arena plan in February.

He wouldn’t say what he has agreed to pay for the properties, which total about 2.3 acres.

But he paid $21.6 million for the 3 acres on the east side of Occidental, or about $163 per square foot.

If the negotiated prices for the seven properties are similar, Hansen could be on the hook for an additional $17 million or so. That would be more than triple the per-square-foot price that three of the parcels fetched when they were sold less than 18 months ago.

While declining to talk numbers, Hansen did say that “we understand we’re taking a lot of financial risk, because we don’t have a done deal with the city yet.”

Hansen and city and county officials are negotiating an agreement to cover cost sharing and other details of the proposed $490 million, 18,000-seat arena for NBA and NHL teams. Hansen wants taxpayers to pitch in $200 million in construction bonds, which he says would be repaid by revenue from the arena.

Once an NBA franchise is obtained, the city would buy the land from Hansen as part of that taxpayer contribution.

The arena-site properties Hansen is buying include the Showbox SoDo theater, several warehouses and a barbecue restaurant.

The proposed arena would require the city to vacate the stretch of Occidental that runs through the site. Hansen declined to discuss the status of that proposal, as did Aaron Pickus, a spokesman for Mayor Mike McGinn.

“Details like that are kind of wrapped up in the overall negotiations,” he said.

Hansen said the additional properties he is buying are on the block north of Massachusetts between First and Occidental, across the street from the Safeco Field garage.

He wouldn’t say how many of those he has under contract.

-Seattle Times

How Affordable Is America’s Affordable Housing?

GardnerGlobal — Wed, 11 Apr 2012 23:01:46 +0000

The trouble with money these days is that it often moves faster than there are right ways to spend it.

That said, we see a big risk for a capital-challenged majority of multifamily industry players in the community’s completely obsessive focus on the claim that “apartments are America’s affordable housing.”

Again, the problem is one of velocity.

Multifamily industry leaders may in fact have a valid point that apartments—from various vantage points, including the very important one where households, companies, localities, nationalities, and continents are in a massive mode of deleveraging from the crush of debt—are a more sustainably affordable solution to housing Americans. Renting saves a household a truckload of up-front costs, taxes, and a number of other monthly obligations that go with the homeownership turf.

For more than one in three households, renting is the right thing, and will be.

But that’s a point that may become hollower and hollower. The reason?

Simply put, a more affordable solution to housing Americans may not be the solution Americans pick.

What, after all, do you make of all the CoreLogic data that say that homeownership is less expensive than renting in 98 of the largest metropolitan areas?

Thing is, for multifamily right now, capital’s impetus is on autopilot, running faster than there are sound, sustainable, strategically mapped new multifamily communities headed to go in the ground.

Meanwhile, revenue management, like lightning in a bottle, is stretching rent tolerance points to their elastic limit and beyond, in some cases, already. Remember, household incomes are growing, but only in broad brushes, as this New York Times article shows—most of the income increases gained since the downturn have gone to the wealthy, not to the 99 percent.

All this as a way to say, “big data” may be mission critical to resetting the Average Joe multifamily businesses to where they can become more than a “lumpy” business model. But revenue management needs a very human dimension to work as a checks-and-balances system, just so that the algorithms don’t “kill the golden goose” of consumers needing America’s affordable housing to actually be affordable.

-Multifamily Executive

Rent vs. own: A rhetorical reality check

GardnerGlobal — Mon, 09 Apr 2012 18:10:11 +0000

Author Jane Hodges offers advice about what to think when you hear from well-meaning friends as you make the call about where and how you are going to live.

Deciding whether to rent or buy is challenging for many Americans now, especially those who came of age during a boom and waited for prices, interest rates and foreclosure inventory to improve, as they appear to have now. With new apartment construction going up, there are signs that rent prices could rise.

So, should you rent or buy? Ultimately, the decision hinges on:

• How long you plan to stay in one place (the longer the better if buying).

• How much you plan to put down (the more the better if buying).

• How your credit score looks (the better the better in both cases).

It also depends on your expectations for how much you ought to spend on housing and what your choice does to your overall financial picture — because if what you pay to get into your new housing wrecks the rest of your financial life, perhaps it’s not worth it. (See sidebar.)

Then, of course, you’ll have to tune out a lot of rhetoric from well-meaning friends and family and commission-driven professionals about what to do.

