LEASED ANOTHER ONE! 999 Cattlemen Road.

This one was a double header: I sold this unit at 999 Cattlemen Road (Unit A) week prior to an investor and put a new tenant in the space on Friday for three years. Congratulations to Dance Artistry, Inc. on their new 2,280SF home. They look to be open on approximately July 1, so feel free to pay them a visit. The location is perfect for them - lots of glass and an endcap unit. Thank you!

So Long, 2009.

What a year you were.

Business was very much like a roller coaster this past year, with most my deals occurring during the summer and within the past two months (Nov-Dec). Overall I would rate 2009 as not too bad. 95% of my sales came from leasing. Nearly 100% of my leasing deals were taking people out of high rent situations and repositioning them into lower rent opportunities.

I have more bank-owned inventory than I did last year and I am only expecting that to increase. I am also expecting those waiting in the wings for distressed assets to finally start showing up, probably in the mid to latter part of 2010.

Where's the bottom? Who knows. And no one is likely to know until things start turning around. I believe (and have always believed) Florida's geography will help it emerge a little sooner than other distressed areas. If you're looking for a sign, keep an eye on GDP and employment figures.

So here's a toast to the year that was: 2009. Don't let the door hit you in the ass on the way out.

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.

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.

Office Tenants in Driver's Seat

Office Tenants Now in the Driver's Seat

Jun 26, 2009
By: Dees Stribling, Contributing Editor

Even before the financial meltdown last fall, most U.S. office markets were going noticeably soft. In particular, vacancies were rising as businesses downsized, reorganized or otherwise felt skittish about committing to any new use of office space. Now that the worst recession in at least a generation is under way, what was once only a worrisome trend for U.S. office landlords is full-blown reality.

Few dispute that current conditions in almost every office market could be called a “tenants' market.” Tenants have the edge now, provided they themselves aren't beaten up so badly by the economy that they can't take advantage of that fact.

Though each major metro market has its own distinct features, the overall numbers are telling. According to Reis Inc., the overall U.S. office vacancy rate climbed to 15.2 percent by the end of the first quarter of 2009, compared to 14.5 percent at year's end 2008 and 12.8 percent during 1Q08. Office-space users vacated nearly 25 million square feet during 1Q09, moving in tandem with the spike in the U.S. unemployment rate during that period. People go, then the space goes, and people are still going.

Moreover, since commercial real estate tends to be a lagging indicator, even if the economy starts to grow again later this year--something of a tall assumption--office landlords might not feel the benefit for quite a while longer than that.

In some ways, this office downturn is like previous ones, Bill Lichwala, president and CEO of Plante Moran Cresa told CPN. “Financially solid tenants are now able to negotiate with a lot of strength,” he said. “At first, landlords resisted lowering rents, and offered more concessions, because lower rents affect the building valuation a lot more.”

But now rents are going down. According to Reis, office rents were an average of 3.2 percent lower in the first quarter of 2009 than a year earlier.

“Landlords simply can't compete anymore without competing on rents,” said Lichwala, whose Southfield, Mich.-based firm specializes in tenant rep. “They can only offer so much in the way of incentives, and that's reached its limit.”

Lichwala pointed out that in one way, however, this office market isn't like previous slumps in space usage. “Previously, landlords needed to be sure that a tenant was creditworthy before a deal would be inked,” he said. “That's normal due diligence, and it hasn't changed. But now tenants need to be as sure of the solvency of the landlords as much as the other way around. It isn't any good to negotiate a sweet concession package if the landlord goes into receivership and can't afford it.”

LINK

Get Real or GO HOME

Below is a fantastic Power Point slide show provided by Sequioa Capital. It's tremendously relevant in real estate, especially in this economy. The focus for me personally is getting sellers to understand they need to be realistic when pricing their properties these days. The few buyers who are out there are looking for value, not speculative plays.

Sequoia Capital on startups and the economic downturn

View SlideShare presentation or Upload your own. (tags: depression recession)

Regs to Orion Bank: "Better Get It Together"

Looks like Orion just got slapped by regulators and have been told to straighten up. From the Sarasota Herald Tribune.

