How bad is it? Just look.

I recently conducted a ride-along interview...the subject was industrial vacancy. Good commercial brokers should always know what kind of inventory is available in their market and, even though I'm still fairly young and have a pretty good memory, even I was overwhelmed by the sheer number of buildings for sale or lease. The interview below was conducted in an approximate one mile radius of the Whitfield/US301 intersection. Expand this area to the entire Manatee/Sarasota MSA and you can imagine it's nearly impossible to remember every single available building and price. A good portion of this inventory isn't even online anywhere.

Selling or leasing industrial property is truly a huge challenge for all agents and owners. This video underscores those challenges.

Leased Another One

Just wanted to welcome PEN Produce to their new home at 2065 12th St in Sarasota. PEN is run by a great guy named Pete Greci and he'll be running a small farmer's market on the weekends to supplement his produce distribution business. PEN leased 4,800 square feet for 3 years. Welcome, guys and thanks for the business!

CMBS Red Shoots, RealPoint Report

From RealPoint. Tell us something we don't already know.

And I quoteth:

In June 2009, the delinquent unpaid balance for CMBS increased by a substantial $9.87 billion, up to a trailing 12-month high of $28.65 billion. Overall, the delinquent unpaid balance grew for the 10th straight month, up an astounding 585% from one-year ago (when only $4.18 billion of delinquent balance was reported for June 2008), and is now almost 13 times the low point of $2.21 billion in March 2007. An increase in four of the five delinquent loan categories was noted in June, including a significant $6.82 billion increase in the 30-day delinquency bucket. Nearly one-half of this increase was driven by the reporting of $3.38 billion of GGP-sponsored but specially-serviced loans as 30-days delinquent (the ultimate resolution of such loans to be determined). In addition, the distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 19th straight month – up 32% from the previous month and over 411% in the past year.

The full report is here.

June Office Vacancy Report (Sarasota County)

Vacancies inched up once again. We have about another percentage point of empty office space than we did a few months ago with the I-75/Fruitville, south to Clark corridor seeing a negative 40,651SF of absorption this year. Ouch!

Down and dirty numbers:

Countywide: 18.82%
University Parkway: 18%
Downtown: 13%
I-75/Fruitville S to Clark: 23%
Venice: 22%
North Port still sucking wind at: 35%
Suburban and South Trail: 26%

Area Losing Two Dillards Stores.

I'm wondering when the time will come where most large malls will either be bulldozed or turned into college campuses. No surprise DeSoto is losing tenants; you almost need a bodyguard or a gun to go shopping there. Everyone I know avoids that place.

2 Dillard's stores are said to be closing in the region

Dillard's confirmed it will close its store at Westfield Sarasota Square. Also, sales associates at the DeSoto Square Dillard's said they have been told that store will close before the end of the year.

By Toni Whitt

Published: Thursday, July 23, 2009 at 1:00 a.m.
Last Modified: Wednesday, July 22, 2009 at 10:02 p.m.

In another sign of stress on the Southwest Florida economy, giant retailer Dillard's is closing two of its four stores in the region.

The anchors at Westfield Sarasota Square and DeSoto Square Mall in Bradenton are two of the five store closings that the Little Rock, Ark.-based retailer plans nationally in 2009.

The company confirmed on Wednesday that the Westfield Sarasota Square is closing, but a corporate spokeswoman would not confirm the shuttering of the Bradenton site.

Sales associates, however, said they were told that the DeSoto Square Dillard's would close before the end of the year. Many of their co-workers have already been transferred to other stores.

Consumers have cut their spending at a nearly unprecedented level in the last year as the nation's financial crisis, recession and rising unemployment has reduced their wealth and willingness to part with cash.

Dillard's, with 306 department stores and nine clearance centers in 29 states, reported earlier this month that its same-store sales fell 15 percent for the five weeks ended July 5 -- a worse drop than analysts had expected.

The DeSoto store shows all the signs of closing. Display cases stand empty amongst the perfume and handbag displays, and nearly one-third of the department store's second floor has been roped off and filled with empty display racks and other fixtures.

The store is going to be hosting a shipment of clearance merchandise that will go on sale the week of Aug. 1.