Here’s what you might hear — and what to think about when you hear it.

“YOU SHOULD BUY!” arguments

Claim: Owning a home is vital to the American dream!

Consider: The American Dream, some cultural observers and historians argue, has become an excuse for Americans to overstretch financially, for the U.S. to live in a perpetual red it can’t escape, and for people to buy not just more home than they can afford but more everything than they can afford. Does owning a place make you more American?

Claim: Owning your home is always a great investment!

Consider: How great an “investment” your home is depends on how long you stay, how much you put into it, and when you happen to buy and sell. In recent years, buyers would snap up homes with plans to move in four or five years, then eight years, then 10 years. Will you stay a decade?

Claim: Homeownership makes for better communities!

Consider: Some research suggests homeowners are more likely to participate in civic activities, voting and volunteering. But some think otherwise: Richard Florida, author of “The Great Reset,” points to data suggesting high homeownership rates in specific communities have presaged higher rates of unemployment in them because when a local economy falters owners can’t sell and move for work.

Claim: You’re making a good living and are a grown-up, so you should own.

Consider: The average first-time buyer in America is typically in their 30s, according to National Association of Realtors data. Buying may seem like a way to accelerate adulthood. But if your income and financial position haven’t hit their groove, or may change drastically, ask yourself if you’re ready.

Claim: Owning a home is a forced savings plan.

Consider: There’s some merit to this argument: If you buy a home you can afford, maintain it properly (and/or invest in remodeling and repairs to sustain or boost its value), develop equity through either a big down payment or staying a good long while, and sell it in a decent market, you will likely make some money when you exit.

That’s an awful lot of “ifs,” isn’t it? Most first-time buyers make far less than a 20 percent down payment, and many don’t stay long before moving. Own if you want, but consider the “savings” a small, not-guaranteed bonus rather than a sure thing.

Claim: Homeowners get special tax deductions and perks!

Consider: Homeowners do get a variety of tax deductions, which offset the costs of owning, ranging from mortgage interest to property taxes. However, as politicians grapple with how to fix the U.S. housing problem, home-related tax deductions may be reduced or erased, especially for higher earners who, some research shows, are the owners most likely to use them.

Claim: Home prices are changing — get in while you can!

Consider: Everyone’s an amateur economist, right? If you’re interested in buying, acting solely on price behavior and ignoring your personal circumstances turn home buying into stock picking. If you’re not really committed to the lifestyle for the long haul, don’t treat your home buy like a stock buy.

Claim: Interest rates are shifting! You should pounce!

Consider: There are two kinds of interest rates: The “best-advertised” rates (i.e., if you have perfect credit and satisfy other criteria) and the “real” interest rate you’ll pay (i.e., add a few basis points here for imperfect credit, add a few there for your low down payment, etc.). Are you actually getting more home (based on a low interest rate) — or are you getting more loan because you don’t qualify for the best rates?

“YOU SHOULD RENT!” arguments

Claim: You need your flexibility — don’t get tied down!

Consider: If you’re new to the workforce, new to the country, or in complicated financial circumstances (ending a relationship, for instance) renting may be easier while you sort out your new landscape or if you’re unsure how you’ll live in a year or two.

If you really want to own, though, you could make it work if you apply foresight. Many would-be owners with lives in flux don’t mind the extra to rent out their place when they’re away or get roommates to make ends meet.

Claim: You can’t buy; you don’t have 12 months of income saved!

Consider: In an ideal world you could buy, invest, and save all at once, you may have to pick and choose your priorities as you balance the competing demands of adulthood. If you can afford to buy a place, maintain it post-purchase, and stash away emergency and retirement funds, then you’re probably in decent shape. Just don’t put everything into your housing costs.

Claim: Renting is cheaper than owning, the best way to start out.

Consider: Renting isn’t always cheaper than owning, not in some markets with low rental inventory or a glut of cheap for-sale homes.

Rents rise and fall with the economy and local employment picture, so each time you renew your lease you may pay more.

If you want to buy but keep your housing costs in the renting ballpark, you can buy in a cheap neighborhood or co-buy with a friend, partner, or family member for a monthly payment that trumps renting — albeit with maintenance responsibilities.

Claim: You’re single. What if you meet someone?

