The City of Houston’s Planning Commission has granted a variance to TIAA-CREF to accommodate a 30-story office building it plans to construct in the Galleria area.
TIAA-CREF intends to build an office tower at 1300 Post Oak, in place of an existing two-story 24-Hour Fitness. The office building will be located next to the Four Oaks Place office complex that is also owned by TIAA-CREF.
The owner needed city approval to build the structure 15 feet away from Post Oak instead of the standard 25 feet. The setback change, granted last week, applies on Post Oak from Four Oaks Place Drive to West Briar Lane.
The building will be located closer to the street in keeping with guidelines being developed for the future rail corridor. The Metropolitan Transit Authority of Harris County plans to construct a rail line down the middle of Post Oak.
Houston-based Transwestern is development manager and leasing representative for the proposed office building, which has been on the drawing board for more than a year.
With more than $435 billion in combined assets under management, TIAA-CREF is the leading retirement system for people in the academic, research, medical and cultural fields. For more information see; www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Monday, November 10, 2008
Wednesday, November 5, 2008
High-rise security from the ground up
High-rise security from the ground up
The design and installation of an access control system raises a host of issues beyond the technology itself.
"The attacks of Sept. 11, 2001, made high-rise security a prominent issue for building owners. But it would be a mistake for building owners to focus so much on measures to prevent terrorist attacks that they neglect other security threats like workplace violence, theft and domestic violence. Although these other incidents are less severe in scope than a terrorist attack, they also occur with far greater frequency.
One way to address the spectrum of security risks in a high-rise building is with an access control and alarm monitoring system that complements the security measures of tenants. Such a system can prevent or delay a criminal from entering, make the building less inviting as a target and establish an image of a safe and secure environment.
Even though the installation of an access control and alarm monitoring system seems straightforward, it can be problematic and very costly when security is not part of a cohesive architectural program. The most opportune time to incorporate access control is at the beginning of the planning and programming process.
This requires that multitenant buildings be segregated into two broad
areas:
Base Building
The structure, building support, and common spaces and equipment under the domain of the building owner.
Tenant Fit-Out
Space specifically built out and occupied by the tenant; in some instances, separate design and construction teams could be working in this space.
When a high-rise will have multiple tenants, it is important to ensure that the access control system used by the base building will be interoperable with the ones used by tenants; otherwise, tenants will have to use two types of credentials.
The control of grade entrances and below grade entrances - loading docks, main entrances, tertiary grade entrances and so forth - represents the first and most important part of a building's security. Security at these locations should unobtrusively allow access to legitimate users, prevent illegitimate access, and segregate visitor traffic to a concierge or security desk to validate a visitor's need to access the building.
Different spaces, different needs
The best method for accomplishing these goals at main lobby entries is with optical turnstiles. Optical turnstiles are especially valuable in large open atriums, where the size of the space and the number of people present significant security challenges. Optical turnstiles provide a quick and relatively unobtrusive way to ensure that people passing through have proper access credentials. These turnstiles can be equipped with or without barriers; the devices can have electric photo sensors that identify and sound an alarm if someone attempts to enter without presenting an access control credential.
By contrast with main entry lobbies, loading docks require the use of doors with hardware and equipment rated for high-volume use.
One way to improve security in both the base building and the tenant spaces is to sub-compartmentalize elevator and floor access. This approach involves adding security controls - for instance, locked doors or optical turnstiles - at various points to deter potential criminals.
For example, outside a building, the landscape might direct visitors to a certain entrance. The visitor might be required to use an access control credential to enter the building. At the elevator, the visitor might again have to use an access control credential to proceed to a specific floor.
Compartmentalization is easily done if it is planned into the architecture of the building.
In particular, it is important to control the vertical pedestrian core - stairwells, elevators and service elevators. This further compartmentalizes the facility, making a malevolent act more difficult to carry out. These controls provide a level of base building security in addition to security measures taken by individual tenants.
Providing the right space
In a high-rise environment, properly designed security systems will be distributed throughout the structure, and planners need to incorporate into the program enough space for the system to be monitored and administered and to properly house the front-end systems. Without adequate space, the effectiveness of the security system may be compromised. And if that space isn't provided in the initial planning, it will be more costly to make room for it after the building has been fully programmed.
In a major high-rise, a good rule of thumb is that 1,000 to 1,500 square feet of space will be required for the area that will support the monitoring and maintenance of the system. This space is not solely for the access control and monitoring system; a variety of other activities will be occurring in this area. For example, this space might house a locksmith or provide room for security officers to write up reports. The amount of space depends on the specifics of the security program, but it is important in programming to provide ample space. Later, it is easier to reduce the amount of space than to increase it.
Another important spatial consideration is the need for a continuous stacked security riser. Stacking is basically programming these spaces vertically so they are located at the same point on every floor. This is beneficial in maintenance and can also keep conduit costs to a minimum.
The riser closet does not need to be large; a simple four-foot deep by six-foot wide room with a double door opening should be sufficient to support distributed security requirements for the foreseeable future.
Closets on each floor should have dedicated 110v power, telecommunications and a minimum of a four-inch continuous sleeve. This approach will make it easier to add and delete devices for each floor independently and allows the building to adapt quickly to the security needs of its clientele.
In some instances, the security system shares closets with the telecommunications system. This is not recommended because the telecommunications and security staff have different priorities.
In one project, security closets were eliminated from the design to save money, and the access control and alarm monitoring system was moved to the telecommunications closets. At the closeout of the project, the telecommunications department was charging for the time their personnel spent to provide access to the closets and to oversee the installation and maintenance of security panels.
Finally, it's worth considering providing space for remote badging stations. From time to time, the access control credential will have to be replaced. Providing space for remote badging stations will aid in the badging process and make security unobtrusive. For example, a remote badging station might be located on a floor with the cafeteria or a workout room. That would save occupants needing a new badge the time and trouble of going to a badging station on the main floor that is busy issuing temporary badges for visitors and handling other matters.
Architectural Design and Security
The placement of access control readers requires careful attention. For instance, credential readers need to be mounted so as to meet the requirements of the Americans with Disabilities Act (ADA) for both frontal and side approach. The location of the credential reader is especially important, because the device will seem obtrusive if it is improperly placed. As an example, in the case of a single door, the access control reader should be placed 42 inches above the finished floor and on the same side as the door handle.
Proper design and placement of readers can prevent problems. In one case, a reader was mounted on the left side of a door that swung open to the left. As a user reached over to present the credential, someone else exited through the door, wedging the first person between the wall and the door.
The options for placing a reader can be affected in the construction process by other trades. For example, the place where one electrical contractor installs conduit for light switches may limit the choices another electrician has for the placement of the credential reader. The best way to avoid this problem is to have a single electrical contractor on the project. If this is not possible, the security designer should coordinate electrical requirements with the electrical designer to ensure all electrical subcontractors are aware of other equipment that will need to be installed.
In some instances, the architecture of the building presents areas where mounting a credential reader is impractical, inconvenient or not possible. Only a small space is required to mount a reader, so if the security designer works with architects early in the process it should be possible to eliminate problem areas.
Taking the time during planning to coordinate door hardware choices with the access control and alarm system design will also pay substantial dividends. In many cases, doors within tenant spaces are glass and, therefore, require different door hardware than typical wood doors. By ensuring that the architect and security designer work together early on to identify door hardware requirements, the facility executive can protect both the budget and the schedule from unexpected shocks.
There are other ways in which early planning makes it possible for architectural design to improve security. One example is placing doors on opposite sides of an elevator vestibule. This approach compartmentalizes the vestibule, creating another zone of security on the floor. This is an excellent way to prevent elevator surfing by an individual who may be casing the high-rise.
It's important to remember building code compliance in these cases.
If doors are placed on both sides of an elevator vestibule, there is no longer an unimpeded path of egress for someone exiting the elevator. By properly blending architectural and security designs, it is possible to meet life-safety requirements as well as security needs. For example, an exit stairwell can be placed directly off the elevator vestibule to provide a means of egress. That approach would maximize security while providing code compliance.
The design and installation of an effective access control and alarm-monitoring system raises a host of issues beyond the technology itself, from the use of architectural barriers, to code compliance, to effective placement of readers. The only way to address those issues is with communication during the design process. It takes time and effort, but the result will be a system that serves the needs of the building owner, tenants and visitors for years to come." For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
The design and installation of an access control system raises a host of issues beyond the technology itself.
"The attacks of Sept. 11, 2001, made high-rise security a prominent issue for building owners. But it would be a mistake for building owners to focus so much on measures to prevent terrorist attacks that they neglect other security threats like workplace violence, theft and domestic violence. Although these other incidents are less severe in scope than a terrorist attack, they also occur with far greater frequency.
One way to address the spectrum of security risks in a high-rise building is with an access control and alarm monitoring system that complements the security measures of tenants. Such a system can prevent or delay a criminal from entering, make the building less inviting as a target and establish an image of a safe and secure environment.
Even though the installation of an access control and alarm monitoring system seems straightforward, it can be problematic and very costly when security is not part of a cohesive architectural program. The most opportune time to incorporate access control is at the beginning of the planning and programming process.
This requires that multitenant buildings be segregated into two broad
areas:
Base Building
The structure, building support, and common spaces and equipment under the domain of the building owner.
Tenant Fit-Out
Space specifically built out and occupied by the tenant; in some instances, separate design and construction teams could be working in this space.
When a high-rise will have multiple tenants, it is important to ensure that the access control system used by the base building will be interoperable with the ones used by tenants; otherwise, tenants will have to use two types of credentials.
The control of grade entrances and below grade entrances - loading docks, main entrances, tertiary grade entrances and so forth - represents the first and most important part of a building's security. Security at these locations should unobtrusively allow access to legitimate users, prevent illegitimate access, and segregate visitor traffic to a concierge or security desk to validate a visitor's need to access the building.
Different spaces, different needs
The best method for accomplishing these goals at main lobby entries is with optical turnstiles. Optical turnstiles are especially valuable in large open atriums, where the size of the space and the number of people present significant security challenges. Optical turnstiles provide a quick and relatively unobtrusive way to ensure that people passing through have proper access credentials. These turnstiles can be equipped with or without barriers; the devices can have electric photo sensors that identify and sound an alarm if someone attempts to enter without presenting an access control credential.
By contrast with main entry lobbies, loading docks require the use of doors with hardware and equipment rated for high-volume use.
One way to improve security in both the base building and the tenant spaces is to sub-compartmentalize elevator and floor access. This approach involves adding security controls - for instance, locked doors or optical turnstiles - at various points to deter potential criminals.
For example, outside a building, the landscape might direct visitors to a certain entrance. The visitor might be required to use an access control credential to enter the building. At the elevator, the visitor might again have to use an access control credential to proceed to a specific floor.
Compartmentalization is easily done if it is planned into the architecture of the building.
In particular, it is important to control the vertical pedestrian core - stairwells, elevators and service elevators. This further compartmentalizes the facility, making a malevolent act more difficult to carry out. These controls provide a level of base building security in addition to security measures taken by individual tenants.
Providing the right space
In a high-rise environment, properly designed security systems will be distributed throughout the structure, and planners need to incorporate into the program enough space for the system to be monitored and administered and to properly house the front-end systems. Without adequate space, the effectiveness of the security system may be compromised. And if that space isn't provided in the initial planning, it will be more costly to make room for it after the building has been fully programmed.
In a major high-rise, a good rule of thumb is that 1,000 to 1,500 square feet of space will be required for the area that will support the monitoring and maintenance of the system. This space is not solely for the access control and monitoring system; a variety of other activities will be occurring in this area. For example, this space might house a locksmith or provide room for security officers to write up reports. The amount of space depends on the specifics of the security program, but it is important in programming to provide ample space. Later, it is easier to reduce the amount of space than to increase it.
Another important spatial consideration is the need for a continuous stacked security riser. Stacking is basically programming these spaces vertically so they are located at the same point on every floor. This is beneficial in maintenance and can also keep conduit costs to a minimum.
The riser closet does not need to be large; a simple four-foot deep by six-foot wide room with a double door opening should be sufficient to support distributed security requirements for the foreseeable future.
Closets on each floor should have dedicated 110v power, telecommunications and a minimum of a four-inch continuous sleeve. This approach will make it easier to add and delete devices for each floor independently and allows the building to adapt quickly to the security needs of its clientele.
In some instances, the security system shares closets with the telecommunications system. This is not recommended because the telecommunications and security staff have different priorities.
In one project, security closets were eliminated from the design to save money, and the access control and alarm monitoring system was moved to the telecommunications closets. At the closeout of the project, the telecommunications department was charging for the time their personnel spent to provide access to the closets and to oversee the installation and maintenance of security panels.
Finally, it's worth considering providing space for remote badging stations. From time to time, the access control credential will have to be replaced. Providing space for remote badging stations will aid in the badging process and make security unobtrusive. For example, a remote badging station might be located on a floor with the cafeteria or a workout room. That would save occupants needing a new badge the time and trouble of going to a badging station on the main floor that is busy issuing temporary badges for visitors and handling other matters.
Architectural Design and Security
The placement of access control readers requires careful attention. For instance, credential readers need to be mounted so as to meet the requirements of the Americans with Disabilities Act (ADA) for both frontal and side approach. The location of the credential reader is especially important, because the device will seem obtrusive if it is improperly placed. As an example, in the case of a single door, the access control reader should be placed 42 inches above the finished floor and on the same side as the door handle.
Proper design and placement of readers can prevent problems. In one case, a reader was mounted on the left side of a door that swung open to the left. As a user reached over to present the credential, someone else exited through the door, wedging the first person between the wall and the door.
The options for placing a reader can be affected in the construction process by other trades. For example, the place where one electrical contractor installs conduit for light switches may limit the choices another electrician has for the placement of the credential reader. The best way to avoid this problem is to have a single electrical contractor on the project. If this is not possible, the security designer should coordinate electrical requirements with the electrical designer to ensure all electrical subcontractors are aware of other equipment that will need to be installed.
In some instances, the architecture of the building presents areas where mounting a credential reader is impractical, inconvenient or not possible. Only a small space is required to mount a reader, so if the security designer works with architects early in the process it should be possible to eliminate problem areas.
Taking the time during planning to coordinate door hardware choices with the access control and alarm system design will also pay substantial dividends. In many cases, doors within tenant spaces are glass and, therefore, require different door hardware than typical wood doors. By ensuring that the architect and security designer work together early on to identify door hardware requirements, the facility executive can protect both the budget and the schedule from unexpected shocks.
There are other ways in which early planning makes it possible for architectural design to improve security. One example is placing doors on opposite sides of an elevator vestibule. This approach compartmentalizes the vestibule, creating another zone of security on the floor. This is an excellent way to prevent elevator surfing by an individual who may be casing the high-rise.
It's important to remember building code compliance in these cases.
If doors are placed on both sides of an elevator vestibule, there is no longer an unimpeded path of egress for someone exiting the elevator. By properly blending architectural and security designs, it is possible to meet life-safety requirements as well as security needs. For example, an exit stairwell can be placed directly off the elevator vestibule to provide a means of egress. That approach would maximize security while providing code compliance.
The design and installation of an effective access control and alarm-monitoring system raises a host of issues beyond the technology itself, from the use of architectural barriers, to code compliance, to effective placement of readers. The only way to address those issues is with communication during the design process. It takes time and effort, but the result will be a system that serves the needs of the building owner, tenants and visitors for years to come." For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Monday, November 3, 2008
New building doubles SpectraCell’s space
SpectraCell Laboratories Inc. has doubled the size of its facilities by adding a second 20,000-square-foot building on its campus in the Westchase Business District.
The new $3.5 million facility houses SpectraCell’s state-of-the-art clinical laboratory operations while the existing building, designed in 2005, retains the corporate, financial, marketing and administrative functions.
The new building was completed and opened in late October.
SpectraCell, a privately-owned biotech firm, is a federally accredited laboratory that provides advanced clinical testing services to health care providers nationwide using its patented Functional Intracellular Analysis and Lipoprotein Particle Profile tests.
“Our business has grown at a strong pace over the past few years,” said William “Chip” Stanbeffy, the company’s chairman and CEO. “The number of tests performed by us each month has skyrocketed. We outgrew our current building in three years.”
The company has more than doubled its number of employees since 2005 and now serves more than 3,000 physician clients in 38 states. For more information see; www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Houston Business Journal - by Monica Perin Reporter
The new $3.5 million facility houses SpectraCell’s state-of-the-art clinical laboratory operations while the existing building, designed in 2005, retains the corporate, financial, marketing and administrative functions.
The new building was completed and opened in late October.
SpectraCell, a privately-owned biotech firm, is a federally accredited laboratory that provides advanced clinical testing services to health care providers nationwide using its patented Functional Intracellular Analysis and Lipoprotein Particle Profile tests.
“Our business has grown at a strong pace over the past few years,” said William “Chip” Stanbeffy, the company’s chairman and CEO. “The number of tests performed by us each month has skyrocketed. We outgrew our current building in three years.”
The company has more than doubled its number of employees since 2005 and now serves more than 3,000 physician clients in 38 states. For more information see; www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com
Houston Business Journal - by Monica Perin Reporter
Tuesday, October 28, 2008
Galleria Tower Cancelled by Turnberry LTD.
Turnberry Ltd. confirmed this week that it no longer plans to build a 34-story luxury condo tower by the Galleria Mall that had been in the works for more than three years.
The 184 proposed condo units, priced from $1 million to more than $3.5 million, were to be located west of Post Oak Boulevard, between Hidalgo and W. Alabama.
Buyers were notified of the developer’s decision last week, and have been refunded their deposits plus interest accrued on the money, according to Turnberry.
Jim Cohen, a vice president of sales for the prolific development firm, said in a statement released this week that the project was cancelled because the firm could not get a construction loan during the current financial crisis.
“With great reluctance we have decided to suspend development operations for Turnberry Tower, Residences at the Galleria,” Cohen said in the statement. “This is the first project Turnberry has had to discontinue in more than 40 years in the real estate development business.”
The Aventura, Fla.-based company has developed more than $7 billion in commercial and residential property, including 20 million square feet of retail space, 7,000 apartments and condo units, 1.5 million square feet of office space and 2,000 hotel and resort rooms.
Turnberry’s splashy marketing effort in Houston began in September 2007 with the unveiling of a 12,000-square-foot, multimillion-dollar sales center/model home near the development site.
The sales center closed last week, and the developer has not decided what it will do with the property. For more information see www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
The 184 proposed condo units, priced from $1 million to more than $3.5 million, were to be located west of Post Oak Boulevard, between Hidalgo and W. Alabama.
Buyers were notified of the developer’s decision last week, and have been refunded their deposits plus interest accrued on the money, according to Turnberry.
Jim Cohen, a vice president of sales for the prolific development firm, said in a statement released this week that the project was cancelled because the firm could not get a construction loan during the current financial crisis.
“With great reluctance we have decided to suspend development operations for Turnberry Tower, Residences at the Galleria,” Cohen said in the statement. “This is the first project Turnberry has had to discontinue in more than 40 years in the real estate development business.”
The Aventura, Fla.-based company has developed more than $7 billion in commercial and residential property, including 20 million square feet of retail space, 7,000 apartments and condo units, 1.5 million square feet of office space and 2,000 hotel and resort rooms.
Turnberry’s splashy marketing effort in Houston began in September 2007 with the unveiling of a 12,000-square-foot, multimillion-dollar sales center/model home near the development site.
The sales center closed last week, and the developer has not decided what it will do with the property. For more information see www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Thursday, October 23, 2008
KBC Signs 30,000-SF Prelease at Energy Crossing
KBC Advanced Technologies Inc., a process engineering, consulting and software group, signed a lease for 30,000 square feet at 15021 Katy Freeway in Houston. The six-story, 480,000-spuare-foot office property at Energy Crossing I and II, broke ground in early 2008 and will be completed in February 2009. KBC is the first tenant to sign a lease with Opus West, the landlord. The tenant is expected to move into the space in March upon completion of the property. John Pruitt and Dena Wren of CB Richard Ellis represented the landlord. Anthony Squillante of Jackson Cooksey represented the tenant. for more information see: www.houstonrealtyadvisors.com or www.houstonrea;tyadvisors.net or www.edayres.com
Tuesday, October 21, 2008
Commercial Real Estate Sales Slump Spans Globe
The dearth of transactions that has daunted U.S. commercial real estate investors for 14 months has spread overseas, but observers suggest that measures to restore liquidity could help some markets to avoid the degree of paralysis that lingers in North America.
Article Tools
Transaction volume worldwide has contracted across property types and totaled $388 billion year-to-date through August, down 57% from the same period in 2007, according to New York-based researcher Real Capital Analytics. That pace is still slowing, with third-quarter sales expected to show an even steeper decline of 68% from the year-ago quarter.
“The credit crunch that has been impeding deal flow in the U.S. and Europe is now spreading throughout Asia and erupting into a full-blown financial crisis in the West,” researchers contend in the September/October issue of Global Capital Trends, published by New York-based researcher Real Capital Analytics.
But if the credit crunch is to blame for declining sales numbers, then recent measures taken by governments around the globe may help to slow the downward spiral of dwindling transactions by boosting liquidity. This month the United Kingdom announced it will invest £37 billion in its largest banks, while the United States agreed to infuse its own banking system with $250 billion and expanded government backing of deposits through the FDIC. The Bank of Japan took steps to bolster Japanese stocks and finances, and 27 states in the European Union agreed to work together in supporting their own banks.
Those coordinated responses should help increase liquidity, but investors remain cautious about declining economic indicators, according to Global Market Perspective, a report published Oct. 17 by real estate service provider Jones Lang LaSalle. Even in markets where property values experience declines, however, more readily available credit will increase the number of investors able to bid on properties as more property owners become distressed and are forced to sell.
“For every region of the world, it all hinges on whether debt capital comes available,” says Keven Lindemann, director of the real estate group at SNL Financial in Charlottesville, Va.
Making deals
So far, most overseas markets have maintained transaction volume better than the U.S. Through August, year-to-date commercial real estate sales in the U.S. reached $105.5 billion, down 77% from the previous year and down 80% since the crisis began, Real Capital Analytics reported.
By contrast Europe, the Middle East and Africa collectively had $152.4 billion in commercial real estate sales this year through August, down 46% from a year earlier. The U.K.’s $37.6 billion in sales since the beginning of the year were down 55% from a year ago.
While it’s too early to show up in sales data, the fourth quarter may bring an increase in transaction volume in Europe and the U.K., says Earl Webb, CEO of Capital Markets at Chicago-based Jones Lang LaSalle. Based on conversations with brokers and investors in Europe, Webb says the gap between bids and asking prices in Europe is narrowing and more sales are occurring as some banks as investors liquidate real estate assets.
“Investors there who need liquidity tend to get it by selling assets into the market at market-clearing prices faster than they do here,” Webb says. “In the U.K. for example, property trades are already taking place at fairly considerable discounts over where pricing was a year ago.” Indeed, buyers in August could expect an average yield of 6.3% for office, industrial and retail properties in the region, up from 5.8% a year earlier, according to Real Capital Analytics.
The only major commercial real estate market to see a decline approaching the precipitous drop in volume experienced in the U.S. has been Australia/New Zealand, where sales of $6.7 billion year-to-date mark a 74% decline from the same period last year. As a whole, the Asia-Pacific region, including Australia and New Zealand, racked up $113.3 billion in commercial real estate sales this year through August, down only 18% from the year-ago period.
Asia retains liquidity
Asia’s transaction volume has plummeted since midyear and volume for sales in the region will be down 68% in the third quarter from a year ago, Real Capital Analytics estimates. Asia enjoyed a brief surge in acquisitions earlier this year when investors sought refuge in markets they hoped would escape the illiquidity crisis plaguing the West. Japan even posted a 19% gain with its year-to-date transaction volume of $28.9 billion through August, although that number masks a more recent decline that is expected to show up as a 41% drop in sales in third-quarter sales from a year ago.
Some investors clearly expect to see buying opportunities in Asia, and those acquisitions could usher in renewed transaction volume by establishing market prices, according to SNL Financial’s Lindemann. Merrill Lynch has formed a $2.65 billion investment fund to buy Asian real estate, for example, and LaSalle Investment Management has launched a $3 billion opportunity fund focused on the same region. “The idea is that there are going to be some distressed sellers out there,” he says.
Transaction volume in Asia is down in part because investors the world over have grown more cautious in reaction to this year’s bank failures and bailouts, according to Lee Menifee, director of global strategy at CB Richard Ellis Investors in Los Angeles. Less debt is available in the region than in previous years, too, because the largely U.S.-based lenders who provided mezzanine loans and other secondary leverage have ceased to offer new loans.
Yet there is good reason for investors to consider commercial real estate acquisitions in China, Japan and other major Asian markets, Menifee says. Japan’s domestic banks continue to offer mortgage financing at 65% loan-to-value ratios for core assets in that country. The base interest rate in Japan is an incredibly low 0.5%.
China has lowered its official lending rate by 80 basis points to an attractive 6.92% and could easily boost liquidity if needed by easing restrictions on the use of foreign capital in real estate acquisitions. In the larger Asian markets, at least, the sales slump may be more transient than it has been in the West. “Asia is certainly not immune from the credit crisis,” Menifee says, “but it’s relatively less impacted.” For more information see www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Article Tools
Transaction volume worldwide has contracted across property types and totaled $388 billion year-to-date through August, down 57% from the same period in 2007, according to New York-based researcher Real Capital Analytics. That pace is still slowing, with third-quarter sales expected to show an even steeper decline of 68% from the year-ago quarter.
“The credit crunch that has been impeding deal flow in the U.S. and Europe is now spreading throughout Asia and erupting into a full-blown financial crisis in the West,” researchers contend in the September/October issue of Global Capital Trends, published by New York-based researcher Real Capital Analytics.
But if the credit crunch is to blame for declining sales numbers, then recent measures taken by governments around the globe may help to slow the downward spiral of dwindling transactions by boosting liquidity. This month the United Kingdom announced it will invest £37 billion in its largest banks, while the United States agreed to infuse its own banking system with $250 billion and expanded government backing of deposits through the FDIC. The Bank of Japan took steps to bolster Japanese stocks and finances, and 27 states in the European Union agreed to work together in supporting their own banks.
Those coordinated responses should help increase liquidity, but investors remain cautious about declining economic indicators, according to Global Market Perspective, a report published Oct. 17 by real estate service provider Jones Lang LaSalle. Even in markets where property values experience declines, however, more readily available credit will increase the number of investors able to bid on properties as more property owners become distressed and are forced to sell.
“For every region of the world, it all hinges on whether debt capital comes available,” says Keven Lindemann, director of the real estate group at SNL Financial in Charlottesville, Va.
Making deals
So far, most overseas markets have maintained transaction volume better than the U.S. Through August, year-to-date commercial real estate sales in the U.S. reached $105.5 billion, down 77% from the previous year and down 80% since the crisis began, Real Capital Analytics reported.
By contrast Europe, the Middle East and Africa collectively had $152.4 billion in commercial real estate sales this year through August, down 46% from a year earlier. The U.K.’s $37.6 billion in sales since the beginning of the year were down 55% from a year ago.
While it’s too early to show up in sales data, the fourth quarter may bring an increase in transaction volume in Europe and the U.K., says Earl Webb, CEO of Capital Markets at Chicago-based Jones Lang LaSalle. Based on conversations with brokers and investors in Europe, Webb says the gap between bids and asking prices in Europe is narrowing and more sales are occurring as some banks as investors liquidate real estate assets.
“Investors there who need liquidity tend to get it by selling assets into the market at market-clearing prices faster than they do here,” Webb says. “In the U.K. for example, property trades are already taking place at fairly considerable discounts over where pricing was a year ago.” Indeed, buyers in August could expect an average yield of 6.3% for office, industrial and retail properties in the region, up from 5.8% a year earlier, according to Real Capital Analytics.
The only major commercial real estate market to see a decline approaching the precipitous drop in volume experienced in the U.S. has been Australia/New Zealand, where sales of $6.7 billion year-to-date mark a 74% decline from the same period last year. As a whole, the Asia-Pacific region, including Australia and New Zealand, racked up $113.3 billion in commercial real estate sales this year through August, down only 18% from the year-ago period.
Asia retains liquidity
Asia’s transaction volume has plummeted since midyear and volume for sales in the region will be down 68% in the third quarter from a year ago, Real Capital Analytics estimates. Asia enjoyed a brief surge in acquisitions earlier this year when investors sought refuge in markets they hoped would escape the illiquidity crisis plaguing the West. Japan even posted a 19% gain with its year-to-date transaction volume of $28.9 billion through August, although that number masks a more recent decline that is expected to show up as a 41% drop in sales in third-quarter sales from a year ago.
Some investors clearly expect to see buying opportunities in Asia, and those acquisitions could usher in renewed transaction volume by establishing market prices, according to SNL Financial’s Lindemann. Merrill Lynch has formed a $2.65 billion investment fund to buy Asian real estate, for example, and LaSalle Investment Management has launched a $3 billion opportunity fund focused on the same region. “The idea is that there are going to be some distressed sellers out there,” he says.
Transaction volume in Asia is down in part because investors the world over have grown more cautious in reaction to this year’s bank failures and bailouts, according to Lee Menifee, director of global strategy at CB Richard Ellis Investors in Los Angeles. Less debt is available in the region than in previous years, too, because the largely U.S.-based lenders who provided mezzanine loans and other secondary leverage have ceased to offer new loans.
Yet there is good reason for investors to consider commercial real estate acquisitions in China, Japan and other major Asian markets, Menifee says. Japan’s domestic banks continue to offer mortgage financing at 65% loan-to-value ratios for core assets in that country. The base interest rate in Japan is an incredibly low 0.5%.
China has lowered its official lending rate by 80 basis points to an attractive 6.92% and could easily boost liquidity if needed by easing restrictions on the use of foreign capital in real estate acquisitions. In the larger Asian markets, at least, the sales slump may be more transient than it has been in the West. “Asia is certainly not immune from the credit crisis,” Menifee says, “but it’s relatively less impacted.” For more information see www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net
Commercial Real Estate Sales Slump Spans Globe
The dearth of transactions that has daunted U.S. commercial real estate investors for 14 months has spread overseas, but observers suggest that measures to restore liquidity could help some markets to avoid the degree of paralysis that lingers in North America.
Transaction volume worldwide has contracted across property types and totaled $388 billion year-to-date through August, down 57% from the same period in 2007, according to New York-based researcher Real Capital Analytics. That pace is still slowing, with third-quarter sales expected to show an even steeper decline of 68% from the year-ago quarter.
“The credit crunch that has been impeding deal flow in the U.S. and Europe is now spreading throughout Asia and erupting into a full-blown financial crisis in the West,” researchers contend in the September/October issue of Global Capital Trends, published by New York-based researcher Real Capital Analytics.
But if the credit crunch is to blame for declining sales numbers, then recent measures taken by governments around the globe may help to slow the downward spiral of dwindling transactions by boosting liquidity. This month the United Kingdom announced it will invest £37 billion in its largest banks, while the United States agreed to infuse its own banking system with $250 billion and expanded government backing of deposits through the FDIC. The Bank of Japan took steps to bolster Japanese stocks and finances, and 27 states in the European Union agreed to work together in supporting their own banks.
Those coordinated responses should help increase liquidity, but investors remain cautious about declining economic indicators, according to Global Market Perspective, a report published Oct. 17 by real estate service provider Jones Lang LaSalle. Even in markets where property values experience declines, however, more readily available credit will increase the number of investors able to bid on properties as more property owners become distressed and are forced to sell.
“For every region of the world, it all hinges on whether debt capital comes available,” says Keven Lindemann, director of the real estate group at SNL Financial in Charlottesville, Va.
Making deals
So far, most overseas markets have maintained transaction volume better than the U.S. Through August, year-to-date commercial real estate sales in the U.S. reached $105.5 billion, down 77% from the previous year and down 80% since the crisis began, Real Capital Analytics reported.
By contrast Europe, the Middle East and Africa collectively had $152.4 billion in commercial real estate sales this year through August, down 46% from a year earlier. The U.K.’s $37.6 billion in sales since the beginning of the year were down 55% from a year ago.
While it’s too early to show up in sales data, the fourth quarter may bring an increase in transaction volume in Europe and the U.K., says Earl Webb, CEO of Capital Markets at Chicago-based Jones Lang LaSalle. Based on conversations with brokers and investors in Europe, Webb says the gap between bids and asking prices in Europe is narrowing and more sales are occurring as some banks as investors liquidate real estate assets.
“Investors there who need liquidity tend to get it by selling assets into the market at market-clearing prices faster than they do here,” Webb says. “In the U.K. for example, property trades are already taking place at fairly considerable discounts over where pricing was a year ago.” Indeed, buyers in August could expect an average yield of 6.3% for office, industrial and retail properties in the region, up from 5.8% a year earlier, according to Real Capital Analytics.
The only major commercial real estate market to see a decline approaching the precipitous drop in volume experienced in the U.S. has been Australia/New Zealand, where sales of $6.7 billion year-to-date mark a 74% decline from the same period last year. As a whole, the Asia-Pacific region, including Australia and New Zealand, racked up $113.3 billion in commercial real estate sales this year through August, down only 18% from the year-ago period.
Asia retains liquidity
Asia’s transaction volume has plummeted since midyear and volume for sales in the region will be down 68% in the third quarter from a year ago, Real Capital Analytics estimates. Asia enjoyed a brief surge in acquisitions earlier this year when investors sought refuge in markets they hoped would escape the illiquidity crisis plaguing the West. Japan even posted a 19% gain with its year-to-date transaction volume of $28.9 billion through August, although that number masks a more recent decline that is expected to show up as a 41% drop in sales in third-quarter sales from a year ago.
Some investors clearly expect to see buying opportunities in Asia, and those acquisitions could usher in renewed transaction volume by establishing market prices, according to SNL Financial’s Lindemann. Merrill Lynch has formed a $2.65 billion investment fund to buy Asian real estate, for example, and LaSalle Investment Management has launched a $3 billion opportunity fund focused on the same region. “The idea is that there are going to be some distressed sellers out there,” he says.
Transaction volume in Asia is down in part because investors the world over have grown more cautious in reaction to this year’s bank failures and bailouts, according to Lee Menifee, director of global strategy at CB Richard Ellis Investors in Los Angeles. Less debt is available in the region than in previous years, too, because the largely U.S.-based lenders who provided mezzanine loans and other secondary leverage have ceased to offer new loans.
Yet there is good reason for investors to consider commercial real estate acquisitions in China, Japan and other major Asian markets, Menifee says. Japan’s domestic banks continue to offer mortgage financing at 65% loan-to-value ratios for core assets in that country. The base interest rate in Japan is an incredibly low 0.5%.
China has lowered its official lending rate by 80 basis points to an attractive 6.92% and could easily boost liquidity if needed by easing restrictions on the use of foreign capital in real estate acquisitions. In the larger Asian markets, at least, the sales slump may be more transient than it has been in the West. “Asia is certainly not immune from the credit crisis,” Menifee says, “but it’s relatively less impacted.”Oct 21, 2008 2:02 PM, By Matt Hudgins Commercial News
For more information see: www.hostonrealtyadvisors.com or www.houstonrealtyadvisors.net
Transaction volume worldwide has contracted across property types and totaled $388 billion year-to-date through August, down 57% from the same period in 2007, according to New York-based researcher Real Capital Analytics. That pace is still slowing, with third-quarter sales expected to show an even steeper decline of 68% from the year-ago quarter.
“The credit crunch that has been impeding deal flow in the U.S. and Europe is now spreading throughout Asia and erupting into a full-blown financial crisis in the West,” researchers contend in the September/October issue of Global Capital Trends, published by New York-based researcher Real Capital Analytics.
But if the credit crunch is to blame for declining sales numbers, then recent measures taken by governments around the globe may help to slow the downward spiral of dwindling transactions by boosting liquidity. This month the United Kingdom announced it will invest £37 billion in its largest banks, while the United States agreed to infuse its own banking system with $250 billion and expanded government backing of deposits through the FDIC. The Bank of Japan took steps to bolster Japanese stocks and finances, and 27 states in the European Union agreed to work together in supporting their own banks.
Those coordinated responses should help increase liquidity, but investors remain cautious about declining economic indicators, according to Global Market Perspective, a report published Oct. 17 by real estate service provider Jones Lang LaSalle. Even in markets where property values experience declines, however, more readily available credit will increase the number of investors able to bid on properties as more property owners become distressed and are forced to sell.
“For every region of the world, it all hinges on whether debt capital comes available,” says Keven Lindemann, director of the real estate group at SNL Financial in Charlottesville, Va.
Making deals
So far, most overseas markets have maintained transaction volume better than the U.S. Through August, year-to-date commercial real estate sales in the U.S. reached $105.5 billion, down 77% from the previous year and down 80% since the crisis began, Real Capital Analytics reported.
By contrast Europe, the Middle East and Africa collectively had $152.4 billion in commercial real estate sales this year through August, down 46% from a year earlier. The U.K.’s $37.6 billion in sales since the beginning of the year were down 55% from a year ago.
While it’s too early to show up in sales data, the fourth quarter may bring an increase in transaction volume in Europe and the U.K., says Earl Webb, CEO of Capital Markets at Chicago-based Jones Lang LaSalle. Based on conversations with brokers and investors in Europe, Webb says the gap between bids and asking prices in Europe is narrowing and more sales are occurring as some banks as investors liquidate real estate assets.
“Investors there who need liquidity tend to get it by selling assets into the market at market-clearing prices faster than they do here,” Webb says. “In the U.K. for example, property trades are already taking place at fairly considerable discounts over where pricing was a year ago.” Indeed, buyers in August could expect an average yield of 6.3% for office, industrial and retail properties in the region, up from 5.8% a year earlier, according to Real Capital Analytics.
The only major commercial real estate market to see a decline approaching the precipitous drop in volume experienced in the U.S. has been Australia/New Zealand, where sales of $6.7 billion year-to-date mark a 74% decline from the same period last year. As a whole, the Asia-Pacific region, including Australia and New Zealand, racked up $113.3 billion in commercial real estate sales this year through August, down only 18% from the year-ago period.
Asia retains liquidity
Asia’s transaction volume has plummeted since midyear and volume for sales in the region will be down 68% in the third quarter from a year ago, Real Capital Analytics estimates. Asia enjoyed a brief surge in acquisitions earlier this year when investors sought refuge in markets they hoped would escape the illiquidity crisis plaguing the West. Japan even posted a 19% gain with its year-to-date transaction volume of $28.9 billion through August, although that number masks a more recent decline that is expected to show up as a 41% drop in sales in third-quarter sales from a year ago.
Some investors clearly expect to see buying opportunities in Asia, and those acquisitions could usher in renewed transaction volume by establishing market prices, according to SNL Financial’s Lindemann. Merrill Lynch has formed a $2.65 billion investment fund to buy Asian real estate, for example, and LaSalle Investment Management has launched a $3 billion opportunity fund focused on the same region. “The idea is that there are going to be some distressed sellers out there,” he says.
Transaction volume in Asia is down in part because investors the world over have grown more cautious in reaction to this year’s bank failures and bailouts, according to Lee Menifee, director of global strategy at CB Richard Ellis Investors in Los Angeles. Less debt is available in the region than in previous years, too, because the largely U.S.-based lenders who provided mezzanine loans and other secondary leverage have ceased to offer new loans.
Yet there is good reason for investors to consider commercial real estate acquisitions in China, Japan and other major Asian markets, Menifee says. Japan’s domestic banks continue to offer mortgage financing at 65% loan-to-value ratios for core assets in that country. The base interest rate in Japan is an incredibly low 0.5%.
China has lowered its official lending rate by 80 basis points to an attractive 6.92% and could easily boost liquidity if needed by easing restrictions on the use of foreign capital in real estate acquisitions. In the larger Asian markets, at least, the sales slump may be more transient than it has been in the West. “Asia is certainly not immune from the credit crisis,” Menifee says, “but it’s relatively less impacted.”Oct 21, 2008 2:02 PM, By Matt Hudgins Commercial News
For more information see: www.hostonrealtyadvisors.com or www.houstonrealtyadvisors.net
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