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Janitorial Services: Unappreciated, Often Unseen
Atlanta Business Chronicle (02/09/04) ; Hall, Lee

Corporate property owners and managers need to be aware that the building cleaning and maintenance industry provides an ever-broadening array of services that extends well beyond just sweeping up floors and emptying garbage cans. Some larger firms actually offer security, parking control, and mechanical maintenance support in addition to the usual office cleaning and window washing services. The largest firm in this niche is Denmark-based Integrated Service Solutions A/S. In 2002, it generated revenue of $5.3 billion and employed approximately 250,000 people around the globe. The largest U.S. building cleaning and maintenance firm is ABM Industries Inc. of San Francisco, which recorded $3.6 billion in revenue for '02 while employing an estimated 40,000 workers. Other firms mentioned in the article include the franchise operators The ServiceMaster Co. and Jani-King International Inc., along with OneSource Facility Services Inc. of Atlanta. Such industry players have to deal with high employee turnover as wages are generally low. But the industry is growing and becoming more sophisticated with such innovations as electronic mops and portable, backpack-like vacuum cleaners that have managed to reduce floor-cleaning time by up to 50 percent.
( http://www.bizjournals.com/atlanta/stories/2004/02/09/focus7.html )

Key Alderman Firm on Sprinkler Measure
Chicago Tribune (02/06/04) P. 3-6 ; Washburn, Gary

Alderman Bernard Stone, chairman of the Chicago City Council's Buildings Committee, told commercial real estate investors this week that he is unwilling to exempt any of the city's office high-rises from a requirement to install fire sprinklers. Stone's contention is that office property investors and landlords are in a much better financial position to afford such sprinklers than condominium owners are. Opposing Stone is the Building Owners and Managers Association, which has argued that a sprinkler mandate would hurt owners of older office high-rises with low rents and high vacancy rates. Stone supports an alternative to scaling back Chicago's office building safety requirements. He explained, "What I would like to try to do is see where we can help them get financing to cover the costs."
( http://www.chicagotribune.com/news/local/west/chi-0402060335feb06,1,3615831. story )

Plots & Ploys: Setting a Standard
Wall Street Journal (02/04/04) P. B6 ; Muto, Sheila

Analysts report that when properties are measured, a square foot in Los Angeles often is not the same size as a square foot in Manhattan, for instance. Landlords in some cities count such areas as lobbies, elevator shafts and a building's rooftop in its final square-footage calculations; while other cities leave those spaces out of the equation. Alarmed by the inconsistencies, a group of commercial real-estate executives from over 80 firms are banding together in an effort to establish a set of real-estate space calculation standards. The group, dubbed the Open Standards Consortium for Real Estate, has been meeting for the last four years and now plans to integrate a new set of standards into a host of electronic databases and other software that companies use to manage properties, staff, and operations. However, the Building Owners and Managers Association (BOMA) stands in the consortium's way. BOMA has long had a set of standards for measuring office areas to ensure the most accurate comparisons between buildings. These are only guidelines, however--not standards--and are not enforced.
( http://online.wsj.com/search#SB107585422872719976 )

Real Estate Notes: People--Pike Rowley
Fort Lauderdale Sun-Sentinel (02/09/04) P. 12 ; Friedman, Robyn A.

CoreNet Global has bestowed its Top-Rated Faculty Award on Pike Rowley, director of Codina Realty Services Inc. ONCOR International's Broward County, Fla., division. Rowley's job is to teach advanced office leasing to corporate real estate executives. CoreNet is an association of corporate property professionals that offers a wide range of educational programs.
( http://www.sun-sentinel.com )

Black's Guide Launches Comprehensive Commercial Real Estate Site
PRNewswire (02/03/04)

