Post by jeffolie on Jun 8, 2011 11:09:53 GMT -6
House prices continue to decline as I predicted during this 'regular depression' for Average Americans.
Office Building prices skyrocketing from their lows and almost reaching their prior all time peak in 2007....'Big-Name Buildings Go on Block as Prices Boom...back to within 15% of their 2007 peak."
The corporations have cash to burn. Corporations have been getting cash from selling debt instruments and/or getting loans because corporations have huge profits and historically low interest rates available for selling debt instruments and/or getting loans...they have been recently loading up by getting cash to avoid future higher rates. The upper 20% of income earners are spending.
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Office Owners Seek to Cash In
Big-Name Buildings Go on Block as Prices Boom
In recent weeks, owners of the Willis Tower in Chicago, Constitution Center in Washington, the Seagram Building in New York and numerous other large properties have put all or portions of them on the block. They are hoping to cash in on the near-boom-era prices being paid by yield-hungry investors discouraged by the volatility of stocks and low interest rates in the bond market.
The surge comes as the U.S. economy shows new signs of weakness, raising questions about the direction of office rents and vacancy rates.
"Who knows what the market will be like in a year or so?" says Tim Jaroch, one of the general partners who own the 1.4 million-square-foot Constitution Center.
In April, the total value of new sales listings of U.S. office buildings was $8.7 billion, according to real-estate research firm Real Capital Analytics. That was the highest level since 2008. Preliminary data for May show $10 billion in new listings, which would be the highest monthly total since late 2007.
.Until recently, post-recession sales activity in the office market has been slow. Lenders have held onto distressed assets rather than sell them, frustrating many investors who hoped to take advantage of the pain of others. Even as values rise, many owners continue to resist selling because they don't like their options for investing the proceeds.
The sharp rise in values has come over the past year, a relatively short time frame in the real-estate market. Recent deals include the sale of 750 Seventh Ave. in New York's Times Square by Hines Interests for a surprisingly high $485 million and Beacon Capital Partners' sale of Market Square in Washington for a record $905 a square foot.
"We're making decisions to sell because we're achieving very fair values," said Fred Seigel, Beacon's president.
Last week, real-estate research firm Green Street Advisors reported that its index of Midtown Manhattan office-building values is up 88% since its mid-2009 nadir, back to within 15% of their 2007 peak. The index is tilted toward better quality buildings.
Beacon also is considering bringing to market 1211 Ave. of the Americas in coming weeks, for which the company would look to retrieve well above the $1.5 billion that it paid in 2006, according to people familiar with the matter. The 45-story property houses the headquarters of News Corp., publisher of The Wall Street Journal.
The strong appetite for office property is limited mostly to major cities. Suburban office markets, which are getting harder hit by the economic downturn, are suffering from weak vacancy and rent rates, putting a damper on investor demand and values.
Building owners in some office markets contrast sharply with the residential market, where home prices have declined for months. Last week, the S&P/Case-Shiller Home Price Index reported home prices were down 4.2% in the first quarter of 2011.
Investors are more bullish on commercial property partly because there was relatively little overbuilding during the boom. Rents have been climbing in cities like New York and Washington, although they remain heavily dependent on job growth.
"There is still a lack of quality product for sale, and investors want to be in these markets," said Douglas Harmon, a broker at Eastdil Secured who is marketing the Willis Tower along with real-estate firm Newmark Knight Frank.
The financing market and interest-rate environment also is fueling the surge. Buyers are finding it easier and less expensive to borrow and, with interest rates at historic lows, even a relatively low yield on office property becomes attractive.
Indeed, the rise in value is being fueled more by trends in the capital markets than by improving rents. For example, in Midtown Manhattan, rents are still 35% below their peak, according to Cushman & Wakefield and growing less quickly than values.
To be sure, the sales numbers are still leagues below their 2007 peak, when buyers were able to borrow nearly the entire price of buildings. That year saw a peak $209 billion in office-building sales in the U.S., according to Real Capital. For 2011, real-estate advisory firm Jones Lang LaSalle projects $73 billion in office sales, up from $43 billion in 2010.
While new buyers are betting on a strong future in the market, the high prices—back so rapidly from the market's trough—have given some investors pause. Large New York City developers, including Douglas Durst, have said prices have risen too high to justify acquisitions.
Some owners are hedging their bets by selling stakes in buildings but retaining an interest to benefit if values keep rising. In Chicago, Hines recently began marketing a stake in the 1.4 million-square-foot One North Wacker Drive, a Hines spokeswoman confirmed. The owners of the Seagram Building also are looking for an investor to buy a piece of the property.
"You get to hold onto the real estate and you get to cash a big check," notes Darcy Stacom, vice chairman of CB Richard Ellis.
online.wsj.com/article/SB10001424052702304906004576371800946316830.html
Office Building prices skyrocketing from their lows and almost reaching their prior all time peak in 2007....'Big-Name Buildings Go on Block as Prices Boom...back to within 15% of their 2007 peak."
The corporations have cash to burn. Corporations have been getting cash from selling debt instruments and/or getting loans because corporations have huge profits and historically low interest rates available for selling debt instruments and/or getting loans...they have been recently loading up by getting cash to avoid future higher rates. The upper 20% of income earners are spending.
==========================================================================
Office Owners Seek to Cash In
Big-Name Buildings Go on Block as Prices Boom
In recent weeks, owners of the Willis Tower in Chicago, Constitution Center in Washington, the Seagram Building in New York and numerous other large properties have put all or portions of them on the block. They are hoping to cash in on the near-boom-era prices being paid by yield-hungry investors discouraged by the volatility of stocks and low interest rates in the bond market.
The surge comes as the U.S. economy shows new signs of weakness, raising questions about the direction of office rents and vacancy rates.
"Who knows what the market will be like in a year or so?" says Tim Jaroch, one of the general partners who own the 1.4 million-square-foot Constitution Center.
In April, the total value of new sales listings of U.S. office buildings was $8.7 billion, according to real-estate research firm Real Capital Analytics. That was the highest level since 2008. Preliminary data for May show $10 billion in new listings, which would be the highest monthly total since late 2007.
.Until recently, post-recession sales activity in the office market has been slow. Lenders have held onto distressed assets rather than sell them, frustrating many investors who hoped to take advantage of the pain of others. Even as values rise, many owners continue to resist selling because they don't like their options for investing the proceeds.
The sharp rise in values has come over the past year, a relatively short time frame in the real-estate market. Recent deals include the sale of 750 Seventh Ave. in New York's Times Square by Hines Interests for a surprisingly high $485 million and Beacon Capital Partners' sale of Market Square in Washington for a record $905 a square foot.
"We're making decisions to sell because we're achieving very fair values," said Fred Seigel, Beacon's president.
Last week, real-estate research firm Green Street Advisors reported that its index of Midtown Manhattan office-building values is up 88% since its mid-2009 nadir, back to within 15% of their 2007 peak. The index is tilted toward better quality buildings.
Beacon also is considering bringing to market 1211 Ave. of the Americas in coming weeks, for which the company would look to retrieve well above the $1.5 billion that it paid in 2006, according to people familiar with the matter. The 45-story property houses the headquarters of News Corp., publisher of The Wall Street Journal.
The strong appetite for office property is limited mostly to major cities. Suburban office markets, which are getting harder hit by the economic downturn, are suffering from weak vacancy and rent rates, putting a damper on investor demand and values.
Building owners in some office markets contrast sharply with the residential market, where home prices have declined for months. Last week, the S&P/Case-Shiller Home Price Index reported home prices were down 4.2% in the first quarter of 2011.
Investors are more bullish on commercial property partly because there was relatively little overbuilding during the boom. Rents have been climbing in cities like New York and Washington, although they remain heavily dependent on job growth.
"There is still a lack of quality product for sale, and investors want to be in these markets," said Douglas Harmon, a broker at Eastdil Secured who is marketing the Willis Tower along with real-estate firm Newmark Knight Frank.
The financing market and interest-rate environment also is fueling the surge. Buyers are finding it easier and less expensive to borrow and, with interest rates at historic lows, even a relatively low yield on office property becomes attractive.
Indeed, the rise in value is being fueled more by trends in the capital markets than by improving rents. For example, in Midtown Manhattan, rents are still 35% below their peak, according to Cushman & Wakefield and growing less quickly than values.
To be sure, the sales numbers are still leagues below their 2007 peak, when buyers were able to borrow nearly the entire price of buildings. That year saw a peak $209 billion in office-building sales in the U.S., according to Real Capital. For 2011, real-estate advisory firm Jones Lang LaSalle projects $73 billion in office sales, up from $43 billion in 2010.
While new buyers are betting on a strong future in the market, the high prices—back so rapidly from the market's trough—have given some investors pause. Large New York City developers, including Douglas Durst, have said prices have risen too high to justify acquisitions.
Some owners are hedging their bets by selling stakes in buildings but retaining an interest to benefit if values keep rising. In Chicago, Hines recently began marketing a stake in the 1.4 million-square-foot One North Wacker Drive, a Hines spokeswoman confirmed. The owners of the Seagram Building also are looking for an investor to buy a piece of the property.
"You get to hold onto the real estate and you get to cash a big check," notes Darcy Stacom, vice chairman of CB Richard Ellis.
online.wsj.com/article/SB10001424052702304906004576371800946316830.html