Consider: Single women have bought at a faster clip than single men for the past two decades, regardless of their relationship status. Men, it appears that when buying single you’re likely to view real estate as an investment (a place to flip, or where roommates help you pay the mortgage) or a sign it’s time to marry (a place to nest with a potential spouse). Does housing carve your relationship status in stone?

Claim: Rent because homeownership is a conspiracy!

Consider: Everyone has that Doomsday friend who equates homeownership with “the 1 percent.” But eventually everyone starts screening his calls. If you want to live in an owned home, can afford it, expect to be able to afford it in the future, and will enjoy it for years to come, don’t forgo these joys because your crank pal thinks you’re bowing to convention. How guilt-prone and paranoid are you?

Claim: I don’t miss the yard at all.

Consider: Renting’s biggest advocates are often former owners turned born-again renters. But dig below the surface and you’ll see that many owners who go reactionary are really on the rebound — lamenting the particular property they chose to purchase, the financing they used to buy or their own lack of realism about maintenance tasks and costs.

If you go into ownership with eyes open and an affordable mortgage, the rest of the ownership learning curve won’t be too bad.

Claim: Renting is the only option if your credit stinks.

Consider: What’s a “good” and “bad” credit score varies from one minute to the next. While scores below 600 are generally bad and scores in the mid-700s or north are typically great, the bell curve moves around a bit on what’s considered doable for lending purposes in the middle of the spectrum.

Low scorers can get loans — at higher interest rates — and then refinance them later. If buying with a higher-scoring partner, their good credit can offset bad credit. Low scorers can also “rent to own” a property. These options have pros and cons, but they challenge the myth that you have none.

Claim: Renters are healthier and happier than owners

Consider: One Wharton School of Business study revealed that while owners may regard their neighborhood more favorably than renters, they socialize less and weigh more.

It’s not surprising: Owning can be stressful. However, keep in mind that most owners band together in a kind of virtual and backyard fence brotherhood, sharing tools, tips, names of handy hires, and giving each other advice — it’s a new kind of community centered on different concerns.

-Seattle Times

Fed Blesses Banks’ Foreclosure-Rental Approach

GardnerGlobal — Fri, 06 Apr 2012 21:08:32 +0000

The Federal Reserve set out new polices for banks that decide to rent out foreclosed homes, endorsing a strategy for managing the huge number of distressed properties that have piled up during the housing bust.

The central bank said in a six-page policy statement Thursday that the Fed’s regulations permit the rental of foreclosed properties to tenants “in light of the extraordinary market conditions that currently prevail.” The policy clarified that banks that would otherwise be required to sell off the properties more quickly can turn to rental as a strategy.

Banks can do so “without having to demonstrate continuous active marketing of the property provided that suitable policies and procedures are followed,” the central bank said. The shift to rentals is a significant change in the way banks deal with properties that fall into foreclosure – if loan assistance programs don’t work.

Federal Reserve Chairman Ben Bernanke and other central bank officials have spoken publicly about the need to encourage banks to rent out foreclosures. “With home prices falling and rents rising, it could make sense in some markets to turn some of the foreclosed homes into rental properties,” Mr. Bernanke said in a February speech.

The central bank said that banks holding large numbers of foreclosures should establish detailed policies for renting foreclosures, including a process to determine whether the properties are safe to occupy and meet local building code requirements.

The Fed said banks should set up criteria by which properties are picked to be rental properties. The banks should establish plans that “describe the general conditions under which the organization believes a rental approach is likely to be successful,” the central bank said.

Last month, Bank of America Corp. announced a plan to allow homeowners at risk of foreclosure to hand over deeds to their houses and sign leases that will let them rent the houses back from the bank at a market rate.

In addition, Fannie Mae is selling 2,500 homes in eight metropolitan areas around the country. The government-controlled mortgage firm is selling the $320 million portfolio to investors, who would be required to turn them into rental properties.

-Wall Street Journal

U.S. home market pulls in more Chinese buyers

GardnerGlobal — Thu, 05 Apr 2012 20:32:02 +0000

China’s great wall of cash is pouring into the struggling U.S. property market, from multi-million-dollar mansions on the West Coast to venerable hotels on the East Coast.

Buyers from mainland China and Hong Kong are snapping up luxury homes, often paying cash, in major U.S. cities such as New York, Los Angeles and San Francisco. They’re coming by the dozens to buy foreclosed properties in downtrodden cities in Florida and Nevada. Chinese buyers are even starting to snap up pricey commercial buildings and hotels in Manhattan.

Chinese interest in U.S. real estate began climbing during the U.S. housing meltdown, when plunging property prices made the U.S. a magnet for global buyers. Today, interest is growing as a rising yuan — up more than 8% since mid-2010 — gives the Chinese greater purchasing power, and the mainland’s restrictions on property purchases encourages them to look overseas. With U.S. single-family home prices a third lower since 2006, the U.S. also compares favorably with other top markets for Chinese investment, such as the United Kingdom, Australia and Canada.

“For China, the world is an emerging opportunity,” saysAndrew Taylor, founder of Juwai.com, a real estate site based in Hong Kong that was launched in 2011 to match Chinese buyers with U.S. real estate. “We’re talking about a huge chunk of people with cash and the desire” to invest overseas.

In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24% from the previous 12 months, according to theNational Association of Realtors. Buyers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011, more than quadruple their investment in 2008, says Real Capital Analytics.

Those numbers likely understate Chinese investment, as investors may buy property under business entities they’ve set up in the U.S., says Patrick O’Neill, founder of ONeill Group, a Hong Kong-based company that helps Chinese buyers find U.S. property.

Roughly 40% of Chinese buyers want property in the U.S. as investments, while 60% are buying in anticipation of their children going to school here, or for business or immigration purposes, says Steven Lawson, chief executive of Windham China, a firm that helps match Chinese buyers with U.S. sellers.

Lily-Sui Zhang, 30, says her husband’s Beijing family bought a house in South Pasadena, Calif., last year so her three young children would have access to good public schools. The family thought investing in the U.S. was “probably more stable than in Beijing” due to concern about a Chinese real estate bubble, Zhang says.

Some Chinese buyers also see the U.S. as an attractive place to invest because on the mainland, Chinese never own land — they just lease it from the government.

While mainland China allows each citizen to exchange only $50,000 of yuan into foreign currency per year, wealthy clients often do business overseas and have offshore funds they can use to buy property, says Alan Liu, managing director of North Asia for Colliers International, a brokerage and real estate firm. The currency restriction doesn’t apply in Hong Kong, a special administrative region of China.

Hong Kong residents Lillian and Frank Yan say they bought a condo in Honolulu this year because U.S. property prices are relatively low compared with major cities in Asia. They plan to stay there two to four weeks a year, and rent it out the rest of the time.

“The majority of our equity is tied to the Hong Kong or Chinese economy, so we wanted to diversify our portfolio,” says Lillian Yan, 42.

A multitude of millionaires

China has more money to invest than ever. Mainland China now has 960,000 millionaires — defined as individuals with residences, private businesses and investable assets of more than 10 million yuan or $1.5 million, according to the Hurun Report, a Shanghai publisher of magazines for China’s wealthy.

Nearly half of those millionaires are considering moving or getting permission to reside overseas. Their top country of choice? The USA.

In the year ended Sept. 30, Chinese applicants accounted for 78% of the 3,805 EB-5 applications in the U.S., up from 35% four years before, according to government data. In that program, foreign investors can get permanent resident status, or “green cards,” in exchange for investing $500,000 or $1 million, depending on the part of the country, in ventures that create or sustain at least 10 jobs within two years of the immigrant investor’s admission to the U.S. as a conditional permanent resident.

Some lawmakers also see foreign investment as a way to boost the U.S. housing market.

Legislation proposed last fall by Sens. Charles Schumer, D-N.Y., and Mike Lee, R-Utah, would let foreigners get a three-year resident visa if they invest $500,000 in U.S. real estate, including $250,000 for a primary home. They’d have to live at least 180 days a year in the property and pay taxes here.

California dreamin’

The New York, Los Angeles and San Francisco areas are most popular with Chinese home buyers, according to Realtors and data from real estate website Trulia.

East West Bank, a regional bank heavily active in California with branches in China and Hong Kong, says U.S. home buying among mainland Chinese has been “stable” in recent years as buyers wait for prices in various markets to hit bottom.

“They want to buy at the lowest” price, says senior vice president Emily Wang.

