After decades of amassing ever-more square footage under roof, big box retailers are evolving in a new direction of getting smaller. According to Time Magazine, many big box retailers are realizing that the enormous, one-size-fits-all approach doesn't work for all shoppers and locations. Many retailers are beginning to shrink into smaller stores, sometimes with smaller, more intimate and approachable locations within larger stores.
The CMBS delinquency rate hit an all-time high of 10.36% during the month of July, marking the fifth straight month it has increased. According to the New Mexico Business Weekly, the increasing delinquency level was driven by a wave of 2007 loans that reached balloon payment dates but could not be refinanced. With the majority of these loans occurring in the first half of 2012, it is expected that the delinquency rate will begin to slow in the second half.
Businesses in California paid just under $90 billion in taxes last year, with property taxes by far being the largest contributor. According to The Orange County Register, California businesses pad $29.8 billion in property taxes, followed by $17.7 billion in sales taxes, $9.6 billion in corporate taxes, and $8 billion in income taxes passed through to owners. The $89.9 billion in taxes paid by businesses accounted for 48% of all state and local tax collections in California.
The price paid for every operating hotel includes money exchanging hands for the acquisition of intangible assets. Of course, it also includes money exchanging hands for the acquisition of real estate and tangible personal property – land, building, and FF&E. However, some renowned appraisers would have you think that that is it. The evidence for the fact that intangible assets are transacting is the terms of the Purchase and Sale Agreement (PSA).
Consumer contributions to the economic recovery are beginning to slow as retail sales fell for the third consecutive month, a trend that has not occurred in almost four years. According to GlobeSt.com, core retail sales remain at healthy levels, 8% higher than their pre-recession peak, but the pattern of monthly declines implies a growing hesitancy on the part of consumers and correspondingly lower confidence. Consumer confidence fell 6.5 points in June to the lowest level recorded this year.
San Francisco, California Mayor, Ed Lee, along with two of his rivals, have announced a compromise for the overhaul of the city's business tax that will go before voters in November. According to the San Francisco Chronicle, the ballot measure would change how the city levies its oft-criticized business tax, which brought in $410 million last year and is the second biggest source of money for the general spending account behind the $1 billion generated from property taxes.
Office vacancy rates in the Albuquerque, New Mexico metro area continued to rise in the second quarter of 2012. According to New Mexico Business Weekly, the office vacancy rate hit 18.8% in the second quarter, up 0.4% from the previous quarter and 0.8% year-over year. The vacancy rate from the second quarter hasn't been seen since the second quarter of 1989, as the market slowly recovered from a spurt of overbuilding in the 1980's.
New York Governor Andrew Cuomo has approved legislation that will provide property tax incentives to the construction of energy efficient buildings by builders and homeowners. According to Riverhead LOCAL, the legislation authorizes a local government or school district by local law, ordinance, or resolution to provide a real property tax exemption for construction or improvements constructed after January 1, 2013 which meet LEED certification standards for green buildings.
Though Denver, Colorado Mayor Michael Hancock's tax proposal will come with a sales-tax break, business owners claim that it will not be enough to offset the additional property taxes they will have to pay. According to The Denver Post, the proposal will make taxes higher for business and industrial properties than residential property, but does include relief in the form of a four-year moratorium on taxes typically levied on new equipment purchases, an incentive that many will receive no use from.
While aware that the excess that went into the CMBS market several years ago contributed to the recent recession, commercial real estate investors are still eager to see that market get back on its feet. According to Finance & Commerce, this year, when many of those 2007 five-year term loans are coming due, the CMBS market has issued just $18 billion in new securities. By the end of 2012, no more than $35 billion will be issued, about $200 billion short of the 2007 mortgage volume that will roll in over the next few years.
Office net absorption inventory entered its ninth consecutive quarter of occupancy growth, led by technology and energy firms. According to Market Watch, the technology and energy industry accounted for 46 and 23 percent respectively of net absorption in the office sector over the second quarter, with little to no help from other segments. Still though, leasing activity is depressed, down 17 percent year-over-year as a result of tenants negotiating leases during the rough times of 2010-11.
Pennsylvania property buyers will no longer be able to avoid paying deed transfer taxes by exploiting a loophole in state law. According to the Pittsburgh Post-Gazette, Governor Tom Corbett has signed into law an amendment to the state tax code that prohibits property buyers from setting up "89-11' transactions to avoid paying transfer taxes. In an "89-11" transaction, a buyer will acquire 89% of the interest in the company that owns the property, and then after three years purchase the other 11%. Until the recent amendment, a property was only considered a sale if 90% or more of the ownership interest was transferred within three years.
Driven by strong fundamentals in commercial real estate as a whole, the REIT industry continued its impressive first half of 2012. According to NASDAQ, the continued uptrend further suggests that economic growth was broadening across sectors and indicated a higher probability of a firmer foundation for future growth. With all said, the U.S. REIT industry actually outperformed the broader equity market in the first half of 2012.
Lender and investor confidence is high these days on the hotel investment market for a number of reasons. According to the 2012 edition of Hospitality Investment Survey by PKF Hospitality Research, LLC, lower interest rates, revenues that are outpacing expense growth, and below average supply additions are leading to double-digit growth and making hotel real estate an attractive option to commercial real estate investors. Industry fundamentals at the moment are strong enough to outweigh economic uncertainties.
California Ballot Initiative #11-0087 regarding a proposed split tax roll has failed to obtain the 807,615 signatures required to pass. The initiative would have required the assessment of most commercial properties every three years and would have provided tax reductions for homeowners, renters, and businesses. The incentive to voters would have been the doubling of the current homeowner's tax exemption and renter's credit.
Effective September 4, 2012, St. Louis County businesses will not be issued permits and licenses if they owe property taxes. According to the St. Louis Business Journal, the measure, approved by St. Louis County Council in June, is positioned to help the county collect approximately $25 million to $35 million in unpaid commercial personal property taxes.
Commercial property owners in Washington, D.C. owe over half a million dollars in overdue taxes to Business Improvement Districts (BIDs), non-profit groups that provide cleaning and marketing services. The debts amount to 10-20% of some organizations' budgets. According to The Washington Post, BIDs are formed when property owners in an area create a special tax district requiring payments based on the value of each owner's holdings, whether offices, multi-family or retail.
With very little development in the second quarter of 2012, U.S. shopping centers saw rent and occupancy rise over that time frame. According to Bloomberg, occupied space rose by a net 2.06 million square feet, the third largest addition since the slump for neighborhood and community shopping centers began in the first quarter of 2008. The absorption of space compares to a loss of 39,000 square feet over the same time period in 2011.
Bedford County, Pennsylvania has moved forward the second reassessment in three years, and now awaits the appeals phase. According to the AltoonaMirror.com, the appeals phase is the last step before taxpayers' new property values are finalized and the court-ordered reassessment in complete. The new values, expected to go out this week, have been redone since their last release in 2009 and will dictate property taxes in the years to come.
Oregon recently announced that they will be expanding property tax breaks on the value of improvements that brought such companies as Facebook and Apple to the state. According to Bloomberg Businessweek, businesses that build new operations or expand existing ones inside one of the states enterprise zones can avoid paying property taxes on the value of their improvements for anywhere from three to five years. To qualify, the company has to create at least one job, sometimes more.
Most Milwaukee, Wisconsin commercial real estate markets showed improved fundamentals in the second quarter of 2012. According to the Commercial Association of Realtors Wisconsin, vacancy rates for Milwaukee-area industrial, office, and retail properties all slightly decreased over the quarter.