By John Hielscher & Michael Braga
STAFF WRITERS

Published: Saturday, August 30, 2008 at 1:00 a.m.
Last Modified: Saturday, August 30, 2008 at 1:09 a.m.

Federal and state banking regulators slapped Orion Bank with a major enforcement action, criticizing its lending practices and oversight by the board of directors.

Naples-based Orion, a major real estate lender in Sarasota and Manatee counties, was ordered to take a number of steps to maintain its "financial soundness."

The Federal Reserve and the Florida Office of Financial Regulation made public on Friday a 15-page "written agreement" with the bank and its parent company, Orion Bancorp Inc.

Orion faces a series of deadlines -- some as soon as next week -- to tighten its loan policies, better monitor its borrowers and charge-off as uncollectible more of its soured loans.

The agreement is one of only 15 such enforcement actions taken by the Federal Reserve against a U.S. bank so far this year.

"The Fed would not have made this public unless they determined it was a serious enough situation for them to do it," said bank analyst Ken Thomas of Miami.

Orion, a nearly $3-billion-asset bank, posted a profit of $8.3 million through mid-year.

It reported $108.9 million in non-current loans and leases as of June 30, up from $5.2 million one year earlier. That represents 5.25 percent of Orion's entire loan portfolio.

A sizable chunk of those bad loans were apparently made in Manatee and Sarasota counties, where the bank operates four branches.

In the past 18 months, Orion has foreclosed on 20 loans totaling $74 million in the two counties.

Sarasota home builder Ron Mustari accounted for $11.3 million of the defaulted loans. Condo converter Warren Hickernell accounted for $11.7 million.

Manatee home builder David Lewis accounted for $1.8 million in bad loans, and Siesta Key developer Jack LeFrock accounted for $1.3 million.

Orion's financial picture could change under the Federal Reserve agreement.

Within 10 days, the bank must eliminate from its books an unidentified amount of assets it now classifies as losses but has yet to charge-off.

The privately owned Orion has long been headed by Jerry J. Williams, who acts as chairman, president and chief executive officer.

Neither he nor his public relations firm returned calls Friday seeking comment.

The 31-year-old bank has been consistently profitable, boasting of industry recognition as a top-performing Florida bank.

The agreement's first order directs the bank to improve the board's oversight of management and operations. Thomas said it is unusual for the board to be cited first thing in such an action.

"It's suggesting that the current board is not strong and needs to be strengthened," he said.

Speaking generally and not about Orion specifically, Thomas said banks whose CEOs are also board chairmen often wind up with rubber-stamp boards and too much power concentrated in one person.

The bank has 90 days to submit a plan to reduce its concentration of commercial real estate loans.

Within 60 days it must revise its loan policies on renewing credit to existing borrowers, and revise its loan-to-value limits to follow federal regulations.

Enforcement actions by federal or state banking regulators are considered serious actions.

First Priority Bank of Bradenton was hit with a "prompt corrective action directive" by the Federal Deposit Insurance Corp. just one month before it became the nation's eighth bank failure of 2008.

Venice-based Community National Bank of Sarasota County entered into a "formal agreement" with the Office of the Comptroller of the Currency in April to toughen its lending operations after the agency discovered "unsafe and unsound" banking practices. Read story here.

Integrity Bank Goes Down

Another one goes down for the count. From Bloomberg.com.

Integrity Bank Becomes 10th U.S. Failure This Year (Update2)

By Alison Vekshin and Ari Levy

Aug. 29 (Bloomberg) -- Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression.

Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp. Regions Financial Corp., Alabama's biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank's five offices will open on Sept. 2 as branches of Regions, the FDIC said.

``Depositors will continue to be insured with Regions Bank so there is no need for customers to change their banking relationship to retain their deposit insurance,'' the FDIC said.

