Armstrong 4th Quarter 2011 Economic Monitor

Summary: The coincident index shows economic activity in the metro Savannah area decreased slightly. It is believed that conflicting Department of Labor data regarding employment and decreased electricity use contributed to the lower numbers.

A coincident index is "a single summary statistic that tracks the current state of the economy. The index is computed from a number of data series that move systematically with overall economic conditions. A rise in the index indicates an expansion of economic activity and a decline in the index indicates a contraction in economic activity. Each of the regional indexes is computed using data on employment, real earnings, the unemployment rate and average weekly hours worked in manufacturing," according to the Federal Reserve Bank of New York.

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A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

What Matters For Commercial Real Estate: Supply And Demand

Investing 2/24/2012 @ 12:23PM by Brad Thomas

Summary: Sam Zell told CNBC that simple supply and demand shows why commercial real estate "must come clean by 2013" meaning that we must put the majority of distressed real estate behind us by then. Zell says our problems can be summarized in one word, "demand". The author says our problems are summarized with another word: "jobs".

Key Quotes:

Zell said, "We have built nothing since July of 2007. That’s the good news. So we’ve had no additional supply. The bad news is that we’ve also had less job growth and less demand. So literally, the existing facilities are getting filled up, but at rates that don’t reflect new cost. So I think (commercial) real estate still has another couple years to get its act together.”

Regarding multifamily housing, combine[...] surging demand from renter households that are postponing decisions to buy homes because of the flagging for-sale sector, and you’ve got a great combination. That’s why vacancy rates dipped by 280 basis points in 2010 and 2011, ending at 5.2%, the lowest vacancy rate in more than a decade.

For office properties it’s a little less ideal. Anemic job growth means less demand for office space, but supply growth was halved from 2004 to 2008, compared to 1998 to 2003. As a result, office properties have less of a glut to deal with.

Retail properties have it worst.

According to Trepp, LLC, the third quarter 2011 distress levels for construction/land is 16.28%, commercial mortgage is 4.85%, and multi-family mortgage is 3.57%. As Zell referenced, distressed assets should continue a linear decline in 2012 and 2013; however, distressed land will not be as responsive to the overall recovery. The commercial real estate markets are still flooded with distressed assets and expiring loan maturities.

Read the full article at: What Matters For Commercial Real Estate: Supply And Demand

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

How commercial tenants can enforce their rights in the event of foreclosure

From SmartBusiness 02.01.2012

Summary: Commercial tenants (for example, those in Berwick Marketplace) whose landlords go into foreclosure may find out the hard way why SNDA lease provisions are important. Subordination, nondisturbance and attornment — or SNDA — clauses must be examined and negotiated before signing a commercial lease in today's market.

Key Quotes:
“Subordination, nondisturbance and attornment — or SNDA — provisions are something tenants should pay attention to in their lease in the event of a default by the landlord that leads to foreclosure,” says Cameron McCausland, partner and director of Transaction Management at Southfield, Michigan-based Plante Moran CRESA.

SNDA provisions define the responsibilities of property owners, lenders and tenants if the owners should default. Distribution of insurance proceeds in the event of casualty or condemnation is also often included in SNDAs.

Tenants need to pay attention to SNDA provisions in their leases to avoid the negative fallout should a lender take over and attempt to implement aggressive tactics. When the lender becomes the landlord, its primary objective will be to preserve or recover as much capital as possible, which can involve raising rent, failing to honor rental abatement periods, revoking tenant improvement allowances and even eviction. The lender’s actions are often driven by market conditions.

Read the full article at: How commercial tenants can enforce their rights in the event of foreclosure

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

A Third Port for Georgia?

Atlanta Business Chronicle Carla Caldwell
Date: Thursday, February 16, 2012, 6:14am

Key Quotes:
A 720-acre site of a bankrupt paper mill on Georgia’s St. Marys River is an excellent location for a third Georgia ocean port, says David Keating, the executive director of the Camden County Development Authority.