In the affluent Southern California city of San Marino— where the median price of a home sold in January was $1.6 million, according to MDA DataQuick — Chinese buyers are looking for high-end homes in good school districts and neighborhoods likely to see stable home values, says Linda Chang of Coldwell Banker.

One of her recent mainland Chinese buyers paid $5 million for a 5,000-square-foot home in Pasadena that the family expects to occupy for one month a year, she says.

“They treat it like a hotel without room service,” says Chang, who estimates that a quarter of shoppers in the $3 million-plus market in her area are from mainland China.

Mainland Chinese also account for a third of the buyers at luxury home builder Toll Bros.’ new home development, The Heritage in Vista Del Verde in Yorba Linda, Calif., southeast of downtown Los Angeles.

In the San Francisco Bay Area, Realtor Stanley Lo of Green Banker real estate says mainland Chinese — a third of his clientele — are looking for homes priced at $800,000 and up. Most of his clients are Chinese business executives, who can afford second homes. They follow friends, relatives or work colleagues to the suburbs between San Francisco and the Silicon Valley.

One recent rainy afternoon, Lo showed a six-bedroom $4.5 million Hillsborough home to Lee Xiao Jun, from Hubei Province in China. Her husband works in manufacturing and makes frequent trips between the U.S. and China, so they want a home in a good location close to the San Francisco airport.

“The prices here are more reasonable than in China,” she says, standing under wood-beamed ceilings overlooking a garden terrace.

In New York City, mainland Chinese are increasingly paying cash for $20 million “trophy apartments,” says Pamela Liebman, CEO of The Corcoran Group, a residential real estate brokerage company.

Based on current trends — and the increasing numbers of mainland Chinese buyers — Liebman expects they’ll account for one in 10 uber-luxury buyers in the next year or two.

New York, New York

New York City is also popular with a growing number of Chinese investors looking for commercial property. Last year, China’s HNA Group, which owns Hainan Airlines, paid $265 million for 1180 Avenue of the Americas, a 23-story office building in Manhattan, and $126 million for the luxury Cassa Hotel and Residences near bustling Times Square.

Hong Kong billionaire Cheng Yu-tung’s family also bought five U.S. luxury hotels in 2011, including Manhattan’s iconic Carlyle, for $570 million. Chinese investors are looking to buy hotels as a growing number of mainlanders travel overseas, says Chris Brooke, chief executive of broker CBRE, Asia.

Yet, unlike the Japanese, who were criticized for overpaying for high-profile U.S. assets in the 1980s and 1990s, many Chinese investors “do not care about the image of a building and usually do not want to pay a premium for such image,” says Allen Wu, chairman of Wu & Kao law firm, which represents HNA Group.

The rising numbers of Chinese investors are hard for U.S. developers and real estate agents to ignore.

LA Urban Homes, which is selling a development of 125 new homes in Southern California’s San Gabriel Valley, recently added a Chinese language section to its website to lure the mainland Chinese, says President Jeff Lee.

Corcoran is working with partners in China to bring potential buyers to New York.

Last year, Corcoran brought one group of 11 Chinese buyers, four of whom bought properties. This year, it plans to do at least four such events, maybe six, Liebman says.

“Five years ago, developers were coming to me about opportunities to invest in China, and now, they’re coming to me to try to get Chinese to invest” in the U.S., says Patrick Randolph, a professor of real estate law at the University of Missouri-Kansas City and a co-director of the Real Estate Research Center at Peking University in Beijing.

Zhuang Nuo, president of SouFun International, a Beijing real estate company that brings dozens of mainlanders to the U.S. each year to tour new and foreclosed properties, says he expects the U.S. to remain the top choice for clients buying overseas.

“The U.S. is always the Chinese people’s dream,” says Zhuang.

-USA Today

China’s Biggest Commercial Real Estate Boom in 6000 Years Shaping Up in Guangzhou

GardnerGlobal — Fri, 30 Mar 2012 16:33:32 +0000

China’s Biggest Commercial Real Estate Boom in 6000 Years Shaping Up in Guangzhou

Most North Americans will stumble over the pronunciation, but Guangzhou, the third largest city in China, will be in the headlines regularly before the year is out. The city of 13 million residents is ushering in the biggest commercial real estate surge in its 6000-year history.

