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Commercial Real Estate Home September 02, 2011 Up to 700M SF of commercial floorspace to undergo energy efficiency overhaul by 2018 Edited by: Lisa Benston Source: Savills The firm suggests that the issue of a requirement to upgrade private rented properties to an EPC rating of grade ‘E’ or above will be most pertinent in London. The firm states that due to a large number of lease renewals anticipated to come to the market in the next five years, landlords left with vacant space would be advised to take the opportunity to improve the energy performance of their property. According to DECC (Department of Energy & Climate Change) 62% of non domestic properties are rented and of this figure 18% have a rating below grade ‘E’. Michael Pillow, director of Savills building consultancy, comments: If the legislation goes through, leasing of a sub grade E standard property will become unlawful from April 2018. Although upfront payment issues to enable energy consumers to improve their property are considered within the Government’s proposals under The Green Deal financing framework, in practice there are many issues still to be resolved such as recovering charges incurred during void periods or in multi tenanted properties which could raise concerns and needs close examination.” Savills does however state that going beyond basic levels of refurbishment can reduce void periods in a property as firms are increasingly showing a preference for greener buildings. This may not directly translate into a higher rental premium but Savills suggests it will improve the long term investment value of a building. Marie Hickey of Savills research team says: Its the avoidance of the ‘brown’ discount rather than the hunt for the ‘green’ premium that will drive investors/landlords to improve the efficiency of their portfolio”. The UK market has not yet seen a clear hike in values when comparing higher ranking green office properties to that of lower grades. However, if we look to US and German markets we are seeing evidence of clear demand shifts towards green office product with a recent report suggesting demand has tripled in the five core German markets.” Jon Hutt, director of Corporate Real Estate at Savills, says: ”With the ever increasing costs of energy, early action to introduce green and energy saving enhancements is likely to give properties some advantage over more obsolete stock making them more attractive to occupiers and possibly enhancing rent and value. Review, analysis and delivery well before 2018 will be key.” Sep 2, 2011 11:44:39 AM Comment 0 Reblog It 0 July 15, 2011 Los Angeles property sells for $132.85 million In what is being touted as one of the largest commercial real estate sales in Los Angeles County since the turn of the century, the new Warner Center apartment complex has been sold for almost $133 million, according to the Los Angeles Times. The 438-unit Millennium Earner Center was purchased by Wesco, sponsored by Essex Property Trust. The complex was sold by developer Warner Center Apartments, the media outlet reports. Experts believe that even though commercial real estate sales have tapered off since the real estate boom and crash, high-end buildings in good locations are still drawing the attention of buyers. Additionally, a property that can provide good income from tenants is even more appealing to prospective owners. "There is tremendous demand for newer, Class A assets in core California markets, and these opportunities are few and far between," broker Stan Jones of Institutional Property Advisors told the news source. The Millenium Warner Center is less than 60 percent leased, but experts have found that buyer demand and leasing momentum has investors willing to assume the cost of the empty units. The property opened in December and monthly rents at the Kittridge Street Complex run from $1,565 to $3,350. Jul 15, 2011 3:01:50 PM Comment 0 Reblog It 0 European commercial real estate investments on the upswing Direct real estate investment activity during the first quarter of 2011 was up 32 percent from last year and the second quarter saw that growth continue, according to Global Capital Flows research from Jones Lang LaSalle. Investment volumes were up 4 percent in the second quarter compared to the same timeframe a year ago. While investments in the second quarter were not nearly as high as they were to begin the year, the year-to-year activity is still up a total of 17 percent overall. There were strong increases in Northern Europe, while the UK and Southern Europe experienced declines, the research showed. Experts have reported that the first quarter had several extremely large deals close, including the sale of the UK’s Trafford Center for €1.9 billion and Germany’s Centro Shopping Center, which sold for €650 million. These large sales may have inflated the overall commercial real estate market trends in the first quarter, but the limited amount of property in Central London may have also caused sales to stagnate. "Current market evidence suggests that larger deals now take longer to close and we suspect that some deals currently under offer have been pushed back into the second half of the year," said Robert Stassen, head of EMEA Capital Markets Research and Jones Lang LaSalle. Jul 15, 2011 2:59:44 PM Comment 0 Reblog It 0 July 14, 2011 U.S. commercial real estate may be appealing to international investors Foreign investors have increased their interest in America’s commercial real estate market due to easier financing terms and appealing rental yields, according to Financial Times. A report by Jones Lang LaSalle found that foreign investors spent $49 billion on U.S. commercial property during the second quarter of 2011. This is a 56 percent increase from the same timeframe a year ago. The income a landlord receives as a percentage of the purchase price of a property was more than 6 percent in the office, industrial, retail and hotel markets during the quarter, the media outlet reports. During the same time, 10-year U.S. Treasury securities only yielded 3.3 percent. "There are lenders who have emerged and are making loans on commercial real estate so there is liquidity and capital in the marketplace," Craig Leupold, president of Green Street Advisors, a property research company, told the news source. As the U.S. dollar continues to weaken, American assets may become more appealing to international investors. Experts believe that this trend will remain strong throughout the year, but may begin to slow down as the rest of the world faces potential economic crises. Jul 14, 2011 4:21:53 PM Comment 0 Reblog It 0 Office leasing in the Big Apple is on the rise As the American economy continues its slow recovery, the commercial real estate market in Manhattan is finally starting to show positive signs of life. Office leasing in the city is up 34 percent from last year, according to CB Richard Ellis. A major factor in this increase is the reduction of available space. Close to 15.7 million square feet of leases were signed during the first two quarters of 2011. This is a 4 million square foot spike from a the same time last year, Bloomberg reports. Google, a company that remained on the West Coast during the real estate crash, is finally shifting interests to the talent that New York and surrounding communities has to offer. The company agreed to pay $1.8 billion for 111 Eighth Avenue in December. "You’re seeing New York as a place where almost every company is saying we have to be in, and a market we can’t avoid," Peter Turchin, CB Richard Ellis’s executive vice president, told the media outlet. "If we want to recruit the best and the brightest, those people are in New York." Jul 14, 2011 4:20:39 PM Comment 0 Reblog It 0 Women in commercial real estate may not be treated as equals A study commissioned by the Commercial Real Estate Women Network (CREW) last October found that an increasing number of females are entering the...