War for Talent Hits Brokerage Firms

 

War for Talent Hits Brokerage Firms

Jul 15, 2010 10:42 AM, By Ben Johnson, NREI Contributor

 

Faced with lower volume in leasing and sales transactions, major brokerage firms have struggled to maintain their coveted standing among the largest in the nation. But as transactions begin to tick up in 2010, companies are warring among themselves when it comes to poaching experienced talent.

The latest NREI Top Brokerage Survey clearly shows how far business activity at the largest U.S. real estate services firms has fallen. While Los Angeles-based CB Richard Ellis remains atop the heap, the total amount of its investment sales and leasing transactions fell 30% from 2008 to 2009 to $97.2 billion.

Similarly, the total amount of leasing and investment sales transactions at Chicago-based Jones Lang LaSalle plunged 43% on a year-over-year basis to $47 billion. However, sales have improved in a number of markets in 2010. In Washington, D.C., for instance, Jones Lang LaSalle’s Investment Sales team completed nearly $500 million in office, retail and land sales in the first half of the year.

New York-based Cushman & Wakefield saw the total dollar value of leasing and investment sales transactions drop from $75.8 billion to $53 billion, a 30% dip, from 2008 to 2009.

One of the major fallouts from the slower deal flow in 2008 and 2009 has been reduced brokerage staffs, as the major firms cut scores of idle brokers from their ranks. Among the first to go were many junior brokers and support staff. Translation: In 2010, experience is now at a premium. Brokers who couldn’t add value for their clients as the market soured have been weeded out.

“It won’t be uncommon to see a more mature real estate industry with people who continue to stay vital longer,” says Christopher Ludeman, president of the Americas brokerage operation at CB Richard Ellis. “The shelf life of brokers in our business is longer.”

Deals pick up

Thanks to improving transaction volume in 2010, the landscape for retaining and recruiting new talent is becoming more competitive. This year major brokerages are playing a game of one-upsmanship in announcing their latest hires.

In March, Jones Lang LaSalle snatched the investment banking trio of Thomas Fish, Michael Melody and Thomas Melody, who served as vice chairmen at CBRE.

In late April, Grubb & Ellis announced its hiring of Jeff Majewski away from CBRE to run its debt and equity operation. He was formerly chief operating officer of CBRE’s debt and equity finance group and senior managing director of its capital markets group.

Recently CBRE countered those salvos with its own announcement, trumpeting the fact that it had hired 30 new senior brokerage pros from January through April 2010. That figure pales in comparison to the hundreds of brokers CBRE laid off in the past two years, but it was obviously trying to make a larger point — it is actively recruiting senior-level talent while trying to maintain an overall lower cost structure.

In its first-quarter earnings conference call in late April, CB Richard Ellis CEO Brett White felt the need to address the firm’s hiring practices.

“Competitively, people in this business don’t move for [commission] split. They’re smarter than that,” said White on the conference call. “They move for platform, and the platform that we have, the platform that our very worthy competitor [Jones Lang LaSalle] has are terrific platforms. I think you’re going to find that the highest-quality talent is going to end up generally at those two firms.”

And so the hiring game seems destined to play out for some time, particularly as firms move more aggressively to fill perceived service gaps with experienced brokers.

“One priority is to add and upgrade talent to increase market share and expand our expertise in new product lines such as healthcare, retail, and industrial,” says Jones Lang LaSalle’s chief operating and financial officer Lauralee Martin.

Certainly the brokerage business has become more complex as firms recover and staff up to offer one-stop solutions demanded by their corporate clients. That puts a further premium on experienced talent

“Whether it’s us or one of our competitors, talent management is very important,” says Ludeman. “Ours is an industry where I wish that the talent pool was broader and deeper, but finding the right people and keeping the right people will be the foundation of success or failure for companies.”

War for Talent Hits Brokerage Firms

Published in: on July 18, 2010 at 06:06  Leave a Comment  
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Global Commercial Real Estate Investment is Climbing

 

Global Commercial Real Estate Investment is Climbing

Jul 16, 2010 9:52 AM, By NREI Staff

Compared with last year’s anemic volume, global commercial real estate investment has increased dramatically through the second quarter of 2010, according to a new report by Chicago-based real estate services firm Jones Lang LaSalle.

For the first half of the year, direct commercial real estate investment volume totaled $130 billion. In the second quarter alone, direct commercial real estate investment reached $66 billion, the company says.

“For the full year we anticipate volumes globally of around $300 billion, which represents a healthy 40% to 50% increase on 2009. This is still less than half the pre-credit crisis levels of 2006 and 2007, but we must take into account the fact that those were heady years for commercial real estate investment, with unprecedented record trading volumes,” says Arthur de Haast, head of the international capital group at Jones Lang LaSalle.

“This is solid progress for commercial real estate investment markets,” adds de Haast, even though volumes are still well below pre-credit crisis levels.

Brazil shines
Some regions of the world have fared better than others, in terms of investment. The strongest growth occurred in Brazil, where quarterly volume tripled to a record $1.6 billion.

Canada also has seen strong quarterly improvement. Investment volume there doubled to $3.5 billion.

In the United States, investor demand continues to be strong for core assets, but the lack of product supply hinders direct investment volumes, says Steve Collins, head of the Americas capital group for Jones Lang LaSalle. As more product comes on line, investment is projected to increase.

“We expect total transaction volume in the Americas region for the full year 2010 to increase by at least 80% over 2009 and reach the $80 billion to $85 billion range,” says Collins.

Asia Pacific slips
Meanwhile, the Asia Pacific region experienced a 34% decline in investment volume in the second quarter to $15 billion. Significant declines occurred in Japan, China and Australia, while Hong Kong and Taiwan saw increases.

Still, compared with the same quarter last year, volume in the Asia Pacific region were up by 21% over 2009, when investment reached $13 billion.

“In Asia Pacific, the first half of 2010 has posted reasonably strong increases over the corresponding periods of 2009. If this trend continues, aggregate volumes could be around 30% higher this year to reach the mid-$80 billon range,” says Stuart Crow, head of the Asia capital markets group.

In Europe, the Middle East and Africa, commercial real estate investment volume rose a modest 15% in the second quarter compared with the first quarter, to €23 billion ($29 billion). That represents a healthy increase of 80% from a year ago. The United Kingdom accounts for more than 40% of the investment volume among the three regions

Global Commercial Real Estate Investment is Climbing

Published in: on July 17, 2010 at 11:46  Leave a Comment  
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General Growth Sells Management Portfolio to Jones Lang LaSalle

 

General Growth Sells Management Portfolio to Jones Lang LaSalle

Jul 15, 2010 10:22 AM, By Daniel Beaird, NREI Senior Associate Editor

General Growth Properties (NYSE: GGP) has sold the management and leasing responsibilities for its third-party management division to Jones Lang LaSalle (NYSE: JLL) as General Growth attempts to emerge from Chapter 11 bankruptcy protection.

The five-year agreement calls for General Growth and JLL to share management revenues on a portfolio of 18 regional shopping malls and community centers across 11 states. The agreement is on an earn-out basis with no upfront price, and takes effect immediately.

The 200 employees comprising the management teams of the 18 properties plus 30 General Growth corporate employees will become Jones Lang LaSalle employees.

The portfolio adds more than 11 million sq. ft. to JLL’s retail portfolio of 84 million sq. ft. in the Americas and 265 million sq. ft. worldwide.

“It fits very well into our existing structure,” says Greg Maloney, president of Jones Lang LaSalle Retail, based in Atlanta. Along with the 230 employees JLL is adding, 16 new clients are also coming on board with this deal.

“The people that we’re bringing in are moving just down the street or only within a few miles from one office to another,” says Maloney. “The benefit to JLL is the new talent and new clients as this deal solidifies our position as a third-party provider of regional mall real estate in the country.”

Another benefit to JLL is any possible additional contracts that General Growth might send its way due to this alliance.

“If they decide to sell some properties, we’ll get a shot at the investment sale piece,” adds Maloney. “We are positioned to offer our services for a variety of transactions.”

Chicago-based General Growth’s third-party management arm is a separate business from the mall owner’s main processes, and therefore, wasn’t protected from bankruptcy. The alignment with JLL will allow General Growth to remove top tier management from its payroll in its efforts to reorganize.

