Sam’s Club CEO Brian Cornell has resigned the post, and parent Wal-Mart has named Rosalind Brewer as the 610-store warehouse chain’s new chief executive. Brewer, who currently heads Wal-Mart stores in the Northeast, will be the first woman to lead one of the retailer’s major business units.  (WSJ) READ MORE…

Fisher Plaza, a 294,488-square-foot, five-story office building in Seattle, has sold to Hines Global REIT for $160 million in cash (approximately $543 per sq. ft) . The seller, Fisher Communications, initially wanted to sell the building in early 2008 but quickly suspended its efforts due to the economic downturn. It resumed its search for a buyer in March 2011. Fisher has signed a new 12-year lease at the plaza that allows it to remain in its 120,000-square-foot corporate headquarters, according to CoStar.

Average US retail capitalization rates declined in the third quarter after a temporary increase in the second quarter. Cap rates during the quarter were at the lowest levels since the end of 2008.  The data is from the CBRE Valuation & Advisory Services (VAS) database from 2003 through Q3 2011.

In the West average retail cap rate dropped to 7.81%.

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Downtown Tacoma’s Rhodes Center is for sale, again.

The state-owned office complex, which the government bought in 1996 and tried to sell in 2008, is headed for the open market with an asking price of $25 million. It’s the priciest of a handful of properties the state is trying to shed to help reduce the projected budget deficit.

The complex is two office buildings and a parking garage, all connected by skybridge, along South 11th Street between Market and Broadway. 

However, many of the state tenants in the Rhodes don’t have traditional 10-year commercial leases. Many of the state leases are two-year renewables, tied to the state’s budgeting process.

The Rhodes Center comprises the former Rhodes Department Store on Broadway, built in 1903; a building on Market Street and a 1969 parking garage.  After Rhodes left downtown for the Tacoma Mall, the building became the University of Puget Sound Law School.

UPS then sold the building to Seattle University, which moved the law school to Seattle. The state bought the building in 1996, renovated it in 1999, and tried to sell it to the Tacoma Housing Authority in 2008.

That sale ultimately didn’t close because of THA’s concerns about deferred maintenance.

According the the State, The Market Street building needs a new roof; dozens of heat pumps replaced; and the lights use bulbs that aren’t made anymore.

Ground floor retail space on Broadway has been vacant for years, though the Sundance Cafe recently opened.  (Tacoma News Tribune)  READ MORE

ISSAQUAH — Records show that Klahanie Shopping Center, 4580 Klahanie Drive S.E., sold last week for $22 million (±$328.87 per SF).  Gerrity Group of Solana Beach, Calif. bought the QFC-anchored center from Hogate Properties of Seattle.

Klahanie Shoping Center is approximately 66,895 square feet and sits on just over 7 acres.  According to CoStar, the center was 97% occupied at the time of the sale.

Seattle is the country’s sixth strongest commercial real estate market, according to the Emerging Trends in Real Estate report by the Urban Land Institute and Pricewaterhouse Coopers.

The report is based on surveys of 950 real estate professionals. Release of the rankings is a big day in the industry, and this year’s results were warmly embraced yesterday by a standing-room only crowd of more than 500 people in Seattle. 

Washington, D.C., is the top market, followed by Austin, San Francisco, New York and Boston. Following Seattle are San Jose, Calif., Houston, Los Angeles and San Diego. Most other areas of the country are a different story, according to Emerging Trends, which predicts real estate faces a “long grind” before recovery.

“We think [commercial real estate] is out of the water,” said Charles DiRocco of PwC. “We are breathing, but we are concerned about taking another dip.” One survey respondent said Seattle is “starting to fire on all cylinders.” That’s a turnaround from last year’s Emerging Trends, which summed up Seattle as “crawling out, but running on empty.”

Seattle has the top industrial and retail markets, the second best office market and ranks No. 3 for apartments. The weaknesses are the prospects for building houses and hotels; Seattle ranks seventh for both. Survey respondents said Seattle is blessed to have Amazon, Microsoft and Google, along with “other formidable employers” such as Boeing, Costco and Nordstrom. Emerging Trends also is high on the region’s infrastructure projects, including the tunnel that will replace the Alaskan Way Viaduct and transform the waterfront. “This city gets better and better,” states the report.

The Seattle panel talked about challenges and threats to the Puget Sound market. Jim Gallagher of Cornerstone Real Estate in Santa Monica, Calif., said foreign investors view Seattle as a secondary market and favor San Francisco and Los Angeles. Apartment developer Brian Fritz of AvalonBay Communities worries about an oversupply of new apartments. Douglas Howe, president of the Seattle office development firm Touchstone, said Seattle will see build-to-suit projects start next year but won’t see speculative development for five years.

