February 2nd - February 15th, 2013

Rising Demand Propels Warehouse Market to Strong 2012 Finish

2/6/2013, CoStar Group, Randyl Drummer With a burst of positive absorption in the fourth quarter, demand for U.S. warehouse space moved from the recovery to the expansion phase in late 2012 as rising occupancy rates and limited new construction helped push rents a bit higher across a majority of markets. Although leasing ticked up in the fourth quarter, current market sentiment suggests leasing velocity remains weak. However, the two real estate economists noted, conditions appear ripe for leasing improvement as both tenant move ins and move outs are running below their historical averages. CoStar believes those conditions will eventually set the stage for new demand growth and stronger net absorption next year, Lupton said. Newer, bigger buildings capable of attracting top credit tenants have seen occupancies recover much more rapidly than the broader market and are expected to generate some of the strongest income growth for investors, who are baking rent growth into their investment decisions in certain markets such as Miami and Houston, leading to strengthening capital flows. Click here for more...

Fast-Food Buildings Beating Bonds Spurs Deal Surge

2/6/2013, Bloomburg, Brian Louis Sales of single-tenant retail properties -- buildings leased to fast-food joints, pharmacies and other store operators -- have soared to a six-year high as investors seek real estate that performs better than bonds. So-called triple-net-lease landlords rent to pharmacy chains including CVS Caremark Corp. and Walgreen Co. and such food outlets as Chick-fil-A and Red Robin Gourmet Burgers under multiyear agreements, with tenants paying property expenses. The leases often have rent increases built in over their lifespans, providing steady cash flow and protection against rising costs, much like investing in an inflation-adjusted bond. Sales of single-tenant retail properties totaled $3.1 billion in the fourth quarter, the highest for any three-month period since the fourth quarter of 2006, according to data from New York-based real estate research

company Real Capital Analytics Inc. Click here for more...

The State of CRE Lending: Banks Have Nothing Bad to Say, and That's Good News
2/6/2013, CoStar Group, Mark Heschmeyer As the economic recovery continues, the nation's bankers are spending noticeably less and less time in their quarterly conference earnings conference calls talking about commercial real estate as a factor in the underperformance of their loan portfolios. It was hardly a topic at all in the most recent round of calls, which wrapped up this past week. The change denotes the growing point that commercial real estate has become much less of a drag on bank performance. At the same time, though, CRE lending has not yet become a positive either. What follows is our quarterly roundup of the most telling statements we heard regarding bank CRE-related activities from the earnings conference calls: Click here for more...

SPECIAL REPORT: Liquidity Returns to Commercial Real Estate

2/7/2013, Commercial Property Executive, Keat Foong The low-interest-rate environment is driving the demand for relatively higher-yielding commercial real estate loans, and the commercial real estate financing industry cautiously greeted the rapid return of liquidity into the sector during the Mortgage Bankers Association's (MBA) 2013 Commercial Real Estate Finance/Multifamily Housing Convention & Expo. The exposition opened on Monday with a record attendance level of about 2,600. On the other hand, although the low interest rates provide many benefits, Stevens said, capital is struggling to obtain concurrently desirable yield levels and asset quality in the low-yield environment. One fear among market participants is that debt investors' bid for the relatively higher returns offered by commercial property could lead to lower underwriting standards and a weakened CMBS sector-all too soonas lenders compete for the same deals. While making possible many deals and rescuing mortgages from default, the extremely low interest rates also introduce another point of concern: refinancing risk in the future when and if interest rates should increase again, and many speakers referred to that risk. Financed at extremely low interest rates, properties may have difficulty finding refinancing if interest rates rise significantly in future, especially if they have not amortized, or property values do not rise, adequately. Click here for more...

Six Things to Watch in Commercial Real Estate

2/10/2013, The Washington Post, Sandy Paul In 2012, the Washington commercial real estate market became more competitive for investors. Our region faced the threat of sequestration automatic federal budget cuts - only to see a decision on those cuts deferred until March. Uncertainty led to stasis: executives across the

region paused their hiring and investment, waiting for the government to act. This led to the first year of negative net absorption - more space being vacated than leased - on record for the Washington area office market. At the same time, developers began building so many new apartments that supply now exceeds demand. What will 2013 bring? We have identified six major trends influencing the local economy and commercial markets. These trends are creating both challenges and opportunities for Washington investors. Click here for more...

Executives: Nonprofits, For-Profits Must Support Each Other

2/11/2013, The Gazette, Kevin James Shay Some Maryland businesses are having problems employees and are turning to local nonprofits for help.

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Meeting the private sector's labor needs was among the issues discussed at the gathering, which involved about 125 private, public and nonprofit leaders and was organized by Nonprofit Montgomery, an affiliate of the Nonprofit Roundtable of Greater Washington. That trend mirrors statewide job growth among nonprofits, which saw a 10 percent increase in the sector from 2005 to 2010 to about 260,000, according to Maryland Nonprofits, which focuses on such organizations across the state. Nonprofit, government and business leaders agreed that partnerships and collaborations are needed. Click here for more... more

Commercial Properties Lead the Charge for EV Stations

2/11/2013, National Real Estate Investor, Jennifer V. Hughes In the world of sustainability initiatives, providing charging stations for electric vehicles doesn't provide the same bang for your buck as, say, energy-efficient lighting upgrades or super green HVAC systems. But property owners, managers and REITs are seeing the advantages to socalled EV stations and are installing them at office, retail, hotel and other commercial properties. In some cases, car-charging companies pay for installation and operation of EV stations and even allow property owners to take a cut of the revenue. Other companies work with government to provide subsidies. Often the tenant is the driver toward installing EV stations, but more and more property owners are leading the charge. There are also a wide variety of options for running the systems: Some connect to the common space electrical supply; others to that of an anchor tenant. Plenty of data shows that EV drivers are good for business. ECOtality's Koontz notes that a traditional driver might return to a location once a quarter; an EV driver comes back once a month. An average customer visits a location for 45 minutes while an EV driver stays twice as long, he says. Click here for more...

Small Business Owners Are in a Little Better Mood, But They're Still Not Smiling
2/12/2013, The Business Journals, Kent Hoover Small business owners were a little less depressed in January than they were the month before, but they're nowhere near being a happy bunch. That's according to the National Federation of Independent Business' monthly survey of 2,033 randomly selected members. The survey's index of small business indicators gained nearly 1 point in January to 88.9, but that's still a recession-like reading. Sales continue to trend downward for most small businesses. Only 3 percent of small business owners plan to increase employment, and only 6 percent think now is a good time to expand. That's because most small business owners think the economy is going to get worse, not better, according to the NFIB survey. Click here for more... Click here to download a printable version

MacKenzie is committed to helping firms capture a competitive advantage through commercial real estate. We have a proven approach, a skilled, multi-disciplined team, and the in-depth local market knowledge necessary to succeed in Maryland's business environment. MacKenzie is a full-service commercial real estate company offering services in leasing and sales, construction, development, GIS and research, property management, and debt and equity placement. For more information, please contact: Meghan G. Roy 410.494.4846 Email Meghan Now

This newsletter is a summary of articles related to commercial real estate finance news in the Baltimore/Washington market, collected from local publications as noted above. Should you require specific information, please refer to the publication source or call one of our professionals at 410.821.8585. All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions, or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon.