Philip Blumberg Blog

1450 Brickell in Miami Ready for Storms

Brickell Avenue in Miami, commonly referred to as "Wall Street of the South," saw a new tower completed this past March that was built with hurricane season in mind. The Wall Street Journal spoke with Alan Ojeda, the developer of 1450 Brickell Avenue, a 33 story office building that he's dubbed as the first fully hurricane-protected high-rise in the state. Mr. Ojeda says that the $240 million property was built to withstand a Category 5 hurricane "without significant damage", due in part to debris-resistant windows that cost $100 per foot. The 580,000 square foot tower is currently roughly 50% leased with tenants including Bilzin, Sumberg, Baena, Price & Axelrod LLP, H.I.G. Capital, and Rilea Group.

Miami's city building code requires that the first 30 feet of a building to be protected from large debris, but Mr. Ojeda extended this measure to cover the glass for the entire surface of the building, windows that cost roughly 50% more than normal window installations. The property also includes a second generator to cover the electrical system in the event of a power failure. Mr. Ojeda built the new tower with the 2005 hurricane season in mind, recalling a walk down Brickell after a storm and seeing broken glass well above 30 feet on office buildings. "We said, instead of doing the first 30 feet … let's do the whole building," explained Mr. Ojeda.

For more news and information visit Blumberg Capital Partners.

National Nuclear Security Administration Project Secures $697M in Financing

The new National Security Campus for the National Nuclear Security Administration (NNSA) in Kansas City, Missouri has secured $697 million in financing for its new $4.76 billion project. CGA Capital Corporation and its affiliates, assisted by by a team of attorneys from Ballard Spahr LLP, closed the highly structured, lease-backed financing that will clear the way for construction to begin on the new facility.

The campus, cited as one of the largest commercial projects in the U.S. in a Citybizlist Baltimore article, will serve as a primary producer of nonnuclear mechanical, electronic, and engineered materials for the U.S. nuclear weapons arsenal and other national security missions upon completion. Designed to be a LEED Gold-Rated Green campus, the new facility will include nearly 1.5 million square feet of manufacturing spaces, laboratories, office space, and warehouses. The property will be developed and leased by CenterPoint Zimmer LLC (an entity formed between CenterPoint Properties and Zimmer Real Estate Services), of Oak Brook, Illinois, which in turn will lease it for 20 years to the U.S. General Services Administration.

"It was extremely gratifying to see all the complex elements of this deal come together successfully," said W. Kyle Gore of CGA. "This new facility is truly state of the art, from the way it will be designed and built to its financing structure. It is also a vital part of America's national security effort. Our team is proud to have been part of that, and equally proud to have worked on behalf of such a great developer client as CenterPoint Properties."

For more news and information visit Blumberg Capital Partners.

Whirlpool To Build New $85M Office Campus

Whirlpool Corp. has announced that it will build a new three-building office campus in Benton Harbor, Michigan in an effort to consolidate its over 4,000 employees into a new headquarters. The project, expected to take around 5 years to complete, will reportedly cost $85 million. "This initiative is a good business decision as the new campus and related changes are expected to increase productivity and energy efficiency, and reduce operating costs," said Jeff Fettig, Whirlpool chairman and chief executive officer, in a CoStar article.

Whirlpool will relinquish its leases in Hilltop North, Box Factory, Multimedia Center, and the former Transamerica site. The Michigan Economic Growth Authority is expected to improve a package of tax incentives for the new project. The build of the complex, contingent on approval of all state and local incentives, is expected to begin in the next few weeks.

For more news and information visit Blumberg Capital Partners.

Moody's CPPI Shows U.S. CRE Prices Up 3.6% in May

The Moodys/REAL Commercial Property Price Index (CPPI) report has been released showing the second straight monthly increase in the U.S. commercial property market. May saw a 3.6% price increase, on the heels of April's 1.7% upturn. Commercial real estate prices in the U.S. are currently 38.9% below their peak in October 2007, but they have come back 8.6% from their October 2009 low according to the New York Times.

"We expect commercial real estate prices to remain choppy in the coming months," said Moody's Managing Director Nick Levidy in a release Monday. "The positive news of increasing prices over the past two months is tempered by low transaction volumes, forecasts for slowing macroeconomic growth and the rising risk of a double dip recession."

"With real estate transactions increasing, more investors will receive distributions, which will in turn lead to increased activity in the fund-raising market," Andrew Moylan, a manager in Preqin's real estate data division, said in a statement. "This will take time, however, and it seems likely that there will be several more quarters of slow fund-raising to come."

For more news and information visit Blumberg Capital Partners.

CBRE Investors Buys Oakland City Center Portfolio for $360M

Oakland City Center, a 1.6-million-square-foot office and retail center across from City Hall in Oakland, CA, traded hands this week in a $360 million portfolio purchase according to the Oakland Tribune, making it the largest property sale in the East Bay this year. CB Richard Ellis Investors purchased a portfolio of seven office buildings and a parking garage located within Oakland City Center on behalf of the CBRE Strategic Partners U.S. Value 5 fund from a partnership of Shorenstein Development Co. and the State Teachers Retirement System of Ohio. The purchase includes the office buildings known as 1111 Broadway, 555 12th Street, 1300 Clay Street, 505 14th Street and City Square, along with retail shops in City Square, and the City Center Garage, assets that are currently 91% leased.

"This shows big institutional investors have a lot of confidence in downtown Oakland," said Ken Meyersieck, senior vice president with Colliers International, a commercial realty brokerage. "They see that this market has a lot of viability."

"City Center has got it all," said Bill Nork, a senior vice president with Cornish & Carey, in a San Jose Mercury News article. "It has nice buildings, Class A offices, good retail, good parking, and it's right on top of the BART station."

For more news and information visit Blumberg Capital Partners.

Chesapeake Innovation Center Building Sells for $10M

Riva 2 in the Annapolis Science Center, home of the Chesapeake Innovation Center in Anne Arundel County, MD, has sold for $10 million according to a Baltimore Business Journal article. The property at 175 Admiral Cochrane Drive is a four-story, 55,954-square-foot, Class A office building built in 1987 and currently fully leased.

MacKenzie Commercial Real Estate Services LLC represented the buyer, 175 Admiral Cochrane Drive LLC, in the transaction while the seller, KCS Admiral II LLC, was represented by NAI KLNB. KCS reportedly paid $7.5 million for the property in 2003.

For more news and information visit Blumberg Capital Partners.

Office Vacancy Rate Still on the Rise in Q2

A new article from the Wall Street Journal has taken a look at the second quarter reports for office vacancies in the U.S. and the numbers show a continued climb. The national vacancy rate now sits at 17.4%, the highest level since 1993, with 1.8 million square feet of office space lost during the quarter. Data from Reis Inc., the New York-based data firm, cited the lull in business hiring as an important factor. "The fate of office properties will depend largely on how well the U.S. economy and labor markets fare amid what appears to be a recovery that comes in fits and starts," said Ryan Severino of Reis.

The larger office markets are displaying signs of stabilization. New York and Washington continue to maintain their valuation as the most expensive markets, with rents at $43.66 and $41.09, respectively. New York stabilized at 11.7% vacancy, the second lowest rate among the cities tracked by Reis. Markets like Las Vegas, Phoenix and Detroit, however, are still turning in vacancy rates around 25%. Hartford showed a -0.7% vacancy rate point change from the first quarter, and Dayton reported -0.1%.

For more news and information visit Blumberg Capital Partners.

Mechanics Bank Buys Walnut Creek Office

Mechanics Bank acquired a majority interest in a three-story, 75,000-square-foot office building at 1111 Civic Drive in Walnut Creek in a move that will consolidate many of the bank's administrative departments. Hall Equities Group had previously bought a foreclosed note on the building in February after havin been seized by a lender for $12 million. According to the San Jose Mercury News, Mechanics Bank paid $12.5 million for a majority ownership of the building and will spend another $2.5 million to renovate the property.

"Centralizing more of our administrative functions in one place makes sense for our employees and for our business," said Steve Buster, Mechanics Bank CEO. "The new building fits our footprint, allows us to consolidate certain departments that are now spread apart and puts functional teams together. It works well for now, and gives us room to expand in the future."

For more news and information visit Blumberg Capital Partners.

Dividend Capital Acquires $1.3B Portfolio

Dividend Capital Total Realty Trust Inc. has completed the acquisition of a $1.3 billion portfolio from iStar Financial. The portfolio is comprised of 32 office and industrial properties in 16 markets within the U.S., totaling roughly 11.3 million in rentable square feet. The properties are approximately 99% occupied with many properties leased to single tenant corporate users, including Amazon.com, Sybase, FedEx, Unisys, Goodyear, Nokia Siemens, Avis Budget, DirecTV and Google. iStar will use the proceeds from this transaction to repay a $925 million loan secured by the properties being sold, as well as for general corporate purposes.

We are extremely pleased to acquire this high-quality portfolio of office and industrial buildings," said Guy Arnold, president of Dividend Capital. "We feel the acquisition is a valuable addition to our portfolio, further diversifying our commercial real estate holdings by property type, tenant base and geography." According to the Denver Business Journal, Dividend Capital owns 111 properties totaling about 24.3 million square feet in 35 markets as of June 25.

For more news and information visit Blumberg Capital Partners.

Chinese Media Group Moving into Times Square

China's state news agency, Xinhua, is reportedly finanlizing a deal to establish its North American headquarters at the top floor of 1540 Broadway in Times Square according to a Wall Street Journal report. Xinhua currently occupies space in the Woodside neighborhood of Queens but is now entering into a 20-year lease in the 44-story skyscraper. The terms of the lease have not been disclosed.

"Xinhua's move into Times Square basically signals a new era in which they want to become a global player," said Russell Leong, an adjunct professor of Asian-American Studies at the University of California-Los Angeles. "China is realizing in the global arena that soft power is as important as hard power." Xinhua's North America bureau chief, Zeng Hu, said that the news agency is "doing more coverage here," and indicated that the agency would possibly increase its New York staff after moving headquarters, without noting how many are currently on the payroll.

For more news and information visit Blumberg Capital Partners.