Black's Guide has officially launched its new Web site, www.blacksguide.com, giving such commercial real estate professionals as property brokers, owners, and managers access to timely and accurate data on thousands of properties nationwide. The site features a user-friendly interface that enables users to locate available properties, compare them on a variety of criteria, and produce custom reports. Black's Guide President Doug Martin states, "Accurate, timely information is our core business, just as it is central to the business of the commercial real estate professional. We've developed [the Web site] to be a quality resource, one where users will visit often, stay longer, and connect immediately with the property to get more information." The Maryland-based company was founded in the mid-1970s and today publishes commercial property directories in 18 major U.S. cities. The business is owned by Network Communications Inc.
( http://www.prnewswire.com )

Jottings May Cut Insurers' Payouts on Twin Towers
Wall Street Journal (02/04/04) P. B1 ; Starkman, Dean

Silverstein Properties Inc. risk manager Robert Strachan could injure Larry Silverstein's case that the World Trade Center (WTC) collapsed due to two separate occurrences. According to recent testimony and evidence, Strachan had sent information to a government agency about the WTC being underinsured and that since the terrorist attacks were one occurrence as stipulated in Silverstein's insurance policies, the payment from insurers would be limited to $3.5 billion, not the $7 billion being sought by Silverstein. If the language limiting the attacks to one occurrence and one payout is used to determine the value of the property, Silverstein could face default. Moreover, the Ground Zero site could be left empty for many years until market demand deemed it necessary to build a large office building on the site. However, Silverstein could still win the case, since the WilProp binder, or temporary insurance policy, that defined what constituted a single occurrence was rejected by Travelers Property Casualty Corp., which then sent in its own policy without a definition of occurrence before the terrorist attacks in 2001. Willis Group Holdings broker Timothy Boyd informed Travelers that he would accept their policy barring any advice to the contrary from Silverstein, and emailed his acceptance of the policy to his Willis colleagues. While Silverstein contends that the Travelers form governs all of the policies from the multiple insurers, Swiss Re and others stated that Travelers form only applied to Travelers, and the others were to follow the terms of WilProp. Once the language issue is determined, the case will then move to determine whether the 2001 terrorist attacks were one or two separate occurrences.
( http://online.wsj.com/article_print/0,,SB107585833274520117,00.html )

Britain: Canary Wharf Bid Raised
New York Times (02/06/04) P. W1 ; Timmons, Heather

Brascan Group of Toronto has announced that it will make a higher-than-anticipated bid of $2.9 billion for Canary Wharf, the London-based commercial real estate complex that has become that city's financial hub. Brascan's offer surprised many observers, who then watched as an investment group led by Morgan Stanley trumped that bid with a $2.93 billion offer for the landmark property. Canary Wharf's board has already voiced support for a previous Morgan Stanley-led bid.
( http://www.nytimes.com )

Singapore's CapitaLand to Form 2 Bln Sgd Commercial Property REIT
Dow Jones Newswire (02/06/04)

CapitaLand, a Singapore-based commercial property developer, has announced plans to form a new REIT that will be called CapitaCommercial Trust. The new entity will own and operate seven of the group's commercial buildings located in Singapore's central business district. The REIT is expected to list on the Singapore Exchange this May.
( http://biz.yahoo.com/djus/040206/1015000476_1.html )

Gap Inc.: Retail to Sell German Stores to H&M for Undisclosed Sum
Wall Street Journal (02/06/04) P. B5

Gap Inc. has announced plans to sell its German retail operations to Hennes & Mauritz AB of Sweden, otherwise known as H&M. Terms of the deal were not disclosed. Gap leadership decided to sell the company's German stores in order to place more emphasis on stronger international growth opportunities. Germany ranks as the retailer's smallest international business, with only 10 locations countrywide. Not including those 10 stores, Gap operates about 350 international locations in such far-flung countries as Canada, France, and Japan. An H&M statement read: "Germany is our largest market, and we see great potential for further growth."
( http://online.wsj.com/search#BT_CO_20040205_005144 )

Inside Real Estate: AMA Site Stake
Chicago Tribune (02/04/04) P. 3-3 ; Corfman, Thomas A.