Despite current office vacancy of 12 percent that could balloon to 25 percent, big-name developers like Guangzhou R&F Properties Co. and Poly Real Estate Group Co., plan to add 18.3 million square feet (1.7 million square meters) of Class A space to the city’s bulging inventory this year.

The activity is unprecedented in this historic trading hub. It’s also a gamble with odds, some say, on which even Las Vegas bookmakers would not bet. There are several reasons for such gloom. Foremost is China’s current economy. It’s not as great as it was seven years ago.

China is targeting a gross domestic product growth in 2012 of 7.5 percent, down from 8 percent in 2005. Last week, China reported its biggest trade deficit in 22 years, along with the weakest January-February factory-production gain since 2009. Retail sales also trailed estimates of several economic yardsticks.

All bad news for the country as a whole and for Guangzhou specifically.

But the ever-optimistic developer brotherhood points to the thousands of construction jobs the new projects will create .and the new businesses that could surface to service the expected 120,000 workers in the new space.

Cushman & Wakefield data show that about 90 percent of the new space will be built in Zhujiang Xincheng, a zone twice the size of London that Guangzhou’s government earmarked as its new central business district almost a decade ago. Guangzhou R&F already has completed five office projects in the area.

Despite the calculated risks ahead in quadrupling the city’s prime office space sector, Guangzhou still has much going for it. The city, historically known as Canton or Kwangchow, hosts the annual China Import and Export Fair every April -a super bowl-like event among the country’s business communities.

Preparing for near-future grow, Guangzhou’s government in 2003 transformed

the Zhujiang Xincheng district into a financial center rivaling Shanghai and Shenzhen. That was followed two years later by a 200 billion Yuan (US $32 billion) plan to upgrade the whole city’s infrastructure.

Although banks have been slow to accept this zone as a branch site, export and domestic- industrial companies have been drawn to the district. The 6.6-square-kilometre district features the regional headquarters of China Mobile, the world’s biggest phone carrier by users; General Motors, the largest foreign automaker in China; and Tesco, Britain’s biggest retailer.

Even with the new office supply, rents in top tier buildings are expected to rise from strong demand by tenants.

Average monthly rent at Zhujiang Xincheng was 279 Yuan ($44) a square meter in the fourth quarter, compared with 255 Yuan ($40) a square meter at Tianhe, Guangzhou’s former central business district. That compares with 507 Yuan ($80) in Beijing and 414 Yuan ($66) in Shanghai. One square meter equals 10.76 square feet.

-World Property Channel

Touchstone plans Denny Triangle hotel/office project

GardnerGlobal — Fri, 30 Mar 2012 16:30:54 +0000

Seattle developer Touchstone has filed preliminary paperwork with city planners for a 13-story office and hotel complex in the Denny Triangle, a few blocks from Amazon.com’s proposed three-block highrise office complex.

Seattle developer Touchstone has filed preliminary paperwork with city planners for a 13-story office and hotel complex in the Denny Triangle, a few blocks from Amazon.com‘s proposed three-block highrise office complex.

Touchstone’s half-block site runs along Boren Avenue between Stewart and Howell streets. Touchstone already owns part of it — properties fronting Stewart that are occupied by two aging retail buildings.

The rest of the development site is parking lots owned by Diamond Parking.

The city’s Downtown Design Review Board is tentatively scheduled to consider the project April 24.

-Seattle Times

Home prices fell in January in most US cities

GardnerGlobal — Wed, 28 Mar 2012 18:46:29 +0000

WASHINGTON (AP) – Home prices fell in January for a fifth straight month in most major U.S. cities, as modest sales increases have yet to boost prices.

The Standard & Poor’s/Case-Shiller home-price index released Tuesday showed that prices dropped in January from December in 16 of 19 cities tracked.

The steepest declines were in San Francisco, Atlanta and Portland. Prices increased in Miami, Phoenix and Washington. Price information for Charlotte was delayed and therefore not included in the report.

The declines partly reflect typical offseason sales. The month-over-month data are not adjusted for seasonal factors.

Still, prices fell in 17 of the 20 cities in January compared to the same month in 2011. The group’s nationwide index of prices has fallen 34 percent since the housing bust and is now at 2002 levels.

The continued drop in prices suggests the housing market remains weak, even after the best winter for home sales in five years and steady improvement in the job market.