Banks are being closed at the fastest pace in 14 years as financial companies report more than $505 billion in writedowns and credit losses since 2007. California lender IndyMac Bancorp Inc., which had $32 billion in assets, was closed July 11 in the third-largest bank seizure, contributing to a 14 percent drop in the U.S. deposit insurance fund that had $45.2 billion at the end of the in the second quarter.

Regions will buy about $34.4 million in assets and will pay the FDIC a premium of 1.01 percent to assume the failed bank's deposits, the FDIC said. The FDIC estimates the cost of the Integrity failure to its deposit-insurance fund will be $250 million to $300 million.

Told to Raise Capital

Integrity was ordered by federal and state regulators in May to present a capital-raising plan within 60 days. At the time, the company had been trying without success for at least eight months to raise $40 million after loans to residential and commercial developers were hurt by the collapse of the real estate market.

``Banks must meet certain regulatory minimums to ensure safety and soundness,'' Georgia bank commissioner Rob Braswell said in a telephone interview. ``When those minimums are not able to be met and solvency is in jeopardy, we have no choice but to close the institution and to place it into receivership.''

Integrity Bancshares, which sold for more than $14 a share in January 2007, closed today at 4 cents in over-the-counter trading.

The FDIC insures deposits of up to $100,000 per depositor per bank, and up to $250,000 for some retirement accounts at 8,451 institutions with $13.3 trillion in assets.

`Problem' Banks

The FDIC this week said 117 banks are classified as ``problem'' in the second quarter, a 30 percent jump from the first quarter. The agency doesn't identify ``problem'' lenders.

``More banks will come on the list as credit problems worsen,'' FDIC Chairman Sheila Bair said at an Aug. 26 Washington news conference.

The credit market turmoil may topple some of the nation's biggest banks, Kenneth Rogoff, former chief economist at the International Monetary Fund, said in Singapore Aug. 19.

``Like any shrinking industries, we are going to see the exit of some major players,'' Rogoff told Bloomberg, declining to name the banks he expects to fail. ``We're really going to see a consolidation even among the major investment banks.''

Before today's action, the FDIC had closed 36 banks since October 2000, according to a list at fdic.gov. The U.S. shut 11 banks in 2002, the highest in the period. In 1994 the government had closed a dozen institutions by the end of August.

U.S. regulators this year also closed Columbian Bank and Trust of Topeka, Kansas, on Aug. 22; First Priority Bank of Bradenton, Florida, on Aug. 1; Reno-based First National Bank of Nevada and Newport Beach, California-based First Heritage Bank in July; Staples, Minnesota-based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January.

US Banks to see more write downs. This time, Commercial Real Estate Loans!

Courtesy Proactive Investors.

No good news is emanating from the US banking sector. This time it is commercial real estate loans. Markets were suffering from sub-prime mortgage issues as related residential mortgages turned out to be not so good loans after all. Concerns are now mounting over commercial real estate loans following suit.

Concerns were prompted by Riverton Apartments, a 12-building residential development, in Harlem New York, when it warned last week that it might not be able to honour a $225 million mortgage payment by September. Riverton’s mortgage was also wrapped into a commercial mortgage backed security which was subsequently structured and sold as bonds. According to New York Times, a default by the complex would be New York’s largest in the current housing crisis. Wall Street banks are estimated to hold approximately $100 billion of commercial mortgage-backed securities.

The news has raised concerns over the commercial real estate market and loans as its deterioration could lead to more write-downs in the already suffering banking sector. Several major banks have exposure to the sector which includes Deutsche Bank (NYSE: DB) (estimated $25.1 billion), Morgan Stanley (AMEX: AMK) (est. $22.1 billion) and Citigroup (NYSE: C) (est. $19.1 billion). Lehman Brothers (NYSE: LEH) is estimated to have the highest exposure (est. $40 billion) according to New York Times.

We discussed in a previous note Lehman’s attempts to raise capital from Asian Sovereign Funds. Lehman however is not alone here and all are on the look out to dispose of commercial real estate loans made up of hotels, retail malls and offices.

