Friday, August 28, 2009

Hartman back on a buying spree

Houston-based Hartman Income REIT has purchased two office buildings located in Houston. They include Northchase Center, a 128,891-square-foot property located at 14550 Torrey Chase Blvd., and Cornerstone Plaza, a 71,008-square-foot property located at 3707 FM 1960 West. The two properties are situated within a mile of each other and have an average occupancy of 92.5 percent. Mark Lucescu of Newport Beach, Calif.-based Lucescu Realty represented the seller, KBS Realty Advisors. Dave Wheeler represented Hartman in-house. The acquisition price was not disclosed.

For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
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Ed A. Ayres
Houston Realty Advisors, Inc.
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Thursday, August 27, 2009

Mixed Signals: Nonresidential Construction Forecasts See Little Improvement Near-Term

COSTAR SAYS: While signs of a tentative recovery in the economy continued to appear, including reports issued this week on the fourth-consecutive month of improving new-home sales in July and a sizable increase in durable goods orders by manufacturers' orders also for July reported by the Commerce Dept., it is also clear that investors will be grappling with the fallout from the near-collapse of the U.S. economy for some time to come. This past week, three separate news items reflect the degree that investors and corporations are struggling with commercial real estate valuations and how the rules for assigning that value already are changing.
· A new survey from Jones Lang LaSalle and CoreNet Global survey finds virtually all corporate real estate executives are unprepared for proposed FASB/IASB lease accounting changes that could occur in less than two years.
· The Investment Committee of the Board of Trustees of Teachers Insurance and Annuity Association of America has approved a modification to the investment guidelines of the TIAA Real Estate Account effective Nov. 1, 2009.
· The California Public Employees' Retirement System has submitted for investment board approval a new accounting policy that imposes fair value on all aspects of its real estate portfolio.
The items are all unrelated except for the fact that each has come about as a direct result of events leading up to the recession and subsequent collapse of CRE property values. Lease Accounting Changes - a Stealth Issue Let's start with the Jones Lang LaSalle/CoreNet survey because the lease accounting changes it addresses will affect every size and type of business in the U.S. The recent survey of U.S. corporate real estate (CRE) executives found that a large majority is substantially unprepared for a proposed major change in national and international accounting treatment of real estate lease obligations. The proposed changes are designed to standardize the treatment of leases as financial obligations (much like a mortgage payment) as opposed to an operating expense. The changes are intended to improve the transparency, credibility and usefulness of lease accounting. Under new standards presented on a preliminary basis by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) slated to be issued in 2011, all leases of real estate and equipment will have to be capitalized on a reporting entity's balance sheet. The changes will affect both the entity renting the property and the owner collecting rent payments. "Whether a firm is public or private, this change would impact literally every item a corporation leases -- not just real estate," said Mindy Berman, managing director of Jones Lang LaSalle's Corporate Capital Markets practice. "Everything from computers to trucks, an ATM kiosk to a floor in an office tower, would have to be capitalized on a balance sheet." Berman said lease accounting has been a stealth issue in light of more immediately pressing business matters in the current economic environment and other major accounting changes made recently. The Securities and Exchange Commission estimated in 2005 that U.S. public companies will be forced to capitalize approximately $1.3 trillion in operating leases under the new rules. Industry experts estimate that approximately 70 percent of all operating leases are for real estate, impacting balance sheets by $1 trillion or more. According to the World Leasing Yearbook 2009, total annual leasing volume in 2007 amounted to $760 billion; yet many of those lease contracts do not appear in an entity's balance sheet. According the Jones Lang LaSalle/CoreNet survey:
· 90% of respondents noted that 95% or more of their company's real estate leases are currently structured as operating leases-responses which cut across all business sectors and everything from small to large lease portfolios.
· 83% of respondents indicated the proposed changes would cause a significant (19%) or major burden (64%) on their company's administrative requirements.
· More than a third of those surveyed (39%) agree or strongly agree that the increase in lease-related expenses on their income statements will result in a meaningful detriment to earnings.
The proposed accounting changes are still in the public comment stage and are subject to change before being adopted. Stymied by Limits, TIAA To Increase Debt Ratios; Refinance Portfolio The Investment Committee of the Board of Trustees of Teachers Insurance and Annuity Association of America recently approved a proposed modification to the investment guidelines of the TIAA Real Estate Account effective Nov. 1, 2009. The modification stems is intended to address the rapidly declining value of real estate property values in the pension fund investment firm's portfolio and the unchanging amount of debt on those properties. TIAA Real Estate's current investment guidelines prevent it from incurring debt beyond a 30% debt to equity ratio. As of Aug. 18, 2009, the aggregate principal amount of the account's outstanding debt was approximately $4 billion and the account's debt to equity ratio was approximately 42.5%. The account's loan to value ratio was approximately 31.3%. As of June 30, TIAA Real Estate Account owned $10.6 billion in real estate properties and interests in joint ventures. As a result, the account has not been able to incur or refinance any debt on its properties since the fourth quarter of 2008, due to the recent decline in the value of the account's real property investments. Under the new investment guidelines the account will maintain outstanding debt in a total amount not to exceed the current $4 billion level. The change will give the account the ability to refinance its debt and/or extend maturity dates. Over the course of the next two years, though, TIAA wants to whittle down its debt-to-equity and loan-to-value ratios to less than 30% -- a process that could likely involve the sale of some assets. Fair Market Value Accounting The third news item concerns The California Public Employees' Retirement System (CalPERS), which is expected to approve a new accounting policy that imposes fair market value accounting policies on all aspects of its $20 billion real estate portfolio. Fair market value accounting's central principle is that an asset must be valued at its current price if sold today into an orderly market. The policy would be effective immediately upon adoption and would supersede all previous CalPERS real estate appraisal policies. The objective of the policy change would be to provide an opinion of market value for the real estate assets and CalPERS ownership interests on an annual basis or in conjunction with the consolidation, termination or transfer of real estate interests. And, to calculate and report time-weighted returns accurately for the CalPERS real estate portfolio at the portfolio, sector and individual partnership level. Some key revisions for the appraisal and valuation policies include an allowance for:
· More frequent appraisals, if deemed to be in the best interest of CalPERS
· Fair market value dispute resolution procedures to be coordinated by the Investment Office
· Emphasis on the importance of providing transparency for investors, the CalPERS Board, and other stakeholders.
At the same time, the revisions give CalPERS the right to exempt some real estate assets, if deemed to be in the best interest of CalPERS. CalPERS did not detail what impact the changes will have on its current portfolio. For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Mitaquye oyasin