“Despite some positive economic signs, home prices continued to drop,” said David M. Blitzer, chairman of S&P’s index committee.

Eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa, Fla. – are now back at 2000 levels or earlier. Only Denver, Detroit and Phoenix posted year-over-year increases.

Analysts were quick to note that prices are expected to rise modestly throughout much of 2012.

“It’s going to be tempting to look at home price declines and see a still-faltering housing recovery, but that’s just not the case,” said Stan Humphries, chief economist for housing website Zillow.com. “The reality is that home prices and home sales will be moving” higher.

The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The January data are the latest available.

Some economists say sales increases could stop prices from falling further by early spring. Home prices tend to follow sales by about six months. When sales rise, prices rise, too, and an increase in prices would likely create a positive cycle.

Homes are the most affordable they’ve been in decades. And mortgage rates are just above record lows.

The job market is also getting stronger. The economy has added an average of 245,000 jobs per month from December through February. The unemployment rate has fallen to 8.3 percent, the lowest in three years.

Conditions are improving for those in position to buy a home. Still, many people can’t afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.

The biggest reason why prices are still falling is foreclosures, which are still high across the country. Foreclosures and short sales – when a lender accepts less for a home than what is owed on a mortgage – are selling at an average discount of 20 percent.

Foreclosure activity surged in February across half of U.S. states. The pace of foreclosures is increasing after all 50 U.S. states reached a $25 billion settlement last month with the nation’s five biggest mortgage lenders over foreclosure abuses. Many foreclosures had been stuck in limbo as the 16-month government investigation into foreclosure paperwork problems dragged on.

-AP

Apartment rents likely to keep rising through 2012

GardnerGlobal — Wed, 28 Mar 2012 18:38:18 +0000

Renters are paying more as vacancies shrink, but next year could reverse the trend, real-estate analysts say.

Apartment rents are rising in King and Snohomish counties and should keep inching up for the rest of the year, two leading research firms agree.

But that could change in 2013, they say, when a bumper crop of new projects is completed and the vacancy rate is likely to increase.

Average monthly rent for the first three months of this year was $1,094, up 1.7 percent from the fourth quarter of 2011, according to Apartment Insights Washington.

Dupre + Scott Apartment Advisors, whose methodology is different, pegged the average rent in March at $1,066, up 1.1 percent from the firm’s last report six months ago and nearly 5 percent from March 2011.

Tom Cain of Apartment Insights and Mike Scott of Dupre + Scott attributed rent increases to several factors: job growth, rising demand from young adults, little increase in apartment supply.

But the region is in the midst of its biggest apartment-construction spurt in two decades. Cain calculates more than 3,100 units in complexes of 50 or more units will be delivered this year, with another 5,500 coming in 2013.

Next year’s big bump in supply should make landlords “justifiably apprehensive,” Cain wrote. He said rents could start dropping — or at least begin rising more modestly — by late 2013.

Scott’s new-construction projections, which include complexes with 20 or more units, are even higher than Cain’s. Anticipated job growth alone won’t fill all those units, he said.

The vacancy rate, which Scott’s firm calculates at 4.2 percent, could climb to 6 percent by the end of 2014, he added.

But vacancies could remain low if employment growth exceeds expectations, Scott and Cain both said.

Apartment Insights calculated the two counties’ first-quarter vacancy rate at 5.21 percent, down a hair after an unexpected increase of more than half a percentage point in the fourth quarter of 2011.

“It seems like it’s stabilized,” Cain said.

But falling home prices and low interest rates could turn more renters into buyers, he added, and that could reduce demand for apartments.

Other highlights from the two firms’ reports:

• More than 80 percent of the apartments under construction in King and Snohomish counties are in Seattle, according to Apartment Insights.

• In-city neighborhoods had the region’s lowest vacancy rates, both firms say.

• Nearly 79 percent of landlords participating in Dupre + Scott’s survey said they plan to raise rents over the next six months, by an average of 3.9 percent.

• Average rents topped $1,500 for the first time in downtown Seattle and downtown Bellevue, Apartment Insights reported, and average rent per square foot in downtown Seattle hit a record $2.03.

• Fewer landlords are offering incentives like free rent now than six months ago, Dupre + Scott said, and the dollar value of those incentives has fallen.

-Seattle Times