Cracks have already started to appear. Moody’s REAL Commercial Property Price Index (CPPI) has continued to fall in June with a 3.3% monthly decline, marking a 9.6% decrease from year-ago levels. June is the fourth straight month the index has declined and in total CPPI has fallen 12 percent from its dizzy heights in last October. All four property types measured in the index have posted negative returns in 2Q2008. The national industrial market has suffered most with 9.3% decline during the quarter. The national apartment market, offices and retail have also fallen 7.1%, 5.9% and 4.6% respectively.

For the savvy investor however, there were enough early warnings. Morgan Stanley and Wachovia announced large write downs related to commercial mortgage losses in late last year and 1Q2008 respectively. More similar write-downs to follow it appear making hopes of a banking sector revival bleak.

Courtesy: New York Times, Moody’s, CEP Newswires

Some Businesses Turning to Credit Cards In Place of Loans

What can only be described as one form of desperation, a recent survey by the National Small Business Association revealed that many small businesses are turning to high interest credit cards in place of hard-to-get commercial loans. Money is certainly scarce, but one has to wonder exactly what kind of fallout this is going to cause down the road.

The 30% interest rate on their small business credit card shocked James and Heather Hills enough to stop using it entirely in April. The couple had turned to credit cards in early 2006 to get their Elgin (Ill.) startup, mhn Internet Marketing and PR, off the ground, after three loan officers told them that they wouldn't qualify for a bank loan without capital equipment to put up as collateral. So the Hills, who have no outside employees, took out a $50,000 home equity line of credit and two personally guaranteed small business credit cards.

They had a handle on their debt until a partner abandoned a planned joint venture in March 2007 and the Hills were left with almost $10,000 for the project on their Advanta (ADVNA) card. Since then, they say they've been late on a couple of payments, and their interest rate has steadily increased from 11.74% to 30.99%. "It suddenly starts being several hundred dollars worth of interest charges," James Hills says. Even without new purchases, they don't expect to pay off the remaining debt, still over $6,000, before 2009. (Advanta, citing privacy laws, declined to comment.)

While data on small business borrowing is scattered, indications show that entrepreneurs are increasingly relying on credit cards to finance their businesses, especially early-stage companies. The percentage of firms using credit cards has jumped from 16% in 1993 to 44% today, according to surveys by the National Small Business Association, a trade group. In the same period, the proportion using bank loans dropped from 45% to 28%. A Federal Reserve survey showed that the percentage of firms using business credit cards jumped from 34% in 1998 to 48% in 2003. And numbers from the NSBA and the Fed show that between 20% and 30% of all small businesses carry a revolving credit-card balance, rather than paying their bills in full each month.

"We don't have an alternative right now," says NSBA chair Marilyn Landis, a former bank executive who now runs Basic Business Concepts, a financial consulting business. "If there were alternatives, business owners would go there." It's a particular problem for service or information companies that don't have equipment or inventory to secure commercial loans. In testimony before the Senate Small Business Committee in April, Landis described applying for bank lines of credit and receiving credit cards instead. But relying on cards, rather than on fixed-rate loans or credit lines, can saddle small companies with unexpected and expensive debt.

Read more at Business Week...

Moody's: Commercial Real Estate Prices Dip in June

NEW YORK - Commercial real estate prices continued to decline in June, according to Moody's/REAL Commercial Property Price Indices, Moody's Investors Service said Wednesday (8/20).

The index fell 3.3 percent from May, and was down 9.6 percent from the year-ago level.

June was the fourth consecutive month that the index declined, Moody's (nyse: MCO - news - people ) said. The CPPI now stands 11.8 percent below its peak in October 2007.

The index is based on repeat sales of the same properties across the U.S. at different points in time.

All four property types measured by the index went negative during the second quarter, Moody's said. The national industrial market saw the largest price drop, down 9.3 percent during the quarter. National apartment market prices fell 7.1 percent, while office prices slipped 5.9 percent and retail declined 4.6 percent.

Through the first half of the year, transaction volume dropped more than 25 percent compared to the first half of 2007, Moody's said. There was a slight increase in both number and dollar value in June from the previous month, the company said.