If both stores close by the end of the year, there will be only one Dillard's department store -- at Westfield's Southgate mall in Sarasota -- between Port Charlotte and St. Petersburg.

Dillard's spokeswoman Julie Bull said the company has begun working with sales associates to move them to other stores, but that it might be impossible for some employees to stay with the company.

The pain in retail has yet to show major signs of abating after one of the worst holiday and spring seasons in decades. It is not expected to perk up in the important back-to-school season.

Even the normally optimistic National Retail Federation is projecting that consumers will spend nearly 8 percent less on back-to-school supplies than in 2008.

In Southwest Florida, plans for several malls have been put on hold, meaning that billions in new investment and thousands of new jobs are still possibly years away.

Those delayed projects include the University Town Center, a luxury mall slated for University Parkway and Interstate 75, a regional mall along I-75 in North Port and a one-million-square-foot retail center planned for Punta Gorda.

Westfield Corporation Inc., the Australian owner of Westfield Town Center, has plans to acquire the building Dillard's occupies at Sarasota Square and to develop the space, said spokeswoman Catherine C. Dickey.

"The company has a strong track record of recovering real estate and reorienting the space with other shops and restaurants," Dickey said.

That will be a challenge in this economy, and perhaps especially in Sarasota County where retailers have been closing at an unprecedented pace. Data from the county tax collector show that one in four retailers have gone out of business in the past year.

The closing of the Dillard's at DeSoto Square will be a blow to that aging mall, owned by Indianapolis-based Simon Property Group.

Starbucks, Old Navy, Lady Foot Locker and Waldenbooks all closed at the mall this year.

Across from Dillard's anchor at DeSoto Square are three empty storefronts, each bearing the sign "More Choices, More Opportunities."

DeSoto Square was built in 1973 and is showing its age. Simon, the largest shopping mall owner and operator in the U.S., bought the property in 1996 and immediately built a food court, but has done little since. The mall has three anchors besides Dillard's: J.C. Penney, Sears and Macy's.

Simon spokeswoman Les Morris declined to comment.

The company, a real estate investment trust, reported in May that its first-quarter funds from operations improved, but Simon cut its quarterly dividend 33 percent.

Commercial Real Estate: "Ticking Time Bomb"

A few videos I ran across this week underscoring the current stress going on in the commercial real estate market.

Local Jobless Rate Hits New High at 11.7%

In another blow to the local economy, we're teetering close to 12% unemployment. Although it seems as if jobless claims nationally have slowed, I'm wondering if that's just a temporary thing. I know quite a few people struggling or laid off - for some, this couldn't come at a worse time.

For us in commercial real estate, that means fewer people able to spend which means stores and businesses will close. This results in more vacancies and more trouble for landlords who may need to meet cashflow requirements...not a good scenario at all.

Region's jobless rate hits 11.7 percent

By Kevin McQuaid

Published: Friday, July 17, 2009 at 10:34 a.m.
Last Modified: Friday, July 17, 2009 at 10:34 a.m.

Unemployment jumped higher during June in Southwest Florida in June, with Charlotte County hitting nearly 12 percent and Manatee and Sarasota counties not far behind.

Just short of 1 million employable Floridians do not have a job.

There were 44,355 people out of work collectively in the three counties, for a regional unemployment rate of about 11.7 percent, according to data released Friday by the Florida Agency for Workforce Innovation.

Hardest hit was Charlotte County, which saw its unemployment rate climb to 11.9 percent in June from 11.4 percent in May.

Manatee County had a jobless rate of 11.8 percent, up from 11.2 percent the previous month.

Sarasota County’s unemployment rate was 11.4 percent, up 10.9 percent in May.

Meanwhile, Florida’s unemployment rate crept up to 10.6 percent in June to stay at the highest level since 1975.

The rate was 0.3 percentage points higher than the revised May unemployment rate and is 4.6 percent age points higher than June 2008.

That means about 970,000 employable Floridians don’t have jobs.

Florida’s unemployment rate is 1.1 percent higher than the national rate of 9.5 percent.

Mega-Project The Subject of Various Lawsuits

From the Herald Tribune...

