Coldwell Banker Commercial Southeastern US Q3 Market Report

Here is your copy of the Southeastern US 3rd Quarter Coldwell Banker Commercial ViewPoint
Commercial Real Estate Market Report: Download Here.

Florida Notes:

Market Conditions Kill Ritz-Carlton Project in Tampa
Developers of Ritz-Carlton Tampa Bay blame market conditions and timing for placing the $420 million project on hold. The developers were apparently unable to obtain financing even though they planned to provide $90 million of their own money for the project.

Florida Real Estate Experts Staying Calm
Florida real estate experts are not panicking in response to the national economic crisis, according to a recent survey by the University of Florida. Florida’s housing crisis is worse than in other states, Archer said. But respondents to the survey think the state will benefit the same way it has in the past, by capitalizing on retirees. But the recent drops in the stock market and the tightening of credit will probably delay the plans of retiring baby boomers, Archer said.

The sale of Winter Garden Village, Winter Garden, FL
A 1.14 million SF regional shopping center, located in Winter Garden, FL has been sold.

110,600 SF Industrial Property in Orlando Under New Ownership
The 110,600 SF industrial property in Orlando has just come under new ownership, courtesy of Monmouth Real Estate Investment Corp.'s acquisition from FE Orlando Investment L.P

215,000 SF Coral Gables, FL Office Project Has First Space Commitment

Rockefeller Group Business Centers Inc. has become the first business to commit to space on the tenant roster at Ponce de Leon Towers, a 215,000 SF office project in Coral Gables, FL.

Southeast Commercial Market Notes:

Southeast Has Retail Edge - Region fairing better than the rest of the country.According to developers and brokers in the Southeast, retail development in this part of the country is handling the slumping development market with more tenacity than the rest of the United States.

Southeast OFFICE - Summary of Market

• Miami was ranked in the top five for the Southeast for Retail Vacancy and Rent Growth for this quarter.
• The number of Office transactions that occurred in the Southeast for this quarter continued its downward slope as well as transaction dollar volume.
• Out of the 359 Office transactions in the US for this quarter, only 83 (less than 25%) occurred in the Southeast.

Southeast APARTMENT - Summary of Market

• Columbia was ranked in the top five for the Southeast for Apartment Inventory and Rent Growth for this quarter.
• The number of Apartment transactions that occurred in the Southeast for this quarter continued its downward slope but transaction dollar volume remained flat.
• Out of the 77 Apartment transactions in the Southeast for this quarter, 33 (over 40%) occurred in Atlanta.

Southeast RETAIL - Summary of Market

• Baltimore was ranked in the top five for the Southeast for Retail Vacancy and Inventory Growth for this quarter.
• The number of Retail transactions that occurred in the Southeast for this quarter continued its downward slop, how-ever transaction dollar volume increased slightly.
• Out of the 272 Retail transactions in the US for this quarter, 56 (only 20%) occurred in the Southeast
  

Long-term Opportunity is Still in Florida's Real Estate

What we see today in Florida real estate is a market correction. We have experienced over-exuberant expectations in returns that have been fueled by inexperienced investors in the housing segment. This has created challenges in capital markets. As lenders overreact, less money is available for deals and we see that fewer deals happen. During this time, property values may decline while cap rates increase

Because people like to live and play in Florida, the state remains a preferred destination long-term. Even though the Florida real estate market generally trends up, right now we are experiencing a trough in the cycle.

Central Florida Economy Growing

The 4th Annual Florida Real Estate Land Conference
Economists Agree: Cautions Short-term Outlook; Positive Long-term Outlook

The convening of the 4th Annual Florida Real Estate Land Conference hosted exclusively by Dean Saunders, Coldwell Banker Commercial Saunders Real Estate (CBCSRE) in Lakeland, FL, was an exercise in poking through and around the perceived woes and economics of real estate, both in the nation and in Florida today.

This year’s presentation proved to be a judicious and hopeful glimpse into the economy that fuels real estate decisions for Florida and for Polk County.

Economic forecasts were presented by influential economists and a legislative lobbyist. This year’s conference included respected authorities Dr. Sam Chandan, Chief Economist and Senior Vice President, REIS, New York, NY; Dr. Sean Snaith, Director of the Institute for Economic Competitiveness/University of Central Florida, Orlando, FL; and Wade Hopping, Former Florida Justice Supreme Court, Attorney, Land Use and Environmental Law, Hopping Green & Sams, Tallahassee, FL.

Priming the audience for the well-anticipated economic news was Dean Saunders, ALC, owner of Coldwell Banker Commercial Saunders Real Estate, and host/sponsor of the annual event.

Opening remarks by Saunders observes, “We see less real estate activity due to the lack of consumer confidence but it is different from other recessions. There is money to be invested, however, buyers are not sure where the bottom is and are cautious. We’ve also lost the activity of two major markets: large tract development and the investor/speculator, which brings to us a soft market.”

Wade Hopping, former Justice Florida Supreme Court, is a legislative attorney working in the Tallahassee legislative process since 1958 and who focuses on land use and environmental law. Hopping’s overview of the legislative year included the sub-prime debacle, “irrational exuberance” in the real estate markets, insurance availability and rate problems run up in Ad Valorem taxes, foreclosures by the hundreds, gasoline price increases, and national economic woes all conspired to reduce Florida’s 2008-2009 budget by $6 billion compared to the state’s $72 billion budget two years ago. The state budget reductions have impacted all state activities including schools, State employees, healthcare recipients, everglades restoration, university funding, and community college funding.

Hopping’s advice for property owners: “With the housing and real property markets suffering economic woe, it is important that those who own property become active in Florida's legislative process. Bad market conditions are good times for local government officials, legislators, and regulators to examine the project review process and eliminate unnecessary bureaucracy."

Dr. Sean Snaith, Director of the Institute for Economic Competitiveness at the University of Central Florida states that, “The short term malaise in real estate and the credit industry is a bump on road compared to the longer trends for demographics and economics that shine a favorable light on Central Florida. Lakeland is in a good position, given the central metro area and the rise in prices in coastal areas that align Polk County for growth.”

Snaith suggests strong trends showing demographic migration from the once popular coastal regions to the interior of the state. Due to the rising costs of real estate, property insurance, and basic cost of living on Florida’s coasts, the fastest growth will be in the interior of the state.

Dr. Sam Chandan, Chief Economist of REIS, concluded the event with an historical and a current view of the nation’s economy as a whole. “July 2007 saw US equities markets at their peak; an all-time high following the years of the housing and consumption boom. Now in 2008, corporate profits are down, equities markets have fallen from their peaks, and we find more houses than households and slower consumer spending growth. We will need to bear with a further tightening of credit markets and a protracted period of slower consumer spending growth.” The next couple of years will be challenging; however, Chandan encourages confidence in the long-term resilience and flexibility of the US economy."

Closing comments by Saunders summarizes, “There is a slowing of activity and softening of pricing, but ultimately, pricing will come to reflect economic-based expectations. Even in this market, we fully expect to have more closings this year than last year.”

Dean Saunders, ALC, is a Licensed Real Estate Broker and owner of Coldwell Banker Commercial Saunders Real Estate. Since 1996, Saunders has provided professional land and commercial real estate services. Winning many national and regional awards, the former Florida legislator is considered an expert on land and conservation and is quoted in many real estate and business publications. For more information on the company and on Dean Saunders, please visit http://www.saundersrealestate.com/.