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NO JIVING THIS TURKEY

WASHINGTON DC 06.27.2017

THE WASHINGTON DC STATE OF THE MARKET

Matt Bronfman -- Jamestown Properties
Anthony Lanier -- EastBanc
Herb Miller -- Western Development
NO JIVING THIS TURKEY
DEW GETS HIS POINTE

 
John Dewberry's first major office development in Midtown may have just been saved from foreclosure.
 
Dewberry Capital One Peachtree pointe trepp foreclosure
This morning, we took a stroll along Peachtree Street to snap One Peachtree Pointe. According to data from Trepp, Dewberry Capital has come to an agreement with the Class A building's special servicer with a new undisclosed discounted payoff amount (DPO) after the developer made an undisclosed deposit toward the loan. Now, the new DPO agreement must close by Dec. 6 or One Peachtree Pointe will be advertised for foreclosure the very next day, according to Trepp documents. Officials with Dewberry declined to comment, but John Dewberry  previously told an audience atBisnow's ?How Goes Midtown?? event in October that his firm was ?working something out? on the One Peachtree Pointe loan. The project—secured by a loan with $24.8M  left on its balance prior to this current agreement—has certainly performed well in the past, generating $3M in revenue and nearly $2M in expenses for the first nine months of 2009. But One Peachtree Pointe's formerly largest tenant—law firm Seyfarth Shawvacated the space at the end of its term and moved to Daniel Corp's 12th and Midtown project.

Bisnow
DUKE-ING IT OUT IN THE MARKET
 
Sam O'Briant Duke Realty industrial
Duke Realty is closing out the year with its industrial portfolio at  94% leased, helped by some really big deals like the 550K SF in leases to Dayton Superior and Safelite at Braselton Park 85. That's also despite acquiring JP Morgan's 2.3M SF in industrial properties along I-85—including Horizon Business Center, in which Duke was a 50/50 partner. To Duke's Sam O'Briant, this has been a slower year of big box  deals. Duke focused on smaller, local tenants to help fill spaces. And 2011 will offer more of the same. Sam will elaborate more on his crystal ball as one of the panelists at Bisnow'sIndustrial Real Estate Summit tomorrow at the Westin in Buckhead (Hurry! Tickets are going fast.) ?We're just not seeing the big retailers getting out there and expanding their supply chains  right now,? he says. Duke will also continue to focus on readjusting its real estate portfolio, selling more of its office holdings (especially in the Midwest) and buying more industrial properties along the East Coast. This past year alone, Duke acquired $1B in real estate. ?As a company, we're looking to increase our industrial portfolio ... to 60% industrial and 40% office,? he says.

Bisnow
GABLES NEW GAMBIT
 
Gables Residential multifamily emory point cousins properties
At a time when very little is being built, this could be the next major multifamily development  to break ground in Atlanta. Gables' Residential's Joe Wilber  sent us the imagery of its 450-unit Class A Emory Point project, a JV with Cousins Properties, which would develop 80K SF of retail and located off of Clifton Road near Emory University. It could break ground in 2011 and would be the  first new Gables project  since the firm finished Gables Midtown on Monroe Drive. This will be done at a time as multifamily fundamentals continue to post strong growth, Joe tells us. With fewer than 1K new units being delivered (7K-10K new units is average for Atlanta), Joe says Gables expects the market will absorb 5K units and rents should improve another  three to five basis points.  In any other market, this dynamic would spur on a development spree. Not so today. ?Capital is still hard to come by, and you've got to believe in rent growth,? Joe says. He's seeing a trend of more people in their '20's returning to the rental market with parents helping co-sign on the lease agreement. ?A lot of their parents see the worst is behind us, and feel more positive about their job prospects,? he says. 

Bisnow
NO JIVING THIS TURKEY
 
Grubb Ellis Robert Bach Thanksgiving inflation landlord rents
A lack of any real inflation was certainly good for our Thanksgiving dinners. But it isn't so hot on landlords. That's this year's message by Robert Bach, the chief economist with Grubb & Ellis (seen here holding your turkey hostage, thanks to our photoshopping), who declares in his annual economic message that the cost to feed 10 people this holiday is $43.17, a 1.3% increase from Thanksgiving of 2009. At the same time, industrial and office landlords have been unable to push through any rent increases this year. The average asking rental rate/SF of office space in the US fell from $26.60 full service gross in Q3 '09 to $26.10 in Q3 '10, a decline of 1.8%, while a SF of industrial space fell from $5.38 to $5.35 triple net, down 60 bps. Nevertheless, sales prices of the associated real estate have risen sharply during this period. The average PSF sales price of office and industrial properties increased by 13.2%  and  8.2%, respectively, according to Real Capital Analytics. Some analysts have expressed concern that prices for income-producing real estate, whether prime agricultural land, or core office buildings are getting ahead of market fundamentals due to a combination of very low mortgage rates and investor concerns over inflation somewhere down the road.