Wednesday, August 19, 2009

New Hotel Sorella Opens in CityCentre @ Town & Counrty Blvd.

Houston-based Midway Cos. has announced the grand opening of the new Hotel Sorella at CITYCENTRE, a $500 million mixed-use project located in Houston. The luxury hotel will feature 244 rooms, including 30 junior suites and a penthouse suite. Hotel amenities include a Moroccan-style bar with a central fireplace and active seating, a fitness center and spa, an outdoor pool with daybeds and draped cabanas, and two restaurants, Cafe Rosé and Bistro Alex. CITYCENTRE comprises 1.8 million square feet of mixed-use space on 37 acres between Interstate 10 West and the Sam Houston Tollway. For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Mitaquye oyasin

Monday, August 17, 2009

Equipchef expand to Houston, Tx,

http://www.rebusinessonline.com/main.cfm?id=17&date=20090811&region=Texas

HOUSTON REALTY ADVISORS BROKERS INDUSTRIAL LEASE EXPANSION
HOUSTON — Houston Realty Advisors has brokered a 15,575-square-foot industrial lease expansion on behalf of Equipchefs. The Dallas-based company will be expanding into Houston with its new space at 129922 Hempstead Hwy. Ed Ayres of Houston Realty Advisors represented the tenants. The landlord, MPI Properties, was represented by Gregg Barra and David Boyd of Boyd Commercial. Terms of the lease were not disclosed. For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Mitaquye oyasin

