Transcript Slide 1

Commercial Real Estate – National Summary
OFFICE MARKET- through 3rd Qtr 2008
LEASES:
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The US office market gave back space for lease helping to push the national vacancy rate up
for the fourth consecutive three month period.
Office Rents began to reflect real weakness in the general economy with downtown & suburban
lease rates falling.
Business confidence is unlikely to return before the financial crisis shows signs of abating, keeping
decision makers on the sidelines & perpetuating a “wait-&-see” attitude.
Overall Office vacancy rate increased for 3rd consecutive quarter, posting 10.6% in Central
Business Districts (CBD), & 15.6% in suburban markets – 13.1% Total
3rd quarter absorption was again negative with occupied space contracting by 2.2 million SF
Combined with 1st & 2nd quarters, year-to-date absorption registered -7.5 million SF.
Financial & insurance sectors, & even law firms, expected to give back at lease 20 million RSF
over the next 6-12 months.
Expect vacancies in both downtown & suburban markets to rise again (to peak around 17% )
next year before stabilizing in 2010.
National Average Rental Rates (Class A) = $49.50 per RSF Downtown & $28.50 per RSF Suburban
BUILDING SALES:
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A frozen debt market, eroding fundamentals, & uncertainty in property pricing have combined
to cause sales of significant properties to plummet to their lowest quarterly volume recorded
since the 2nd quarter of 2004.
Year-to-date, National sales volume is down over 60% from the same period in 2007 – at $23.9
billion for downtown & $26.2 billion for suburban markets.
Source: Cushman & Wakefield & Colliers
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – Tampa/St. Pete Office Summary
OFFICE LEASING - 130,279,073 RSF
through 3rd Qtr 2008
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – Tampa Bay Area
OFFICE SALES - through 3rd Qtr 2008
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Total office building sales activity in 2008 was down compared to 2007.
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In the first six months of 2008, the market saw 18 office sales transactions with a
total volume of $130,572,900.
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The price per square foot averaged $129.48.
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In the same first six months of 2007, the market posted 43 transactions with a total volume
of $542,836,099. The price per square foot averaged $157.78
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Cap rates have been lower in 2008, averaging 7.74% compared to the same period
in 2007 when they averaged 8.04%.
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One of the largest transactions that occurred within the last 12 months in the
Tampa/St. Petersburg market is the sale of the SunTrust Financial Centre in Tampa.
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This 527,000 square foot office building sold for $117,050,000, or $222.11 per square foot.
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The property sold on 9/20/2007, at a 5.50% cap rate.
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – National Summary
RETAIL MARKET - through 3rd Qtr 2008
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For past few years, Shopping center owners & retailers alike have witnessed a more sluggish
retail environment as the economy has slowed & housing weakened.
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Consumer confidence, a key indicator for the economy, registered a 15 yr low in the month
of April 2008 (with the exception of March 2003 & the onset of the Iraq war).
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The national shopping center vacancy rate increased to 10.2%
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Despite a modest weakening of fundamentals, shopping center rents continue to increase
with the latest annual increase registering at 3.9%
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Rental Rates per SF increased to $16.93 per SF NNN
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YTD Absorption has been 1.3 million SF.
NATIONAL FORECAST:
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Destination & Large Malls (mostly owned by REITS) should weather the ongoing consumer
retail retreat better than other retail segments.
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Shopping centers have turned “High Risk” with energy and Inflation eating into retail sales.
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Retailers will again focus on stores in the top centers, leaving some B & C malls behind.
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Consumers crave bargains- outlet centers and discount clubs will hold their own.
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Well located strip centers, anchored by top supermarket chains will continue to draw
necessity shoppers.
Source: Urban Land Institute
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – Tampa Bay Area Summary
RETAIL – 192,326,629 TOTAL SF
through 3rd Qtr 2008
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The Tampa Bay Area experienced a slight decline in retail market conditions in the 3 rd qtr 2008.
The vacancy rate went from 5.3% in the previous quarter to 5.5% in the 3rd quarter 2008.
Over the past year, the market has seen an overall increase in the vacancy rate from 4.6% in the
4th Qtr 2007 to 5.5% in the 3rd quarter 2008.
Net absorption was negative (6,635 SF), & vacant sublease space increased by 51,086 SF.