Seattle’s strength is being “a talent magnet” among high-tech and other creative companies, Howe said. “I think we’ve got a good 10 years in front of us.” Gallagher predicts growth will continue in the region’s urban cores. Employers know that to attract talent they must be in lively, walkable areas where people want to live. “Increasingly convenience counts as more people shy away from car-dependent places,” the report states.  (Daily Journal of Commerce)

Retail Caps Rates Investment Way Up

Average US retail capitalization rates were effectively flat in Q2 2011 at 8.14% (after we revised Q1 from 7.79% to 8.16%). It is unclear what impact the recent global bond market turmoil will have on real estate as of this writing. We expect some upward pressure on cap rates, at least in the short term. The data is from the CBRE Valuation & Advisory Services (VAS) database from 2003 through Q2 2011.

CBRE Retail Vaulation Group measured increases in the East, Midwest and West, and a decrease in the south. Average rates remain near Q4 2008 levels. The highest quality institutional quality retail centers and net leased investments (such as Walgreens, McDonalds, etc.) continue to achieve significantly lower cap rates than market averages.

The data points used are confirmed closed transactions, adjusted for assumed financing, and reflect overall market trends. Contact a local CBRE appraiser for a detailed overview of a specific market.

US Retail :: Cap Rate Trend – Quarterly Average

Source: CBRE

On Tuesday Trader Joe’s paid more than $8 million for property in Lacey and the seller — a group affiliated with Teutsch Partners of Seattle — has applied for permits to build a 500,000-square-foot food distribution center on the site. 

For months market watchers have been waiting for this deal. It will result in South Puget Sound’s second significant industrial development in what has been a very slow three years. Both of the new projects are in the Hawks Prairie area of Lacey and have come a year after the city lifted its long-time ban on distribution centers larger than 200,000 square feet.  Earlier this year, Teutsch completed a $15 million build-to-suit industrial facility and headquarters on 12.5 acres for Harbor Wholesale Grocery, which moved from Tumwater.

Lifting the ban was expected to alter the makeup of the South Puget Sound’s industrial market, and the two Hawks Prairie deals show that it has. When the moratorium was in place, companies were moving south of Lacey despite being farther from the port.  (DJC) READ MORE…

The U.S. CMBS sector will gain a little breathing room in 2012 as the pace of securitized loans reaching maturity slows, according to Fitch Ratings.  In transactions rated by Fitch, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to mature in 2012. This represents a sizeable drop compared to 2,000 loans totaling $22.5 billion that mature this year.

Maturities remain modest in 2013 ($13.3 billion) and 2014 ($15.5 billion) before jumping to $29 billion in 2015.

Loans scheduled to mature in 2012 have an average balance of $13.9 million and were originated between 1996 and 2007. Loans secured by office properties represent the largest concentration of maturing loans next year at 38%. Multifamily (22%), and retail (20%) properties follow. In the fourth quarter of 2011, maturities remain modest at only 204 loans representing $4.4 billion.   (NREI) READ MORE…

The tumultuous events of the last four weeks have prompted downward revisions to economic forecasts, and for good reason. On July 29, U.S. GDP growth figures for the second quarter came in at an anemic 1.3%, with first-quarter figures revised down to 0.4%.

Then came the debacle over the debt ceiling debate, and the S&P downgrade. The probability of a double-dip recession has now risen to between 30% and 50% based on consensus estimates, up from a relatively low 15% earlier in the year.

And yet there is good reason to believe that the economic recovery will continue to putter at an uninspiring pace, but progress nonetheless. Monthly job growth has been positive for 10 straight months since October 2010. Some 930,000 jobs have been created in the first seven months of 2011, about as much as the 940,000 jobs that were created in all of 2010…. 

Commercial real estate effects

Obviously, a double-dip recession would suspend any hopes of a quick and robust recovery in fundamentals. But today’s uncertainty actually raises questions about how investment sales will fare. The sharp drop in equity markets may actually prompt greater demand for assets considered “safe havens,” generating a positive halo effect for Class-A properties in gateway cities and nudging cap rates downward.

For now, reports from brokerage firms indicate that few buyers are pulling back or lowering pending bids on attractive properties because of the events of the last few weeks.

As new information arrives over the next two months, we will find out whether the optimists are prevailing or if the pessimists will win the day. Consensus estimates now place 2011 U.S. GDP growth at 1.6% to 1.8%, but that still implies that second-half GDP growth will accelerate to around 2.5%. For now, a double-dip recession is unlikely to happen, but sentiment is a fickle thing.   (NREI)  READ MORE….