Friday, August 7, 2009

Lucky Strikes Comes to Houston, TX. in the Pavilions




www.bowlluckystrike.com



This September will mark the grand opening of the new Lucky Strike Lanes & Lounge at Houston Pavilions, a 700,000-square-foot mixed-use project located in downtown Houston. Lucky Strike is a boutique bowling alley that features bowling lanes with luxury amenities, a bar and lounge area and luxury food service. The 24,886-square-foot Houston location is the company’s 23rd Lucky Strike and its first in Texas. It will feature 14 lanes with premium leather couches, as well as a Luxe premium suite with four private lanes and a separate bar. It will be located at 1001 Fannin St. For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Mitaquye oyasin

Thursday, August 6, 2009

HPD finds new diggs

The Houston Police Department signed a 50,800-square-foot lease at 7125 Ardmore St. in Houston. The single-tenant, 50,800-square-foot office building was constructed in 1978 and was renovated last year. The building is in the South Main/Medical Center submarket. HPD is a 5,000-officer strong law enforcement agency with jurisdiction of more than 2 million citizens. The agency was formed in 1841. Principal and Senior Vice President Jay Kyle and Chairman Charlie Herder of Colliers International represented the landlord, Ardmore Professional Center. Director Chip Horne of Cushman & Wakefield represented HPD.For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.
Mitaquye oyasin