Quoted rental rates increased from 2nd quarter 2008 levels, ending at $16.95NNN per SF
Average sales price per SF decreased from $134.77 per SF in the 2nd quarter 2008 to $129.13 per
SF in the 3rd quarter 2008
Source: COSTAR
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – National Summary
INDUSTRIAL MARKET - through 3rd Qtr 2008
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Overall US Vacancy increased to 8.7% in the 3rd quarter, from 8.5% in 2nd quarter,
& 8.2% in the 1st quarter of 2008
Net absorption for the overall US industrial market was positive 9,474,091 SF in the
3rd Qtr. 2008.
Vacant sublease space increased to 69,841,420 SF in the third quarter
Average overall quoted rental rate was $6.09 NNN per SF
2008 Average Sales Price to date has fallen to $65.91 per SF compared to $68.52
per SF in 2007
Source : COSTAR
FORECAST
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Slumping Consumer buying leads to declining import traffic, slowing warehouse
activity.
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Markets tied to homebuilding will show continued weakness- homebuilders stop
buying construction materials and fewer new homebuyers mean reduced overall
spending to fill homes with furniture and fixtures.
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In 2009 & 2010, Builders need to back off due to rising vacancies, high construction
costs and very limited financing.
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Good News- Over the long term, the sheer volume of increased global trade and
steadily increasing demand at the major coastal port gateways insures a growing
need for new types of distribution and warehouse facilities.
Source : Urban Land Institute
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – Tampa Bay Area Summary
INDUSTRIAL MARKET – 258,827,746 TOTAL SF
through 3rd Qtr 2008
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Industrial markets in the Tampa Bay Area showed mostly negative activity during the 3 rd
quarter 2008
The Tampa / St. Petersburg Industrial market ended the 3rd quarter 2008 with vacancy rate of
8.2% up from 7.3% the previous quarter
Net absorption for the overall Tampa / St. Petersburg market was negative (1,174,940)
Vacant sublease space managed to decrease in the quarter, ending at 1,326,026 SF
The average quoted asking rental rate for available space was $6.81 per SF at the end of
the 3rd quarter 2008 which represented a 0.3% decrease in quoted rental rates from the 2nd
quarter 2008 when rates were reported at $6.83 per SF
Average sales price per SF decreased from $58.51 per SF in the 2nd quarter 2008 to $52.21
per SF in the 3rd quarter 2008
Source: CoStar
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – National Summary
SUMMARY OF NATIONAL COMMERCIAL REAL ESTATE LOANS – CREDIT CRUNCH
through 3rd Qtr 2008
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Third quarter 2008 originations were 53% lower than during the same period last year.
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The year-over-year decrease was seen across all property types and most investor groups.
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“Uncertainty stemming from the credit crunch, and now the deteriorating economy, has led to a continued pull-back
among both lenders and borrowers,” said Jamie Woodwell, MBA’s vice president of commercial real estate research.
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“The need among most investor groups to conserve capital and the uncertainty of how the slowing economy will
affect property fundamentals is fueling a prolonged pause in all aspects of commercial real estate activity.”
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Decreases in total commercial/multifamily mortgage originations continued to be led by a drop in commercial
mortgage-backed security (CMBS) conduit loans and loans for commercial bank portfolios. These numbers show the
impact of the recent credit crunch and other market disruptions.
When compared to the 3rd quarter of 2007, the overall 53% decrease in commercial/multifamily lending activity
included:
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87% decrease in loans for hotel properties,
61% decrease in loans for office properties,
59% decrease in loans for health care properties,
39% decrease in loans for industrial properties,
30% decrease in multifamily property loans,
30% decrease in retail property loans.
Among investor types, conduits for CMBS saw a significant decrease of 93% compared to last year’s 3rd quarter. There
was also a 71% decrease in loans for commercial bank portfolios, and a 27% decrease in loans for life insurance
companies. The dollar volume of loans for government-sponsored enterprises (or GSEs - Fannie Mae & Freddie Mac)
saw an increase of 15%.
Among investor types, loans for commercial bank portfolios saw :
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A decrease in loan volume of 55% compared to the second quarter of 2008,
Loans for conduits for CMBS saw an increase in loan volume of 67% compared to
the second quarter of 2008,
life insurance companies increased by 27% during the same time span,
GSEs volume increased 12% from the second quarter 2008 to third quarter 2008.