“This strategic alliance with Jones Lang LaSalle also allows our clients to leverage the resources and talents from GGP and Jones Lang LaSalle and, ultimately, create a broader range of services for our clients,” says Tom Nolan, president and chief operating officer for General Growth.

Reorganization Plan
General Growth has filed a reorganization plan that would implement a recapitalization of between $7 billion and $8.5 billion of new capital and create two publicly traded companies. Under the plan, one group would include completed properties and the other would oversee planned communities.

GGP also landed a $500 million equity investment from the Teachers Retirement System of Texas this week in another step to help the REIT emerge from bankruptcy protection.

General Growth owns or manages more than 200 regional shopping malls in 43 states.

General Growth Sells Management Portfolio to Jones Lang LaSalle

Jones Lang Lasalle operates as a nationwide Real Estate Development, sales and consulting group. They do have an office in our marketplace of Cincinnati. They have been responsible for the marketing of several commercial building in Norwood and Middletown recently.

Published in: on July 16, 2010 at 07:37  Leave a Comment  
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Industrial Sector Lags Despite Manufacturing Gains

 

Industrial Sector Lags Despite Manufacturing Gains

Jul 14, 2010 10:02 AM, By Daniel Beaird, NREI Senior Associate Editor

Widespread improvement in the industrial sector won’t occur until 2011 and 2012 despite recent economic and manufacturing gains. That is according to a new report issued by Encino, Calif.-based Marcus & Millichap Real Estate Investment Services.

While the manufacturing sector grew for the tenth consecutive month in May on the strength of new orders and production, industrial vacancies will remain elevated throughout 2010 as tenants have more space than they need. However, some industrial markets like Houston, a port city, are better positioned to rebound faster as tenant demand rises and greater employment growth is expected.

“Manufacturing continues to post gains, which will bolster a 2011 recovery in the industrial property sector,” says Alan Pontius, managing director of Marcus & Millichap’s national office and industrial properties group. “Future economic expansion will also be driven by personal and corporate spending.” Both were the primary drivers of GDP growth during the first quarter of 2010.

“As private consumption resumes, business will be encouraged to replenish depleted inventories in anticipation of further increases in demand, albeit at a slow pace,” says Pontius.

Employment growth will be a crucial component in stabilizing consumer sentiment and supporting spending, according to Marcus & Millichap. More robust economic and employment growth won’t take hold until 2011 and 2012.

As the industrial sector begins its slow rally, investors are hoping that cheaper turnover costs and growing competition for available assets will help to stabilize cap rates. Cap rates for best-of-class assets or those located in top industrial markets with credit tenants and long-term leases in place will likely end 2010 in the high-6% to mid-7% range, according to the report.

More buyers will move off the sidelines and compete for deals, while investors will demand higher returns for riskier assets in less desirable locations, Marcus & Millichap predicts. Initial yields for single-tenant properties in secondary and tertiary markets should settle in the 8% to 9% range this year.

Texas Two-Step
Houston, Los Angeles and Denver ranked as the strongest U.S. industrial markets in Marcus & Millichap’s report. The firm ranked 27 national industrial markets on various factors including projected employment changes, construction, net absorption, revenue change and vacancy.

Dallas-Fort Worth made the largest jump in the rankings, up eight spots to fifth. Meanwhile, Tampa, Atlanta and Detroit bottomed out the list.

Top-ranked Houston benefits from its port city status. Tenant demand from port traffic and modest industry growth drove Houston to the top of Marcus & Millichap’s rankings for the second consecutive year. The city’s vacancy rate is expected to dip below the 10% mark by year’s end, recording only one of a few declining vacancy rates nationwide.

However, much like other industrial sectors, Houston’s recovery is dependent on job growth. According to IHS Global Insight, an economic and financial analysis firm, the port city is expected to return to better job levels than other top industrial markets in 2011.

Another metropolitan Texas area has seen its fortunes rise in the industrial sector too as Dallas-Fort Worth cracked the top five of the report’s rankings. Vacancy in the Metroplex is still considerably higher than most top markets, ranging from 12% to 13%, but the rate only slightly exceeds the area’s long-term average. However, demand drivers have moved Dallas-Fort Worth into the top five.

The Dallas-Fort Worth area is positioned to meet future demand with the continued evolution of intermodal facilities at the Alliance Global Logistics Hub and the Dallas Logistics Hub. Employment in the region is expected to pick up by year’s end, with increased industrial leasing activity to follow. Landlords are then expected to rein in concessions.

