Philip Blumberg Blog

L.A. Investor Makes Record Deal in Dallas

The Dallas Morning News has reported that Cannon Commercial, based in Los Angeles, has finalized the purchase of Galleria Towers I, II & III in Dallas Texas from Fortis Property Group, LLC. Though the terms of the deal were not disclosed, sources close to the transaction have estimated that the closing price was in excess of $300M, which would make it the second largest investment transaction in 2008.

The three Galleria Towers, totaling 1.4 million square feet, were built in the 1980s and early 1990s and are currently 98 percent leased with pricing up to $28 per square foot. Cannon, who have not yet released a statement regarding the purchase, will be the fourth owner of the towers and have assumed two loans on the property as part of the transaction.

The sale reflects the "strength of the Dallas investment market for high-quality office product," said John Alvarado, managing director of capital markets for Jones Lang LaSalle in Dallas, the company who brokered the deal.

For more real estate news and information, visit Blumberg Capital Partners.

Trends in Tampa

Marcus & Millichap released an Apartment Research Report this week observing that the depletion of apartment stock in 2005 and 2006 reduced vacancy and fueled substantial rent growth in Tampa, FL.

"Population growth will drive housing demand and absorb the excess supply in the market," says Steven Ekovich, regional manager of the Tampa office of Marcus & Millichap. "The likelihood of more stringent mortgage underwriting will mitigate the migration of renters to single-family homes."

Following are some of the most significant aspects of the Tampa Apartment Research Report:

• Rental inventory will increase by 2,000 units in 2008, up from 878 units last year.
• Vacancy is forecast to end the year at 8 percent.
• Asking rents will rise 0.6 percent to $835 by year-end 2008.
• Effective rents will end the year at $778 per month.
• Ikea has started construction on a store at Adamo Drive in East Tampa that will open in summer 2009 and bring new jobs to the area.

For more real estate news and information, visit Blumberg Capital Partners.

Are Atlanta's lowered rates more of a hindrance than a help?

At a recent meeting in Atlanta of the National Association of Industrial and Office Properties, real estate investors speculated that the tempered rent rates could further stifle the flow of money in the area's economy that's needed for the financing new office property projects. If the rental rates remain stagnant in the area, will the stream of money to finance new office towers continue to flow freely?

An article in the Atlanta Business Chronicle on May 23rd observed that Atlanta's weighted average asking rent on class A buildings was about $24 at the end of the first quarter, a slight 8% increase over the past nine years according to a report from Cushman & Wakefield of Georgia. Taken even a step further, by factoring in adjustments for inflation, the rent has actually dropped by more than 16%.

By way of comparison, in the same observed span of time (1999 to Q1) Denver's rates rose 16% from $22.73 to $26.28, Chicago's increased roughly 5% from $28.32 to $29.62, and Dallas (a market often compared to Atlanta) rose 3% from $24.28 to $24.90.

Addison Meriwether, a broker with Cushman & Wakefield, said, "While it may be market-specific, I think what you're already starting to see is a lack of demand in the market and an ample supply of office buildings coming on line. We're going to struggle to have rent growth. And I don't think the worst is upon us yet. ... It's going to be a bloodbath [in Buckhead and Midtown]."

Atlanta's rental rates have been attributed to several factors -- with uncomplicated permitting policies and plenty of land available, the area may be more inviting than more crowded markets around the country. Developers, too, feel comfortable initiating new projects in a submarket with up to 15% vacancy, while other metropolitan markets like DC, Chicago and NYC might prove to be more of a risk of oversupply.

For more real estate news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was featured yesterday in the Chicago Tribune. The Perfect Office: Nap areas. Energy-efficient elevators. Color. Free food.

An excerpt:

A survey of office workers' attitudes toward their work spaces found that a third had taken or left a job because of the amenities or unsavory conditions of a building. Another one in three worried about sickness or injury due to the unsanitary or unsafe state of the building.

The top complaint: The office is too hot or too cold.

The top requests: Covered parking and subsidized cafeteria food.

The online survey was commissioned by Blumberg Capital Partners. It polled 500 American adults who work in office buildings..

Non-profit Building Sells for $1M in Minneapolis

As reported by crefeed.com, Mosaic Properties, LLC has finalized the purchase of a 6,803 square foot office building in downtown Minneapolis for $1 million, another in a line of recent sales in the greater Minneapolis area (Holliday Fenoglio Fowler recently purchased office space in the same area for $28.5M, and ASB Real Estate Investments acquired the Crosstown Corporate Center in Eden Prairie for $10.57M).

The two-story property, bought from the locally run non-profit company Resource Center of the Americas, may not be one of Mosaic Properties' larger purchases, but it's certainly a curious fit for the company, featuring a large mosaic on the facade of the building entitled "Mosaic of the Americas".

