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.

Leased Another One! John Deere.

Moline, Ill-based JOHN DEERE, INC. (NYSE: DE) has leased 10,000SF of office and warehouse space for its landscape division at 1360 12th Street in Palmetto from HDVN, LLC. Deere, a $28-billion (worldwide sales) company, is ranked 102 in the Fortune 500, and leased the space for 3 years with options. Anthony V. Migliore of Coldwell Banker Commercial represented the tenant. The landlord was self-represented.

Sarasota Industrial Activity Up This Month

Finally some good news for once.

The local Catylist (commercial listing service) is showing 4 different industrial sales transactions occurring last week. The largest, a 40,000SF warehouse in Venice, went for $49PSF. Another, a 20,000SF metal warehouse with 2.3+ acres, and frontage on I-75, went for a strong $75PSF. A 14 year-old 7,500SF freestanding metal building on Porter Lake went for $80/ft. Finally, a 6,500SF building off of US301 sold for $80/ft. The final building was noted in my recent YouTube Video as being vacant. Glad to see that got sold. (Video has been noted).

I'm certainly heartened by the strong PSF numbers obtained on the last three properties, which averages just shy of $80/ft. Any week with 70,000+SF of sale absorption is a great one in my book.

Hopefully we'll see another round of these soon.

Tampa Industrial Vacancy Up

The latest report from Cushman Wakefield shows a noticeable gain in industrial vacancies the Tampa Bay area. Some eye-popping numbers: the area market shed almost 54,000 jobs, nine consecutive quarters of vacancy increases and six consecutive quarters of declining rents. Link to the article and FREJ is below.

TAMPA - The Tampa industrial market continued to weaken in the second quarter of 2009 primarily due to the decrease in industrial-related jobs and the sustained deficit of demand from tenants in the market looking to lease or buy space.

Since mid-year 2008, the Tampa Bay market lost a total of 53,900 positions, with the construction industry losing 13,800 positions, manufacturing employment decreasing by 6,800 jobs and trade, transportation and utilities losing 2,700 jobs. The negative job growth, coupled with the current economic slowdown has resulted in a continued lack of new and expansion leasing activity, increased vacancy and a decline in rental rates during the quarter.

Additionally, sales activity has been nearly non-existent due to the dip in prices buyers are currently willing to pay and their difficulty to obtain financing.

At the close of the second quarter, Tampa’s industrial market fundamentals continued to grow weaker, following the trend which began over a year and a half ago when the national and local economy both took negative turns.

For the ninth quarter in a row, overall vacancy throughout the market increased. The marketwide overall vacancy rate of 9.5% at the close of the second quarter of 2009 increased a full percentage point from the initial quarter of 2009 and increased an astounding 3.4% from the vacancy documented at mid-year 2008.

As can be anticipated with such a significant increase in vacancy throughout the market, overall absorption posted negative 623,026sf over the past three months, bringing the year-to-date total to negative 943,309sf. Although the current negative absorption total appears dramatic, when compared to the year-to-date total recorded this time last year, year-to-date 2009’s negative absorption increased just 107,207sf or 11.5%.

The feeble tenant demand currently being experienced in the market has resulted in a decrease in asking rents for the sixth straight quarter, bringing average asking net rental rates down to levels that haven’t been recorded in the market since the first quarter of 2006.

Marketwide, the direct net asking rental rate averaged $5.95 psf at quarter-end, a decrease of $0.41 psf since last quarter and $1.10 psf from this time last year. Warehouse/distribution space, which accounts for 70.4% of the industrial space in the Tampa market, experienced the largest decrease in asking rents, declining $0.44 psf since last quarter and a much more substantial $1.09 psf since this time last year to an average of $4.89 psf by the end of the second quarter of 2009.

Forecast

Clearly, this economic downturn has lasted much longer than originally anticipated. While much of the fallout in the industrial market can be traced to companies tied to the construction and manufacturing sectors, Cushman & Wakefield believes that the fallout from these segments is largely, if not almost completely, behind us.

Though the effects of the prolonged slump in the economy will continue to have a negative impact on the market well into 2010, current industrial market fundamentals are definitely favoring tenants in the market. Competition between landlords will continue to drive down asking rents and increase lease concessions, decreasing the tenant’s effective rental rate costs over the term of their lease.

Article Link

YouTube Video Makes The News

Nice to see the YouTube video has received some positive feedback, not only from clients but also from the media.

One thing this particular reporter asked me was if I had any resistance to new listings. That's a tough question to answer. My immediate thought was "yes, I am resistant to taking on new industrial listings." Upon reflection, however, it's genuinely true that good buildings priced right will still move. I suppose it depends on the circumstances. There no real "correct answer" with respect to pricing at the moment. Tough to say what the market will bear, especially if the market is pretty much AWOL. So that leaves everyone's pricing a wild guess at best - so few recent comparables are available that we have to extrapolate from various sources (i.e., whatever comps are available, rents, construction costs, etc) to arrive at something that makes sense. Even then, we can still be off. Without any response from potential buyers, it's still tough to judge. But the fact is good buildings will move if marketed correctly.

From The Bradenton Herald this morning.

Anthony Migliore, a Realtor for Coldwell Banker Commercial, closed on a deal involving a 56,000-square-foot facility in Palmetto last year, but says for the most part his listings have been tough to move.

Migliore also fears there’s plenty more inventory to be added.

He published a video on YouTube.com that examines industrial vacancies in Manatee County. The Realtor produced the video for his blog in an effort to be more creative in marketing the properties.

“If there is any positive sign, it’s that if you’re a business looking for industrial space it’s a good time to move,” Migliore said. “The biggest challenge on the sales end is there is still disconnect between sellers and buyers. Sellers, they want to maximize their return and try to get as much as they can in fairness.”

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.

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.

Peek Traffic Lease 3rd Largest in Tampa Bay

According to CoStar, the Peek Traffic deal handled by myself and Staubach Cos. (now Jones Lang LaSalle) ranks as the 3rd largest lease transaction in the entire Tampa Bay region so far this year based on square footage. It ranks as the largest lease of its kind in Sarasota/Manatee counties for the first six months of this year. The property, which is located at 2906 Corporate Way in Palmetto is 56,000 square feet and was built in 2007. The building, which sits atop six acres of land, is owned by Gammerler, LLC. Peek traffic was recently sold to Signal Group (Houston) for $20-million in cash.

New CoStar Industrial Report Shows Increasing Vacancies

A new Tampa Bay industrial survey released today by The CoStar Group shows industrial vacancies for the region edging up to 7.2% for the second quarter ending June, 2008 vs 6.2% for the first quarter. Rental rates sunk to $6.85/ft as opposed to the previous quarter. Net absorbtion for the area was negative 1,526,487 square feet vs. a positive 370,072 sf in the prior quarter.

Flex projects are showing the greatest vacancy, according to the report, at 10.4% at the end of Q2, 2008. That's up almost 1% from the previous quarter.

The warehouse sector is showing to be healthiest of all with a 6.8% vacancy rate, up only 0.7% from the previous quarter.

On the sales end, CoStar reports 24 industrial sales of buildings which are 15,000 SF and larger. The report shows the average price paid for these properties to be around $59/ft. Those sales are down from 28 transactions in 4Q 2007, averaging around $57/ft.

Cap rates are up to 7.93% compared to 1Q 2007, when they were at $7.75%.

Link to CoStar