Partners in Proscenium project suing for millions

By KEVIN L. MCQUAID

Published: Wednesday, July 1, 2009 at 1:00 a.m.
Last Modified: Tuesday, June 30, 2009 at 7:38 p.m.

SARASOTA - Two former partners in the Proscenium are suing developer Zeb Portanova for defaulting on a deal to pay them nearly $5 million -- the largest unpaid debt to date tied to the stalled downtown real estate project.

With the default -- compounded by promised financing that Portanova and representatives now acknowledge may never occur -- husband and wife Gary Moyer and Karen Cook contend Portanova also owes them an additional $11 million. That money is supposed to be paid in monthly installments beginning in December.

"We expect him to pay us," Moyer said Tuesday. "It's not an if, an and or a maybe. He's put us in a position where we now are unable to adhere to commitments we've made."

Moyer and Cook, partners in Lion's Gate Development Group Inc., face a pair of foreclosure lawsuits totaling $1.27 million, for unpaid loans on their Lakewood Ranch Country Club home and on a commercial space at the San Marco Plaza, in Lakewood Ranch, which Lion's Gate developed.

The pair's lawsuit, filed Monday in Sarasota County circuit court, marks the latest legal action swirling around Portanova and Proscenium, a nearly $1 billion, Waldorf-Astoria-anchored real estate development that has stalled amid a lack of financing.

In April, Cadence Bank N.A. filed a $3 million foreclosure suit against Portanova and the Proscenium, and a security company is seeking roughly $35,000 for lack of payment.

The lawsuit by Moyer and Cook also represents the largest in a series of mounting bills that Portanova has failed to pay and might be personally liable for.

More than a dozen contractors, real estate consultants, attorneys and other professionals are owed an estimated $3 million related to the Proscenium, designed as an 18-story tower with offices, retail and restaurants and an 800-seat theater.

Neither Portanova nor his attorney, William Schlotthauer at Sarasota's Williams Parker law firm, returned calls or e-mails for comment.

Despite the legal woes, Portanova continues to try and line up financing with a pair of Atlanta partners -- Nancy Edwards and Kim King -- whose lack of real estate finance experience and embellished pasts were highlighted in a Herald-Tribune story in May.

At the time, Portanova maintained that both Edwards and King were credible financiers capable of generating the money needed to acquire land for Proscenium.

Portanova provided King and her Greencastle Asset Management with $1 million last year, in exchange for securing $100 million in financing, court documents show.

But with no financing in place despite numerous promises, Portanova travelled to Atlanta earlier this month to meet with King.

"Ms. King is still optimistic that funding will occur but provided no specific date," Schlotthauer wrote to Moyer's attorney last week. "We have repeatedly heard this story from Ms. King so we do not have much confidence at this point. The partners are currently reviewing their options as it relates to the Funding Agreement with" Greencastle.

Schlotthauer said Portanova is now seeking other financing sources as well.

Portanova, meanwhile, also continues to negotiate with Anglo-Irish Bank to acquire the former Sarasota Quay property at 401 N. Tamiami Trail.

Sources with knowledge of the deal said Portanova faces a Sept. 1 deadline to complete the estimated $40 million transaction to buy the 15-acre site.

Moyer and Cook's lawsuit could impinge on those plans, though. Anglo-Irish officials have declined comment on the negotiations.

At the heart of Moyer and Cook's lawsuit is a November 2008 agreement in which Portanova bought out Moyer's 45.5 percent interest in the Proscenium, which Moyer had conceived four years earlier.

The agreement calls for Portanova to pay the pair $4.92 million by March 30 of this year.

Only $80,000 of the amount has been paid, the lawsuit states.

Additionally, the agreement states the Proscenium would pay Moyer $32 million from project income "before distribution of any profits to the members of the Proscenium Development or their affiliates."

Since its signing, the agreement has remained unfulfilled and been extended twice, most recently on May 30, court records show.

Moyer is owed more than $10 million on July 22, the documents state.

"We've put three years of our life into this, it's like a child we've given birth to," Moyer said of the Proscenium. "All the progress that was made, and the tenants arranged, to see that go by the wayside is so disheartening."

LINK