Two German investment funds have purchased a majority interest in the American Medical Association's headquarters in the Chicago area. Under the terms of the deal, John Buck Co.--which developed the 29-story tower nearly 14 years ago--will retain its stake. The building contains 622,500 square feet of space and is presently 93.5 percent leased. AMA occupies roughly 58 percent of the building. The two German funds involved are SKAG, which is the pension advisory arm of Siemens AG, and an undisclosed entity managed by KGAL Group. Together, their next target is to buy up the interests of a fund presently managed by Australia's Lend Lease Corp. Ltd. and Morgan Stanley of New York.
( http://www.chicagotribune.com/business/chi-0402040263feb04,1,2169249.story )

Profits Fall for Summit REIT
Calgary Herald (02/05/04) P. F4

Summit REIT recorded a 15.5-percent decline in its fourth-quarter profits from C$14.5 million a year earlier to C$12.3 million. The decrease occurred despite the fact that the Toronto-based industrial REIT posted a 9.1-percent increase in quarterly revenues. Last year, Summit acquired a total of 49 properties for C$233 million. Additionally, it invested an estimated C$16 million to expand existing properties, adding space to its portfolio of factories and warehouses. At the same time, though, it sold 11 non-core assets as a part of a repositioning strategy that is now about complete. Summit REIT President and CEO Lou Maroun stated, "Going forward, we will focus our efforts on enhancing returns."
( http://www.canada.com/search/story.html?id=009e41fd-fe95-4dfb-9a69-e6478fdad 9ce )

Women Slowly Make Inroads in Commercial Real Estate
Calgary Herald (02/07/04) P. E1 ; Lau, Michael

In Canada, the Alberta Real Estate Association reports that of the 167 property brokers who practice commercial real estate in the province, only 40 are female. By comparison, a recent poll of Canadian realtors in every field of real estate--both residential and commercial--found that 43.7 percent of respondents were women. Still, the number is growing, as the article takes a look at several success stories. Karen Barry, for example, entered the business well over a decade ago. She now serves as associate vice president of financial services for Royal LePage Commercial Inc., one of Calgary's biggest property firms. An investment specialist, Barry states, "The beauty of the business is if you are fortunate enough or work hard enough to uncover a piece of business, there is the potential of you becoming extremely rich. Everyone refers to women as having a glass ceiling; in commercial real estate . . . there is no glass ceiling." For the most part, industry observers say that women commercial real-estate professionals have an edge over their male counterparts in that they tend to cultivate trust faster and are often better organized and prepared for crucial meetings.
( http://www.calgaryherald.com )

AIG to Offer U.S. REIT Fund to Japanese Retail Investors
Asia Pulse (02/05/04)

Later this month, Japan's AIG Global Investment Corp. will establish a new fund for retail investors that will invest in U.S. REITs. The fund, which will be managed by an undisclosed U.S.-based property advisory firm, will be available in two versions: one that is hedged against foreign exchange risk and one that is not. It will target REITs based on their liquidity and value. Three of the major property niches--retail, offices, apartments--will be covered along with other commercial properties. AIG officials report that the plan is to invest in 35 to 40 different REITs in all.
( http://www.asiapulse.com )

WBIC Expands to China
Hollywood Reporter (02/08/04) ; Murdoch, Blake

Warner Bros. International Cinemas (WBIC) now holds the distinction of being the first Western cinema operator to hold a majority ownership stake in a Chinese movie-theater chain. Several weeks ago, WBIC entered into a management and licensing accord with the Dalian Wanda Group, one of China's biggest commercial property developers. The joint venture's goal is to build 30 multi-screen cinemas in Dalian Wanda shopping malls across China over the next several years. Last July, WBIC opened a nine-screen cinema in Shanghai, which was the first time that China's government permitted a major U.S. theater owner to extensively brand a Chinese cinema property. More recently, WBIC has petitioned the government for approval to become a majority stakeholder in a Wuhan-based movie theater.
( http://www.hollywoodreporter.com/thr/search/search_display.jsp?vnu_content_i d=2082302 )

Waiting for the Bubble to Burst? Don't Hold Your Breath
Washington Post (02/09/04) P. E1 ; Hedgpeth, Dana

Washington, D.C.'s office property market remains red-hot, with a huge rise in prices in recent years. Some, though, fear the market could bust just as it did in the early 1990s. Office buildings reached an average of $245 per square foot in 1991, only to crash back down to Earth and average $110 per sq. ft. a year later. What exacerbated the situation then was the fact that a lot more building owners were heavily leveraged and were forced to fold when they were unable to pay their huge mortgages. Today, by contrast, more of D.C.'s property owners are such large institutional investors as pension funds or insurers with huge chunks of their own money in these properties. It also helps that the Washington economy is much stronger. In 2003, the city's unemployment rate was 6.6 percent versus 7.8 percent 12 years earlier. Additionally, there are a lot more investors--especially international investors--chasing buildings in the market compared to the early '90s, which has forced some U.S. property firms to sit the market out. Tom Bakke, senior vice president at Chicago's Equity Office Properties Trust, acknowledges, "We're more on the sidelines these days; there's a lot of German and other foreign money coming in and looking at D.C."
( http://www.washingtonpost.com/wp-dyn/articles/A24439-2004Feb8.html )

Grubb & Ellis Sees Atlanta's Office Market as Nation's Strongest
Atlanta Business Chronicle (02/09/04)

In its annual economic forecast, Grubb & Ellis reports that Atlanta ranks as the country's top office market, defined as "the market most likely to perform for investors." In the 12 months prior to September 2003, approximately 65,700 jobs were added to the market. Forecasters expect the new hires will lead the way to an improved overall commercial real estate economic climate in the city in 2004. The property sectors that are expected to see improvement the earliest are office buildings, industrial facilities, and multifamily housing. Finally, Grubb & Ellis expects Atlanta's retail to become increasingly stronger throughout the year as job creation sparks further consumer spending.
( http://atlanta.bizjournals.com/atlanta/stories/2004/02/09/focus11.html )

Commercial, Multifamily Mortgages Hit Record in 2003
CBSMarketWatch.com (02/03/04) ; Kerch, Steve

The Mortgage Bankers Association reports that commercial and multifamily mortgage loan originations reached a new high of $116 million last year, an increase of more than 33 percent from the $86.4 million tallied the year before. Loan originations for the fourth quarter only, meanwhile, totaled $37.9 billion--the highest level recorded since MBA researchers began tracking such numbers. MBA chief economist Douglas Duncan cites low interest rates, an improving economy, and ample capital as three of the main reasons for a strong '03. He adds, "The commercial real estate finance business should remain strong as we enter 2004, given our forecast of continued solid economic growth and moderate increases in credit costs."
( http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?dateid=38020.5410879 63-811779154&doctype=806&siteid=mktw&selCount=20&value=KErch&property=word& )

Oahu Office Space Tightens, Rents to Rise
Honolulu Star-Bulletin (02/04/04) ; Schaefers, Allison

CB Richard Ellis reports that the amount of available office space on Oahu decreased from 14.2 percent to 12.2 percent in the last three months of 2003 compared to the same period a year earlier. Oahu office tenants leased a total of 221,072 square feet last year versus a negative 48,308 sq. ft. in 2002. On average, monthly Oahu asking rents for offices range from $2.07 to $2.26 per sq. ft., which is just below the asking price of $2.09 to $2.26 a year ago. Mike Hamasu, a commercial property analyst for Colliers Monroe Friedlander, predicts, "Rents will be fairly stable, and you won't see any steep prices for at least the next year. Although, we'll likely see more demand in Kapolei, Pearl City, and Aiea." Indeed, new residential communities in those areas are fueling the need for offices. Military businesses that feed off of Iroquois Point and Pearl Harbor are also boosting activity.
( http://starbulletin.com/2004/02/04/business/story3.html )

Roanoke, Va.-Area Office Vacancies Remain Steady in 2003
Miami Herald (02/04/04) ; Kincaid, Jenny

