weathering the commercial real estate market january 28, 2010
TRANSCRIPT
Weathering the Commercial Real Estate MarketJanuary 28, 2010
Weathering the Commercial Real Estate Market
REGIONAL ECONOMIC HIGHLIGHTS
January 28, 2010
Weathering the Commercial Real Estate Market
UNEMPLOYMENT
JOB GROWTH
FINANCIAL MARKETS
January 28, 2010
Weathering the Commercial Real Estate Market
January 28, 2010
Port of VirginiaOver 1.7 million TEU’s flow through the port annually
20 shipping lines with weekly service to Asia and Europe
Less than a seven hour drive to eight major markets
Ice-free, deepwater, unobstructed natural harbor
Expansion capacity to grow to 8 million TEU capacity
Hampton Roads Economic Indicators
Labor Force830,000 person private labor force
13,000 military personnel transitioning into workforce annually
12 traditional colleges and universities and 10 for-profit institutions
Over 14,000 degrees conferred annually
Wage rate 8% below national average
January 28, 2010
Hampton Roads Economic Indicators
Weathering the Commercial Real Estate Market
Hampton Roads Economic IndicatorsBusiness Climate
•Virginia voted ‘Best State for Business’ – again!
•180 international firms representing 27 countries in region
•Workers’ compensation rate 47% below the national average
•Corporate income tax rate of 6%; not raised since 1972
•Ranked 4th in “Cities where Americans are getting richer”
•Ranked in top 20 regions for economic performance by Brookings Institute in December, 2009
•Hampton Roads ranked third least expensive metro area for corporate headquarters by the Boyd Co.
January 28, 2010
Weathering the Commercial Real Estate Market
Hampton Roads Economic Indicators
Military & Government•$19 billion – Direct DOD spending
•45% of regional economy
•Key issues in 2010:–Loss of another carrier group
–Need to develop new OLF
–Transportation system.
January 28, 2010
Weathering the Commercial Real Estate Market
Hampton Roads Economic Indicators
Opportunities and Announcements• Jordan Bridge approved as PPTA project
• New Gilmerton Bridge under construction
• Midtown Tunnel PPTA project close to approval
• I-564 connector, enhancing Port and Norfolk Naval Base traffic
• Higher Speed Rail Service to Hampton Roads
• Stimulus funds for bridge repairs
• APM terminals lease with VIT
January 28, 2010
Weathering the Commercial Real Estate Market
Weathering the Commercial Real Estate Market
OFFICE OVERVIEW
January 28, 2010
Weathering the Commercial Real Estate Market
FORECAST
THE STATE OF THE OFFICE MARKET
TENANT LEVERAGE
FINANCING
ABSORPTION
January 28, 2010
INDUSTRIAL OVERVIEW
Weathering the Commercial Real Estate Market
January 28, 2010
Weathering the Commercial Real Estate Market
“HIGH CUBE” SPACECHALLENGED
INDUSTRIAL CORE STILLHEALTHY
FINANCING
USER LEVERAGE
FORECAST
January 28, 2010
Weathering the Commercial Real Estate Market
RETAIL OVERVIEW
January 28, 2010
Weathering the Commercial Real Estate Market
ANCHORS IN TROUBLE
SMALL SHOPS
FINANCING
TENANT LEVERAGE
FORECAST
January 28, 2010
Weathering the Commercial Real Estate Market
FINANCING
OWNER OCCUPIED/BUSINESS BASED
SPECULATIVE CONSTRUCTION
REFINANCING MARKET
CMBS MARKETS
January 28, 2010
Vacancy and Rents
January 28, 2010
National Trends 4Q 2008 4Q 2009 Rates Apartments 6.50% 8.40% -6.00% Industrial 9.80% 13.00% -9.00% Office 16.00% 19.4% -9.00% Retail 12.9% 18.6% -8.00%
Mortgage Banker’s Association
Vacancy and Rents
Regional Trends
4Q 2008 4Q 2009Quoted Rates
Effective Rates
Apartments 6.90% 6.90% Flat -7% Industrial 9.90% 10.90% Flat -20% Office 9.80% 11.10% -10% -15%
Retail 6.20% 6.70% -5% -25%
Source: Real Data/CoStar
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