Economy Watch: Apartments Doing Better, Maybe
April 7, 2010
By Dees Stribling, Contributing Editor
Real estate research firm Reis said on Tuesday that the vacancy rate for U.S. apartments was 8 percent in 1Q10. The good news: that’s no higher than 4Q09. The bad news: that rate is the highest for the industry since 1986. Some of the people inking those relatively few leases in apartments around the country weren’t even born that long ago.
Asking and effective rents eked out small gains for the quarter, according to Reis. Average asking rents were up 0.1 percent, while effective rents gained 0.3 percent. But some places did better than others, if you’re a landlord. In metro New York, for instance, effective rents were up an average 0.9 percent, and greater Miami saw a 1.6 percent increase.
The report also noted that net apartment absorption jumped to more than 20,000 units in the first quarter, the largest net positive jump in 10 years. If that pace continues, and the new product coming on line finally dwindles to very little, that might budge the vacancy numbers in a downward direction.
Sen. Durbin Breakfasts at Spec Industrial Property
“In October 2008, the leadership of the Senate and the House were asked to meet on short notice with Ben Bernanke and Henry Paulson, then Treasury Secretary,” recalled Sen. Dick Durbin (D.-Ill.), speaking Tuesday morning at a breakfast event at the Halsted Pershing Business Center on the South Side of Chicago, which CPE attended. “They told us they needed $800 billion, or there’s going to be another Great Depression. It was one of those moments you never forget.”
The nearly complete property is a 104,800-square-foot spec industrial facility, financed back when that was easier to do, and developed in spite of the Great Recession that followed that eventful October. About a third of the building will be occupied shortly by a tech user, with other possible leases in the works. Sen. Durbin, who was invited by the Back of the Yards Industrial Council, which organized the event, was there to do his part to publicize the facility. Back of the Yards is an industrial and residential district only a few miles from downtown Chicago, near the former site of the Union Stock Yards.
Mostly Sen. Durbin, who also happens to be Democratic Party Whip, talked of the recovery from the recession, which he posited was in considerable part due to government action since 2008. As for TARP–created from that $800 billion–he mentioned that some $38 billion will soon be provided to small businesses in the form of low-interest loans, the better “to fill buildings like this.”
AIG’s Resort of Choice Changes Hands
Seattle-based Washington Holdings, a private real estate investment company, has acquire the St. Regis Monarch Beach Resort in Dana Point, Calif., from Citigroup Inc. for a reported $235 million. Citigroup had taken possession of the property when the previous owners missed payments on their Citigroup loan. That might be a run-of-the-mill hospitality industry story in our time, except that the resort has a spot in the history of the Great Recession, just as the Watergate Hotel occupies a page of 1970s history.
Namely, it’s the place where American International Group Inc. planned to have a wingding (“sales conference’”) not long after being bailed out by the U.S. government. AIG executives’ sense of entitlement didn’t deflate as fast as the company, apparently, but it’s easy to see the attraction to the oceanfront property. Among other things, it sports 400 guestrooms and suites, beaucoup expensive restaurants, an 18-hole Robert Trent Jones Jr. golf course, the 30,000-square-foot Spa Gaucin, and 65,000 square feet of indoor and outdoor meeting space.
Wall Street dropped in the morning on Tuesday, but regained value toward the end of the day, with the Dow Jones Industrial Average down a 3.56 points, or a scant 0.03 percent. The S&P 500 and the Nasdaq gained by the end of the day, up 0.17 percent and 0.3 percent, respectively.