He has presented his proposal to Georgia Gov. Nathan Deal and to the Georgia Ports Authority, but neither has issued an opinion

Read the full article at: Official: Bankrupt mill should become state's third port

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

2 Amelia Court, Just Listed!

2 Amelia Court, Savannah, Ga.
Wonderful and Affordable Townhouse Initially Offered at $163,000!

Meticulously maintained. All the extras.

1502 SF open floor plan, vaulted and tray ceilings.

Range, fridge, washer/dryer, all included.

New neighborhood enjoyed in your screened in porch with privacy fence.

Conveniently located: 5 minutes to downtown, 10 minutes to southside, 15 minutes to Pooler.

Coldwell Banker Platinum Partners
Connie F. Ray, Broker
912-352-1222

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Commercial Real Estate: A slow grinding path

Atlanta Business Chronicle by Michael Bull, Bull Realty

Date: Friday, February 10, 2012, 2:08pm

Summary: Each major commercial U.S. real estate sector is expected to improve given that: job growth continues, the European debt crises are resolved and the presidential election doesn't scare investors.

Key Quotes:
Apartments should be the strongest asset class this year.

The national industrial market has experienced seven consecutive quarters of positive net absorption, and the sector will again experience improved fundamentals in 2012, as some corporations bring manufacturing back to the U.S. and the Panama Canal is widened. Note that Savannah will not immediately benefit from a wider Panama Canal.

Unlike past downturns, the CBD markets are rebounding better than their suburban counterparts. In particular, medical office properties will continue to be a favored asset class. See also A prescription for Atlanta commercial real estate investment (and Savannah).

The retail market was hit hard by the recession, but is getting back on its feet.

Read the full article at: Commercial Real Estate: A slow grinding path

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Need more office buildings? Not likely, U.S. told

Chris Acheson
Monday, Feb. 6th, 2012

Summary: The Building Owners and Managers Association concluded at a meeting last month that the U.S., apart from special markets like New York, Chicago, etc., does not need new office space. This does not mean the office space market is doomed, but will see a demand to retrofit existing spaces.

Key Quotes:

“We don’t need another office building,” says Martha O’Mara, a symposium panelist, lecturer at the Harvard University Graduate School of Design and managing director of Cambridge, Mass.-based commercial property consulting firm Corporate Portfolio Analytics Inc.

“Our traditional idea of an office space and the idea that as the number of office jobs increase, it will lead to an increase in demand for office space, just doesn’t hold any more.” The reason, according to Dr. O’Mara, is that most companies already occupy about 50 per cent more office space than they actually need, while technology has drastically changed the post-war work model.

Read the full article at: Need more office buildings? Not likely, U.S. told

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

Townsend, Ga Historic Methodist Church For Sale

Old brick Methodist church in Townsend, GA for sale. Constructed in 1910, it has 1900SF and a manageable small lot.

Property classified as R4-Residential. This beautiful old building could be repurposed as a single family dwelling, art gallery, coffee shop, restaurant or unique office space. Interior not to be missed. Large gothic windows allow plenty of natural light.

Priced below tax assessor value at $29,000!

Sold! Thank you for your inquiries.

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga

U.S. demand for commercial real estate loans up, but lending standards not loosened

From TheReadDeal
January 31, 2012 04:00PM

Summary: While demand for commercial real estate loans are up, lending restrictions from banks reflecting federal policy are not loosened. This is problematic for seekers of new loans and those wanting to refinance.

Key Quotes:
While nationwide demand for commercial real estate loans is up, banks are not loosening lending constraints, it would appear, reviewing figures from the Federal Reserve’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices report, released yesterday.

The five- and seven-year commercial real estate loans originated during the boom are beginning to come due in 2012, and many observers have speculated that even borrowers who are not distressed could have trouble refinancing in the current climate. New regulations such as those that demand higher equity ratios, are constraining banks’ lending.


Read the full article at: U.S. demand for commercial real estate loans up, but lending standards not loosened: Fed Report.


A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga