Then and Now
22 | New York
Ground Zero growth guides Manhattan
22 | New Orleans
Supply and demand quandaries for multifamily
28 | Denver
Convention boost could aid tourism, retail
Capsules by Jennifer E. Garrett, Jennifer Landree, Darrick Meneken, Tony Stasiek and Ivanna C. Sukkar
28 | Seattle
Bye, WaMu — hello, empty office space?
“There are always opportunities in real estate markets. You just have
to keep your focus on local activity in the regions and neighborhoods
in which you are interested in buying.”
30 | Houston
What to do with 9 million square feet of new space
— David Lereah, All Real Estate is Local
30 | Las Vegas
Questions arise with CityCenter’s suspension
True, former National Association of Realtors Chief Economist Lereah wrote this passage shortly after titling his
previous book Why the Real Estate Boom Will Not Bust. But a year after All Real Estate is Local ’s release, its sentiment holds true — especially for commercial real estate in today’s economy.
Although 2008 ends with capital scarce across all sectors, bright spots for ’09 likely will pop up on a local level
first — be they in Los Angeles’ historically solid retail market or Denver’s, which reported a $153.9 million boost
after hosting August’s Democratic National Convention.
These cities are two of the many we’ve profiled in Scotsman Guide’s Spotlight feature since June 2006 — and among
the 10 markets we’re updating here, as the calendar turns.
As much as uncertainty reigns nationwide for commercial brokers, trends in these local markets could dictate
where success lies in the months ahead.
32 | Miami
International business keeps sectors afloat
32 | Chicago
Office-vacancy rate stays strong
34 | Los Angeles
Rosy predictions appear spot-on
— Tony Stasiek
34 | Washington, D.C.
Riding the rails of government expansion
What We Said
“It is unclear how the office market will
react to the 8 million square feet of new
office space coming online with the estimated completion of the World Trade
Center in 2012. … Manhattan property-owners in many sectors continue to command rents unheard of in other big cities,
putting a squeeze on affordable housing.”
— Manhattan, December 2006
Office-vacancy rate, Manhattan (second
quarter): 5. 7 percent
■ Rate in second quarter 2007: 6. 6 percent
■ Rate in second quarter 2006: 8. 7 percent
Until completion of the Freedom Tower on
the World Trade Center site — now scheduled for 2013 — the rebuilding of Ground
Zero will top New York’s commercial real
estate news. Falling office prices and faltering condominium projects, however, are
also grabbing headlines.
The apartment market, on the other
hand, holds steady. The combined apartment-vacancy rate in Manhattan, the
Bronx, Queens and Brooklyn was 2.3 percent during the second quarter of this year,
according to Reis Inc. That compares favorably to rates of 2.4 percent and 2.9 percent during the second quarters of 2007
and 2006, respectively.
Reis projects apartment-vacancy rates
in these boroughs to stay at or below 3.2
percent through at least 2012. Office-build-ing owners, meanwhile, face a vacancy rate
expected to reach almost 8 percent by the
time Freedom Tower’s 2.6 million square
feet of office space come online.
— Darrick Meneken
What the Locals Say
“While there has clearly been
a softening in the aggressiveness from buyers, we are
starting from a place of enormous strength. So we have
room for some softening in condo prices.
We have room for softening in office rents
while continuing to be a healthy and fundamentally sound market. And I think
that differentiates New York from most
— Scott A. Singer, executive vice president, The Singer & Bassuk Organization
What We Said
“Gulf Opportunity Zone Act tax incentives
for builders and small-business owners
have played a role in the more than $1 billion worth of commercial and residential
permits issued since August 2005.”
— August 2006
Apartment-vacancy rate: 4 percent
■ Rate in June 2005: 6.2 percent
Average apartment rent: $1,317
■ Average rent in June 2005: $1,021
New Orleans’ apartment properties no
longer see the waiting lists that accompanied the city’s regeneration after Hurricane
Katrina. But multifamily absorption could
continue to be an issue for the area three
years after the big storm.
According to GCR Associates, Katrina
destroyed 182,416 area rental homes —
many of which were in low-income regions. Many returning residents chose
or were forced to relocate to less-flood-prone areas.
What’d they find? Apartments at a premium. Spurred by tax incentives such as
the Gulf Opportunity Zone Act, builders
and owners were able spruce up the city’s
multifamily inventory considerably — completing what analysts compare to a 10-year
makeover in about a quarter of the time.
Hence the city’s large rent increase — with
the average rent for an apartment in Orleans Parish ($1,317) far exceeding the U.S.
Department of Housing and Urban Development’s 2008 fair-market rate for a one-bedroom unit ($846) in the metropolitan
Given the state of the credit markets,
boosting multifamily supply to meet the
considerable demand is tricky. Add that
to New Orleans’ geographical restrictions — it’s bordered by swamp or water
on all sides — and the city could be in a
tight spot in more ways than one.
— Tony Stasiek
What the Locals Say
“The main catalyst for development since Hurricane Katrina
has been the tax credit. But
now with the challenges in the
market, and considering Fannie Mae and Freddie Mac, new construction
projects are on hold. If your project is under construction right now, you’re probably
fine. But it’s a matter of getting in before the
— Larry G. Schedler, president,
Larry G. Schedler & Associates Inc.