Philip Blumberg Blog

NRG Texas Leases Most of Houston Pavilions Tower

NRG Texas and its retail business Reliant Energy have executed a long-term lease at Pavilions Tower in the Houston Pavilions complex, an agreement that includes the space in floors one through ten (Sheehy, Serpe & Ware occupy the top floor). Eric Anderson and Greg Tilton of Transwestern represented the owner, Houston Pavilions LP. NRG Texas was represented by George Strake and Christopher Oliver with Cushman & Wakefield of Texas, Inc.

With the completion of the NRG lease, the second largest lease to be completed within the last year in downtown Houston, the office section of the project is now completely leased. "Even in the best of economic times, it's not often that a 240,000-square-foot tenant comes along," said Geoff Jones, co-developer/principal of Houston Pavilions. "In today's climate, we feel extremely fortunate to have executed a lease of this size with a tenant like NRG."

For more news and information, visit Blumberg Capital Partners.

CPPI Reports Precipitous Drop in April

The Moody's/REAL Commercial Property Index (CPPI) results are in for April, showing a return of negative 8.6% for the all properties national index. The index now sits 25.3% below its level from this time last year, and 29.5% below the peak prices measured in October 2007. "Unlike other areas where people are comfortable that the pace of change is positive, in commercial real estate pricing the pace of change is negative," Neal Elkin, REAL president, told CPN. "January was one of the largest changes in pricing ever seen before, but in April prices are deteriorating faster."

The CPPI is a periodic same-property round-trip investment price change index of the U.S. commercial investment property market based on data from MIT Center for Real Estate industry partner Real Capital Analytics, Inc (RCA). Moody's observes that April's negative return partly reflects that most deals closed during this time were negotiated at the end of 2008 and beginning of 2009 when securities markets plunged. "Primary markets are outperforming compared to the others. If you look at the Southern region, industrial properties are down 28.8 percent," said Elkin. "When you look into the numbers you see a return to the premium of primary markets. Prices are falling much faster and farther in secondary and tertiary markets and you're seeing that in other property types."

For more news and information, visit Blumberg Capital Partners.

Minneapolis Office Space in Macy's Building for Lease

NAI Welsh are marketing office space for lease in the Macy's Building in Downtown Minneapolis, marking the first time in the building's 107-year history that space has ever been available for lease according to a Business Journal article. Located at 700 Nicollet Mall in the heart of downtown Minneapolis, the iconic building dates back to 1902 when Dayton's first opened and has since served as the headquarters and regional office of Dayton's, Marshall Fields, Target, and Macy's. The site was largely emptied last fall when Cincinnati-based Macy's cut about 1,000 jobs in Minnesota, leaving 350,000 square feet on floors six through 10 above the Macy's store now up for lease.

"This space is main-on-main as far as Minneapolis office space goes," said Jim Damiani, Senior Vice President, NAI Welsh. "You couldn't ask for a more prominent location in this market." Damiani said Macy's would prefer to lease the entire space to one or more large tenants, but it is willing to cut up the space to accommodate smaller ones.

For more news and information, visit Blumberg Capital Partners.

Denver Office Tower Sells for $135M Cash

Downtown Denver’s Seventeenth Street Plaza office building has been sold to HRPT Properties Trust who paid $135 million in cash, making it the largest real-estate deal done in Denver this year according to the Denver Post. Newton, MA-based HRPT, a real estate investment trust that owns and operates office and industrial buildings, bought the 666,653-square foot, 33-story building from JPMorgan Chase of New York, a deal brokered by CBRE.

JPMorgan put the property on the market in early 2008, asking $385 per square foot, or roughly $250 million, brokers familiar with the property said. Brookfield Properties had the building under contract last summer for $225 million, but the deal was not finalized because of the debt crisis' impact on Brookfield's lender. Current tenants include the U.S. Department of Justice (with 208,250 square feet of space leased), the U.S. Department of Treasury, Ballard Spahr Andrews & Ingersoll and Molson Coors Brewing Company.

For more news and information, visit Blumberg Capital Partners.

NAR Convenes CRE Coalition Meeting

Representatives from various commercial real estate and community organizations and associations met on Thursday, brought together by the National Association of Realtors, to work together to provide policymakers with a package of principles and policy priorities to help their efforts in addressing the current CRE credit market crisis. Bob Toothaker, chair of NAR's Realtor Commercial Alliance and host of the meeting, said, "We face a liquidity crisis, the likes of which most of us have not seen in our lifetime. There is not one silver bullet to fix the huge problem, but we believe there are key steps that can be and should be taken to ensure the continued health and vitality of the commercial real estate industry."

NAR believes the success of programs and initiatives aimed at restoring liquidity and stability to the markets is intrinsically tied to and must work in conjunction with supportive federal tax policies and accounting principles that support commercial real estate lending. According to NAR Chief Economist Lawrence Yun commercial real estate is the hardest hit industry outside of the auto industry. "A recovery in commercial real estate always lags a general economic recovery, but with the right policy prescriptions we can recover more quickly," said Yun. Organizations involved in the meeting included the Building Owners and Managers Association, CB Richard Ellis, CCIM Institute, Coldwell Banker Commercial, Colliers International, Commercial Mortgage Securities Association, Grubb & Ellis, Institute of Real Estate Management, International Council of Shopping Centers, Mortgage Bankers Association, NAI Global, NAIOP, TCN Worldwide, The Real Estate Roundtable, and Transwestern.