Tuesday, August 4, 2009

Houston fairs better than the rest of US cities

The ongoing recession and an uncertain business environment continue to negatively impact the U.S. office market, pushing vacancy rates up and rental rates down. But even in this tough market, new office leases have been signed.
“All the things that are important in a good market are five times more important in a down market,” says John Brownlee, senior vice president of KDC, a Dallas-based owner and developer. “The simple things like relationship-building, a high level of customer service, listening well and good follow-up really make a difference.”
Across the United States, office vacancy rates have returned to levels not seen since 2005, increasing 95 basis points to register at 14.74 percent at the end of the first quarter, according to Colliers International.
Meanwhile, lease rates dropped substantially during the first quarter 2009, with asking rents for CBD space dipping by 5.5 percent to $43.36 per square foot. Suburban asking rents also fell during the quarter, declining by 1.4 percent to $27.69 per square foot. On an annual basis, CBD rents are down 13 percent and suburban rents are down 3.8 percent, according to Colliers International.
Weak demand is at the root of the declining market. First quarter absorption was again negative with occupied space contracting by 27.8 million square feet, the fifth consecutive quarterly contraction and significantly worse than a year ago when absorption was –a negative 1.3 million square feet. Companies are now shedding space at the quickest pace since the third quarter 2001 when occupied space shrank by 28 million square feet, according to Colliers International.
However, many owners are keeping up the fight. GE Capital Real Estate, for example, has completed tenant renewals and new leases totaling about 6.6 million square feet of office space in North America during the first half of 2009. Roughly 5.2 million square feet of that total were lease renewals, while the remaining leases were new.
“In these tough market conditions, we’re realizing success by sticking to the basics,” says GE Capital Real Estate President and CEO Ron Pressman. “We’re taking time to understand what tenants need, including use of surveys, focus groups and one-on-one discussions.”
The Global Real Estate Monitor talked with office owners across the United States to determine the most successful office leasing strategies for a down market. Read on for details.
Position your assets properly
Dallas-based KDC has inked more than 340,000 square feet of new office deals at the Campus at Legacy, a 1.2-million-square-foot, three-building project in Plano, Texas. KDC purchased the buildings from EDS in 2005, and after months of market research, it redeveloped the buildings into Class A office space.
“We looked at doing a more radical redevelopment that would take us to a price point similar to most of the other buildings in the market,” Brownlee notes. “Instead, we positioned the project as a great value for the Legacy submarket, and that strategy is paying off for us now.”
In the past 12 months, KDC has signed leases with Pepsi Co. for just under 100,000 square feet, as well as a 40,000-square-foot lease with Dr Pepper/Snapple Group Inc. and another 40,000-square-foot lease with St. Jude Medical Center, according to Brownlee.
“You have to find your position in the market by learning the market and asking potential tenants their opinions on your property,” Brownlee says. “You have to be realistic about your position in the market.”
Offer concessions and other perks
The leasing environment today strongly favors tenants, and that means owners must be willing to offer concessions and other perks such as increased tenant allowances, building signage and free parking, according to Simon Adams, a partner with Reed Smith.
“Owners with tenants and cash flow in place with little or no mortgage debt are willing to do almost anything to capture tenants,” says Kurt Rosene, senior vice president of The Alter Group, a Chicago-based company that develops and owns office properties. “The folks who have a lot of leverage find that lenders are much less willing to work with them in offering huge concessions.”
The most common concession that owners are offering today is free rent. It’s not uncommon for owners to offer as much as 12 months of free rent to a new tenant, Rosene says, adding that he’s recently seen owners offer two years of free rent as an enticement.
Along with free rent, many owners have increased their tenant improvement allowances by 10 percent to 15 percent, Adams says. And most owners are more willing to provide monument or eyebrow signage as part of the overall lease when they previously would have required additional payment.
Parking rates and after-hours utilities charges are other areas where owners are being more flexible, says Craig Ersek, principal and executive vice president of Essex Asset Management, an Irvine, Calif.-based firm that manages more than 16 million square feet of commercial property throughout California and Arizona. “All those soft costs tend to be put on the negotiating table in a down market,” he notes.
Some owners are taking concessions to the next level by agreeing to cap expenses, says David Weisman, a partner in Greenspoon Marder’s real estate group. “Although it’s difficult for owners to cap expenses because they don’t what they’ll be from year to year, they’re agreeing not to pass on those expenses,” he notes.
And finally, larger credit tenants are even wrangling standard non-disturbance (SND) clauses from owners, says Jonathan Larsen, an executive managing director with Transwestern Commercial Services. Without an SND, a lender can come in and change the lease rate if the owner is forced to relinquish the property because of default. The SND protects tenants, but it is not commonly offered in hot markets.
Engage the brokerage community
In a down market, concessions and other types of perks aren’t just for tenants – they’re for brokers too. In an effort to drive traffic to their buildings, many owners have become very creative with their broker incentives, Ersek says.
Many owners have increased broker commissions from the standard three percent to four percent and are offering bonuses of $1 to $2 per square foot. They’re even giving away gift certificates for expensive dinners, golf trips, exotic vacations and designer clothing to encourage property tours.
Moreover, owners are changing the payment schedule for broker commissions. “Because of concerns about the financial health of building owners today, the brokerage community is very concerned about getting paid,” Rosene says. “That’s why a lot of owners are offering to pay 100 percent of commissions up front.”
Serve as a community liaison
Many owners have found that they can differentiate their properties simply by serving as a liaison between tenants and the community. “We’ve found that we can reduce the competition by developing a strong relationship with municipalities,” says Grady Johnson, senior real estate director for Opus North Corp.
The company recently signed a 144,500-square-foot lease with DeVry Inc. at Highland Landmark V, a 251,000-square-foot Class A office building in Downers Grove, Ill. DeVry Inc. will occupy approximately 60 percent of the eight-story building, which was completed in September 2008. It is the fifth and final building in the 42-acre Highland Landmark office park, developed by Opus.
Strong relationships with local neighborhood groups and city officials can benefit tenants in a variety of ways, Johnson says. From job training programs to tax abatements, an owner can work with local economic development personnel to create tenant incentives that go beyond free rent or building signage.
“Owners are realizing that this tough market is here to stay for some time,” Rosene says. “They know they must do more to capture tenants and keep their buildings full.”

For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.

Sunday, August 2, 2009

HOLBA Events coming up

Houston Office Leasing Brokers Association

Professionalism and integrity in all we do that is related to the office leasing brokerage industry.
Community service, by providing time, effort and money to worthy causes.
Improving our knowledge of our business and the real estate industry through continuing education.
Promoting our profession and our image in the business community.
Providing opportunities for interaction between HOLBA members and the real estate community through special events sponsored by HOLBA.
Thursday, September 10 (Rescheduled from September 3) 2009 Annual Luncheon Location: Houston Country Club, One Potomac 11:30am-1:00pm
View Full Calendar of Events


For more information on Houston office space, Houston retail space or Houston warehouse space and Houston industrial space, please call 713 782-0260 or see my web site at : www.houstonrealtyadvisors.com Offer opportunities for Houston office space. Thank you for your interest.
FACEBOOK at http://www.facebook.com/home.php#/profile.php?id=1223783810&ref=nf

Thanks,
Ed A. Ayres
Houston Realty Advisors, Inc.