There's no word yet on what plans Mosaic has for the building, but the Resource Center of the Americas website indicates that the organization, working to promote human rights and democratic participation primarily in Latin America, will "be setting up a new office in the basement of the Resource Center Building and getting organized".

For more information on business in the Twin Cities area, visit the Minneapolis/St Paul Business Journal online, or visit the Blumberg Capital Partners website for more of the latest industry news and announcements.

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was recently featured on Yahoo! Finance. Office Workers Vent on Extreme Temperatures, Messy Restrooms, Rodents and 'Dumpy' Workplaces

An excerpt:

Philip Blumberg's Blumberg Capital Partners releases verbatim comments and regional comparisons from landmark office worker survey; 'I wish the building had windows'

Philip Blumberg's Blumberg Capital Partners, the U.S. investment firm and commercial real estate investment fund, today released verbatim comments and regional comparisons from its landmark survey of office workers. The comments from the survey respondents highlight the range of conditions under which U.S. office workers toil.

According to the geographic analysis, respondents in the Northeast are more satisfied that their buildings are acceptably maintained than workers in other regions. Northeast office workers also are more likely to base perceptions of their employers on office building conditions.

For overall safety, a full 96% of Northeast office workers feel safe in terms of their own personal security, higher than workers in the South (90%) and Midwest (83%).

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was recently featured on WFAA - Dallas/Fort Worth TV8. Office Workers Vent on Extreme Temperatures, Messy Restrooms, Rodents and 'Dumpy' Workplaces

An excerpt:

Philip Blumberg's Blumberg Capital Partners, the U.S. investment firm and commercial real estate investment fund, today released verbatim comments and regional comparisons from its landmark survey of office workers. The comments from the survey respondents highlight the range of conditions under which U.S. office workers toil.

The survey was commissioned to gauge the impact of office building conditions on worker attitudes, productivity and motivation. Initial findings, released in January 2008, unveiled a litany of common problems, including extreme temperatures, insects, leaky ceilings, rodents and messy bathrooms. The survey also found that a third of the workers have accepted or left a job due to building conditions or amenities. Nearly half described their office environments as "bland," "dumpy," or "stodgy."

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was recently featured in the Tampa Bay Business Journal. Office Workers Vent on Extreme Temperatures, Messy Restrooms, Rodents and 'Dumpy' Workplaces

An excerpt:

Blumberg Capital Partners today released verbatim feedback from the survey — culled from more than 5,000 written responses. The company also posted its survey live as an interactive online tool for office workers to take the poll and see how they stack up against national averages. The interactive survey and full survey results  — including a compilation of the verbatim comments and regional comparisons — are posted at www.blumbergcapitalpartners.com.

"The companies of 'Corporate America' have long been judged on the quality of work environments they provide to their employees," said Philip Blumberg, Chairman and CEO of Blumberg Capital Partners. "The results of our survey confirm that office conditions, indeed, directly impact employee retention, recruitment, and productivity. That is why Blumberg Capital Partners has spent the last 20 years providing the highest quality space and a broad range of exceptional services to our corporate tenants and their employees."

Blumberg Capital Partners in the News

Blumberg Capital Partners was recently featured in the South Florida Business Journal. Office Workers Vent on Extreme Temperatures, Messy Restrooms, Rodents and 'Dumpy' Workplaces

An excerpt:

Blumberg Capital Partners, which has long pursued a high-end office building investment strategy, late last year formalized its market approach with the rollout of Blumberg Premium Services, and hired a luxury hotel executive to oversee the program. Buildings owned by Blumberg Capital Partners typically include health clubs, conference facilities, advanced wireless technology, and energy-efficient utilities, as well as private suites for tenant members, akin to club-level suites commonly found in five-star hotels.

"While we have focused our investment strategy on buying, creating and providing the highest-quality office buildings and amenities since we launched our first fund almost 20 years ago, we've only recently formalized this market approach under the Blumberg Capital Partners brand," said Blumberg.

Blumberg Capital Partners in the News

A report from Blumberg Capital Partners was recently featured in RBC Dain Rauscher Inc. Office Workers Vent on Extreme Temperatures, Messy Restrooms, Rodents and 'Dumpy' Workplaces

An excerpt:

Philip Blumberg's Blumberg Capital Partners, the U.S. investment firm and commercial real estate investment fund, today released verbatim comments and regional comparisons from its landmark survey of office workers. The comments from the survey respondents highlight the range of conditions under which U.S. office workers toil.

The survey was commissioned to gauge the impact of office building conditions on worker attitudes, productivity and motivation. Initial findings, released in January 2008, unveiled a litany of common problems, including extreme temperatures, insects, leaky ceilings, rodents and messy bathrooms. The survey also found that a third of the workers have accepted or left a job due to building conditions or amenities. Nearly half described their office environments as "bland," "dumpy," or "stodgy."