For more news and information, visit Blumberg Capital Partners.

DHS Signs $83M Lease in Arlington, VA

The Arlington County Department of Human Services will be moving from its current location at 3033 Wilson Blvd. to 2100 Washington Blvd., entering into a new 13-year lease at the building known as Sequoia Plaza One. The county's current lease expires in August 2010, at which point DHS will move into its new 144,740 square foot space -- a relocation that will save the county $22 million.

Mark Roberts with Studley represented Arlington County in the transaction and determined that relocating to the new office building would save the county $22.1 million in total occupancy costs over a projected 10-year period. "Studley started representing us after we had been through two rounds of direct negotiations with the current landlord to renew our existing lease," said Greg Emanuel, Arlington's capital projects director in a CoStar article. Under the lease terms, signed with the landlord, Foulger-Pratt Development Inc., Arlington will be able to grow up to 370,000 square feet at the three-building office park.

For more news and information, visit Blumberg Capital Partners.

Spear Street Buys Tech Park for $54M

Spear Street Capital has purchased Murphy Ranch Technology Park, a five building office complex totaling 363,000+ square feet of space, in Silicon Valley for roughly $54 million according to a Business Journal article. The seller, Prudential Real Estate Investors, was represented by Cornish & Carey Commercial in cooperation with Holliday Fenoglio Fowler.

The Murphy Ranch Tech Park, completed in 1994 and purchased by Prudential five years ago, is currently fully leased and serves as the corporate headquarters for Avaya, Intersil, and Phoenix Technologies. "It's such an incredibly difficult market. The fundamentals are not going well," said John Grassi, president of Spear Street, who said he likes the property because of its flexibility to serve multiple or even a single tenant. "But we did it by keeping our eye out for quality real estate that will stand the test of time and has a long-term, decent shot to stay leased."

For more news and information, visit Blumberg Capital Partners.

Maguire Properties Unloads Office Tower at 40% Discount

Maguire Properties Inc. has completed the sale of 3161 Michelson, located at the Park Place campus in Irvine, to an affiliate of the EMMES Group of Companies. While Maguire has not officially released the sale price at this time, EMMES has announced the price at $160 million, which translates to a selling price of about $300 per square foot, or 40% less than the original cost according to the Wall Street Journal.

Maguire has had all of its Orange County properties for sale for some time now, and has sold a number of them. The Michelson building was originally completed in 2007 and is currently 60% leased, with tenants including Hyundai, Gibson, Dunn & Crutcher and Jones Day. The property was originally slated to be anchored by New Century Financial Corp., a now-defunct subprime mortgage lender.

For more news and information, visit Blumberg Capital Partners.

Stonewood Village to Get Makeover, Preserve Historic Property

Brookfield, Wisconsin's Plan Commission has approved the construction of a new 4,500-square-foot building and preliminary future development plan at the Stonewood Village shopping center on Capitol Drive, a total expansion of the property that will include the addition of more than 80,000 square feet of retail and office space. The developer, Mike Schutte with 4S, plans to renovate the new center by adding buildings and changing the parking and traffic flow of the center. But the initial proposal, which would have razed a historic two-story barn, known as the Siepmann House, met resistance from the community and the Brookfield Plan Commission who were forced to deny the new plan because the traffic aisle did not meet zoning code standards.

The project, which will be one of the largest development efforts undertaken in southeast Wisconsin during the current economic downturn according to a Business Journal article, will come back to the Plan Commission, with plans to preserve or move the 1865 farmhouse, for deliberation in July before heading to the Common Council for a vote. Fourth District Alderman Mark Nelson said the city is making the project more difficult for the developer, who is under no legal obligation to keep the farmhouse intact. "What we're really doing to some extent is whipsawing this developer," he said. Mayor Jeff Speaker said the city "might have to swallow hard" on some concessions to 4S when the developer returns with future phases of its development plan because 4S has made such an effort to keep the farmhouse intact.

For more news and information, visit Blumberg Capital Partners.

Corporate Center at Danbury Trades for $72M

Matrix Connecticut LLC, an entity managed by Glen Nelson, CEO of Matrix Realty Group, merged with GERA Property Acquisition LLC, a real estate agency and a wholly- owned unit of Grubb & Ellis Co., and picked up the Corporate Center at Danbury through a $72.4-million "cash merger". Jeffrey Dunne of CBRE explains that Matrix "bought the partnership interest" and the property was transferred to them from GERA, making it the largest multi-tenant office transaction recorded to date in the suburban New York Tri-State region in 2009.

Corporate Center is a 1,047,000 square foot trophy office campus located within 1 mile of Exits 1 and 2 of Interstate 84 in Danbury, providing a tenant friendly destination for its blue chip tenant roster that includes Boehringer Ingelheim, Praxair and Honeywell. Located on 99+ park-like acres, with an amenity package that includes a 875,000+ square foot garage with 100% covered parking, conference center, full-service cafeteria, fitness center, coffee shop, credit union, dry cleaning delivery and a barber shop, strongly positions this 61% leased asset to continue to attract tenants that desire an efficient work place environment.

For more news and information, visit Blumberg Capital Partners.