Having completed its annual survey, Hall Associates reports that office vacancies in downtown Roanoke, Va., remained stable last year despite an uncertain economy. Vacancies were highest in North Roanoke, where occupancy rates reached only 79 percent for the year--down a notch from 80 percent in 2002. The highest occupancy rate, meanwhile, was recorded in South Roanoke at 90 percent for 2003. That is up from 87 percent the year before. Doug Chittum, director of economic development for Roanoke County, was not surprised that the southern part of the city was the hottest for landlords. He stated, "It's where people want to be. It's where the higher rents are, and it's convenient to where people live." Downtown Roanoke, meanwhile, posted a 2003 occupancy rate of 85 percent versus 86 percent measured in '02. Business tenants like the fact that the downtown corridor has seen a plethora of restaurants open in recent years, offsetting the losses of several retailers.
( http://www.miami.com/mld/miamiherald/7876202.htm?template=contentModules/pri ntstory.jsp )

Landlords Find Big Payoff in Smaller Office Spaces
San Francisco Business Times (02/02/04) ; Chediak, Mike

Looking for creative ways to fill up their buildings, more and more San Francisco Bay Area commercial property agencies are carving up larger vacant floor space in office buildings and selling it as smaller, built-out office suites. Transformation work includes carpeting office floors, putting up new divider walls, and setting up workstations to attract increasingly valuable small tenants. In most circumstances, office landlords opt not to sell smaller offices before they are rented due to the risk of spending funds on something tenants will not like. However, with the high-tech boom having gone bust and the after-effects lingering, desperate times call for desperate measures. Rob Paratte, Divco West Properties' senior vice president of business development and leasing, states, "During the boom, everyone lost sight of the fact that the real average tenant is at 5,000 to 10,000 square feet." Paratte's firm is now building out small offices in the mostly vacant MarketCenter in San Francisco. He believes the market is presently ripe with small tenants wanting affordable space in good locations.
( http://www.bizjournals.com/sanfrancisco/stories/2004/02/02/focus2.html?t=pri ntable )

Plots & Ploys: Top of the Heap
Wall Street Journal (02/04/04) P. B6 ; Muto, Sheila

Real Capital Analytics Inc. confirms that individual investors were the most active buyers of commercial real estate in 2003, topping foreign investors and REITs as well as opportunity and pension funds. According to the New York-based firm's research, individual investors spent $39.3 billion last year on office, apartment, industrial, and retail properties valued at $5 million or more. That accounted for more than 33 percent of the $115 billion spent on such assets during that time span. This trend was quite prevalent in Manhattan, where individual investors accounted for 45 percent of the $9.7 billion on commercial property in the city last year. Cushman & Wakefield executive director Scott Latham notes that access to equity and attractive interest rates offers "individual investors the ability to borrow to a much greater extent and offer a higher purchase price than institutional investors are comfortable doing."
( http://www.wsj.com )

Reduce. Reuse. Recycle. Rethink.
Midwest Real Estate News (01/04) Vol. 20, No. 1, P. 16 ; Craig, Bob

Sustainable design remains something of a mystery to many in the commercial real estate industry, even though its influence in design choices is being felt around the world. Also known as "green building," sustainable design has been embraced by the architecture and construction industries. Furthermore, its tenets have found their way into more and more municipal building codes throughout the United States. While sustainable design has been somewhat slow to catch on, the next building cycle will be key as it will be the first time that established guidelines for such building plans will be ready to be implemented by architects and interior designers who know what such designs are all about. The U.S. Green Building Council, meanwhile, has developed the Leadership in Energy & Environmental Design (LEED) Rating System--which has given the public a benchmark measurement scale for sustainable designs. Facility managers, though, say that it is not necessary to follow LEED's specific guidelines when looking to create a more energy-efficient and healthy workplace. Various consulting firms like The Weidt Group of Minnesota assist in verifying energy savings of design during the planning and building stages. Proponents say the key to greater acceptance and understanding of sustainable design's benefits is to educate commercial property developers, owners, managers, and tenants--especially those who believe the costs are financially prohibitive.
( http://www.mwrealestatenews.com/story.cfm?StoryID=12347&Market=MW )