Scotsman Guide - January 2011 Commercial Edition

From the Editor

BY IVANNA C. SUKKAR, EDITOR

In the Past Month
A new hotel opened neAr ScotSman Guide’s offices recently. At first, it
seemed A bit odd — risky, even — thAt A hotel wAs being constructed And
opening in this still-tight economic mArket, pArticulArly bec Ause the AreA
is AlreAdy sAtur Ated with other hotel properties.

But perhaps risk is the key as 2011 kicks off. It may be that to not only survive, but to thrive as the credit markets begin to thaw, hotel-owners — and property-owners in general — must take such risks. These property-owners’ advisers, including their mortgage brokers, are well-poised to help manage these risks.

And that’s just what this month’s Scotsman Guide is focusing on — risk management. Commercial mortgage professionals must be adept at managing and mitigating risk for themselves and their clients. With the credit markets opening up, they are taking a new shape, as this month’s Lead Article by PSB Realty Advisors’ Scott T. Pickett (Page 21) portends.

Back to hotels: The new one near our offices may be considered less risky because it is a brand-name — i.e., a flagged — hotel. As K. Spencer of Spencer Acquisitions LLC points out in his article on Page 30, whether a lodging property is flagged or unflagged is one of the six keys to financing to which brokers working with this property type must pay attention.

That doesn’t mean that an unflagged hotel can’t succeed, though. Many independent hotel-owners may benefit from the recent changes to U.S. Small Business Administration (SBA) programs brought on by the Small Business Jobs Act. We’ve covered the act’s provisions in recent issues, but this month, Christopher Hurn of Mercantile Capital Corp. discusses how small-business owners can now use the SBA’s 504 program to refinance property loans. Packaged with Hurn’s article, Ronald L. Reuss of GulfCoast Business Finance Inc. offers an overview of the act’s changes (Pages 42-43).

Retail sales increase in October

WASHINGTON, D.C. — U.S. retail sales increased by 1.2 percent this past October compared to September, according to the Commerce Department.

The retail data provide a hint that home-construction numbers may improve in October. Sales of building materials increased 1.9 percent compared to a 1.3-percent increase in the previous month.

Next release:

Retail sales: Jan. 14

Consumer spending sees increase in October

WASHINGTON, D.C. — Personal income increased by 0.5 percent in October 2010 with spending climbing 0.4 percent, the U. S. Bureau of Economic Analysis reported.

Spending was slightly less than expected, but it beat September’s gain of 0.3 percent.

Economists had predicted incomes would increase by 0.4 percent and spending would increase 0.6 percent.

Spending on goods outpaced outlays on services, increasing 0.8 percent. Consumer spending on services was up by 0.1 percent.

Next release:

Personal income and outlays: Jan. 31

Also, although the hospitality market has been among the hardest-hit sectors in the economic downturn, some areas of the country that rely on tourism are bouncing back. In this month’s Spotlight, associate editor Jennifer E. Garrett looks at South Carolina’s commercial real estate market and economy. Part of the state — particularly the coastal cities — relies on tourism, as Garrett discusses on Page 18.

With the new year here, consider what types of risks are worth taking for your business and in your market. They may well pay off.

Layoffs on track for fewest since 2000

CHICAGO — Announced company layoffs in 2010 in the United States are on track to fall to the lowest level since 2000, according to Challenger, Gray & Christmas, a private outplacement company.

This past October, U.S. firms announced 37,986 job cuts, just slightly ahead of the 37,151 announced in September, Challenger, Gray & Christmas reported.

Through October, each month of the year has had fewer layoffs than the same month of 2009, the company said.

ivannas@scotsmanguide.com

NEXT;MONTH
BEYOND;OuR;BORDERS

… in February’s Scotsman Guide

• Self-storage: An often-
overlooked niche
• A big-picture look at
the market today
• Q& A with the Mortgage
Bankers Association
• Is Idaho’s commercial
market a gem?

White House touts stimulus spending

WASHINGTON, D.C. — White House advisers said this past November that the American Recovery and Reinvestment Act had supported 2.7 million to 3. 7 million jobs by the end of the third quarter of 2010.

“By some measures [the act] has exceeded the original goal of creating or saving 3. 5 million jobs by the end of 2010,” the Council of Economic Advisers said in the fifth quarterly report on the $787 billion stimulus spending bill.

The report said the third quarter “was the biggest yet for public investment spending with more than $33 billion outlaid for clean energy, transportation and other infrastructure projects.” The report said the stimulus bill “added 2.7 percent to third quarter gross domestic product growth.”

Panama

… and much more.

Online? Check out current and past editions of Scotsman Guide at scotsmanguide.com.

Panama is the best country in Latin America for business, according to the Latin Business Chronicle’s annual Latin Business Index. The journal forecasts Panama’s gross domestic product to have an average growth rate of 6. 6 percent from 2011 to 2015 — the best for the region. Some factors buoying business in the country: the $5.25 billion expansion of the Panama Canal, already under way, and plans for airport expansions across the country. In Panama City, vacancy rates for Class A properties are down from 9. 3 percent in June 2009 to 5. 5 percent this past June, according to CB Richard Ellis.

Fed to increase bond purchases slowly

WASHINGTON, D.C. — The U.S. Federal Reserve Board this past November announced it would increase its investment in long-term Treasury bonds by $600 billion through this coming June.

The Fed said it would add $75 billion per month to its portfolio. In a statement, the central banks said new data confirmed “the pace of recovery in output and employment continues to be slow.” Consumer spending, a major swath of the gross domestic product, was “increasing gradually,” the Fed said, “but [it] remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit.”