On a quarter-over-quarter basis, the size of the decline in loans for commercial
banks overwhelmed increases among other investor groups.
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650
Commercial Real Estate – National Summary
SUMMARY OF NATIONAL COMMERCIAL REAL ESTATE LOANS – CREDIT CRUNCH
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Compared to the second quarter of 2008, third quarter Loan originations for:
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Hotel properties saw a 71% decrease.
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42% decrease for health care properties,
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28% decrease for office properties,
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22% increase for industrial properties,
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9% increase for retail properties,
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9% increase for multifamily properties.
Source: WASHINGTON, D.C. - Commercial and multifamily mortgage loan originations remained low in the third quarter,
according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers
Originations.
Michael S. Talmadge
Licensed Real Estate Broker
Residential Real Estate – National Market
through 3rd Qtr 2008
Resale market is still the main event with foreclosures assuming the lead role
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Since early 2007, the current housing cycle resale trends would be the most important gauge of
the housing market’s trajectory.
Homebuilders have mostly done what they needed to in wringing the excesses from the new
housing market.
In August 2008, sales volumes declined by 17% from August 2007 in 41 metro areas.
Foreclosures are still dominating the story
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There is a growing impact of foreclosures on the resale market.
In the main foreclosures states of Arizona, Florida, California and Nevada, resale volumes have
turned positive.
These volume increases aren’t reflective of real underlying demand, but instead are driven by
market clearing price reductions.
In the bottom 10 markets in terms of pricing, volumes were up +32%
But at the expense of prices that were down -32% year/year.
Resale prices decline and will reach at least 25-30% from the May 2004 peak
Real price declines could continue through 2010.
Source: Deutsche Bank
Michael S. Talmadge
Licensed Real Estate Broker
Residential Real Estate – Florida Market
FLORIDA – STATEWIDE
through 3rd Qtr 2008
The weather may still be warm in Florida during September, but the home and condo
markets have clearly iced up:
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Single-family home sales fell just 0.3% in September compared to August, but the
median sale price dropped a substantial 6.3%.
Condo sales fell 10.5% month-over-month, while the median sale price fell 2.7%.
On a positive note, statewide September home sales were up 24% from a year ago
and condos sales were up 10.9%.
September 2008 as the first month that the “sub-prime meltdown” severely crimped
sales activity.
The crucial Miami market was the worst large market from a sales perspective, with
353 closings during September, compared to 483 in August, a 26.9% decline.
Florida has a 16.9-month inventory of single-family homes currently on the market,
compared to a 9.4-month supply nationally.
On the same measure, Florida has 35.6 months of condo inventory, compared to 14.3
months nationally.
Source: John McCrory – Sterne Agee
In short, although sales are above their sub-prime-crisis lows, they remain anemic and
prices continue to tumble.
Highest Foreclosures/Households
Michael S. Talmadge
Licensed Real Estate Broker
Residential Real Estate – Pinellas County Market
PINELLAS COUNTY - through 3rd Qtr 2008
Single Family Housing market showed distinctive signs of improvement.
Pinellas County reported a higher number of pending Home sales:
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The absorption rate was the highest it has been this year.
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Year over year, unit sales increased 21.3%.
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3rd Quarter 2008 held steady month to month.
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Inventory remained steady; however it is nearly 6.5% lower than last year.
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The median price was $165,000 in September 2008 - the lowest level for the year and
reflects a 17.1% drop from 2007.
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Of the homes that went under contract in September, the median price was $165,950.
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The number of pending sales was almost 26% higher than last year.
Condo sales, on the other hand, are still working through a slower market:
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Listings are down 17.2% and sales are also down 6% year over year.
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The median price continued to drop, now at $150,000 which is 7.7% below September,
2007.
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22% of the condos sold were in the $100,000 to $140,000 price range, with another
12+% in the $200,000 to $250,000 range.
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Just as with single family homes, the future looks brighter, with pending sales at 22%
higher than last year.
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The median price of the pending sales is $149,900.
Source: Pinellas Board of Realtors
Michael S. Talmadge
Licensed Real Estate Broker
727.214.4650