The June uptick may be the first sign of stabilizing transaction volumes, which could point to future price stabilization, said Moody's Managing Director Nick Levidy. However, "it may also be a transient or seasonal effect, and future data will need to be examined in order to identify any trends." From Forbes.com

Copyright 2008 Associated Press. All rights reserved.

CPI up 5.6% in the past year, biggest increase in 17 years

More lousy news today as the Labor Department released figures stating the CPI grew 0.8% in July alone. Tenants with CPI escalations are definitely going to feel this at renewal time, possibly driving more to default or raise prices to their customers.

The only real saving grace here might be that commodity prices have come down noticeably in August. Either way, it hurts.

WASHINGTON (MarketWatch) -- U.S. consumer prices jumped a greater-than-expected 0.8% in July, marked by big increases in energy, food, clothing and cigarettes, the Labor Department reported Thursday.

The core consumer price index, which measures retail-level inflation after excluding volatile food and energy inputs, rose 0.3% for the second straight month. Read the full report.

Coming in much worse than anticipated, the pair of red-hot inflation readings seem certain to swell the chorus of critics urging the Federal Reserve to raise interest rates to quell inflation.

Economists had predicted that the seasonally adjusted CPI would rise 0.5% and that the core CPI would increase 0.2%, according to a survey by MarketWatch. See Economic Calendar.

Consumer prices are up 5.6% in the past year, the biggest year-over-year increase since January 1991. The CPI has surged at a 10.6% annualized rate in the past three months.

The core CPI has risen 2.5% in the past year, the biggest gain since January. The core rate's rising at a 3.5% annual rate in the past three months.

The CPI rose 1.1% in June, with the core rate up 0.3%.

So far, Fed officials, with a few vocal exceptions, have stuck to their forecast calling for inflationary pressures to moderate as the economy stagnates. Wages, a key linkage in any inflation spiral, have stagnant.

CPI for August should be much cooler, as petroleum and gasoline prices have fallen significantly since mid-July.

As far as July overall goes, the picture was undoubtedly ugly, with just a few bright spots on the inflation front.

Owners' equivalent rent, which accounts for nearly a quarter of the CPI, rose just 0.1%.

Medical-care prices nosed up 0.1%, including a 0.2% drop in medical commodities.

New car prices increased 0.2%.

But elsewhere, inflation raged.

Energy prices rose 4% in July, led by increases of 4.1% for gasoline and 7.4% for natural gas.

Food prices increased 0.9%, with the price of food at home jumping 1.2%. Prices rose by 1.8% for cereals and bakery goods, by 1.6% for dairy products, and by 1% for meat, poultry and eggs.

Apparel prices rose 1.2%, the most in 10 years.

Tobacco prices also increased at a 1.2% clip.

Housing costs increased 0.6%, boosted by a 3.8% increase in energy costs. Rents rose 0.3%, while the price of lodging away from home was up 0.7%.

With prices for urban wage earners up 0.9%, wages flat and hours worked falling, real weekly wages (adjusted for inflation) fell 0.8% in July. In the past year, real weekly earnings have fallen 3.1%.

In a separate report, the Labor Department said the trend of new applications for unemployment benefits rose to a six-year high, while the number of continuing claims hit the highest mark since late 2003.

Manatee EDC Business Survey: Down But Not Out

I haven't had a chance to thoroughly read the entire study, but seems from some of the responses that folks are at least optimistic. I did note more businesses saw positive revenue growth as opposed to the previous study.

Below is an excerpt, check out the full PDF report by using the link below.

"The overall business climate in Manatee County appears to be on a downward trend. When asked to compare the general business climate in the county with two years ago, over 72% said it was worse, and less than 7% said it was better. The most optimistic group was businesses operating for 6-10 years, and those with 51-100 employees. What is not clear in this response is to what extent this attitude is influenced by the overall economy, and how much is influenced by issues primarily driven by local factors."

Click here for the full survey (PDF)