Industrial Sector Lags Despite Manufacturing Gains

Published in: on July 16, 2010 at 07:31  Leave a Comment  
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National Economic Update Mid-July 2010

Weekly Economic Summary – July 9, 2010

OVERVIEW ~ June 28 through July 2 ~ The psychology of the economic marketplace, to the extent that it can be measured, shows up in the numbers. Over the course of the week, for example, the Dow Jones Industrial Average (DJIA) fell from 10143.81 at the opening on Monday to 9640.69, presumably on growing concerns about the apparent weakness in the American economy. Until recently, it has generally been agreed that the economy would stumble forward for several months and then, at the beginning of the next year, begin to grow in a sustainable way. By Friday, however, after the release of the June employment figures, the DJIA dropped and most other data edged lower. Even the manufacturing sector, which has been one of the brightest lights in the economy in recent months, showed a weakening with the Institute of Supply Management (ISM) Index dropping from a strong 59.7 in April to 56.2 in May, and a 1.4% fall for May factory orders. In such an environment, interest rates are likely to fall, and indeed the 10-year Treasury note declined from 3.110% to 2.956%.

FOCUS ~ The employment report was treated as if it were a mid-term report card for the economy in our nation. The Thursday report of 472,000 new claims for unemployment insurance worried most investors and then the larger employment report, released Friday, caused analysts to doubt their earlier hopes for recovery and caused the markets to fall significantly.

There were 125,000 jobs lost in June. Analysts had hoped for a furthering of the positive numbers reported in the prior month. We need at least 150,000 new jobs each month to just keep up with the employment needs in our nation. In June, the economy failed even to tread water.

The unemployment rate actually declined from 9.7% to 9.5%, but this was not good news either, because the survey indicated that 652,000 capable workers had simply stopped looking for work, pulling themselves out of the so-called “labor pool.” Thus, the unemployment rate declined, not because more people found jobs, but because fewer people are looking for them.

The May employment report apparently lulled investors and analysts into a more optimistic view than it should have, largely because of the many census jobs that increased employment numbers and then swiftly fell away. A survey of American economists had resulted in a median expectation of 110,000 new jobs in June. Thus, the markets reacted strongly to the decline.

If there is any good news to be found in the week, it is the fact that overall mortgage interest rates remain even more attractive than they were before.

Published in: on July 16, 2010 at 07:27  Leave a Comment  
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West Chester heralded as “One of the best Places to live” by Money magazine

West Chester Township has been named by Money magazine as one of http://money.cnn.com/magazines/moneymag/bplive/2010/” target=”_new”>
the 100 best places to live in America.
The community of 60,000 residents in southern Butler County was tapped as No. 32 on the list in the magazine’s August issue. It is the only local community in the rankings, which were released Monday.
• http://cincinnati.com/blogs/question/2010/07/12/money-magazines-best-places-to-live-what-city-tops-your-list/”target=”_new”>Tell us: Where’s the best place to live?
West Chester was noted for its community gathering center, The Square at Union Centre, and for its location between Cincinnati and Dayton. Also mentioned was West Chester’s bevy of corporate employers, the largest of which include General Electric Aviation, BAE Systems, the Cornerstone Group and West Chester Medical Center.
The magazine also cited West Chester’s KiteFest, DogFest and historic beer festival at Muhlhauser Barn.
Those events are public-private partnerships and highlight West Chester’s citizen-involvement approach to governing, said Judith Boyko, township administrator.

She also touted recent quality-of-life improvements such as the opening of West Chester Medical Center and University of Cincinnati Physicians.

“We have a residential base, we have infrastructure and institutional anchors,” Boyko said. “At the same time, we are very humbled by these external sources that see value in West Chester.”

The only other Ohio city on this year’s list is Mentor (No. 37), near Cleveland. In Kentucky, Owensboro is No. 93 on the list.

It is the first time a Tristate community has appeared in the rankings since 2007, when Mason was ranked No. 81.

That year, the Northbrook neighborhood of Colerain Township, North College Hill and Cheviot were on the magazine’s list of 25 towns with the most-affordable housing.

Oxford, home of Miami University, ranked fifth in 2007 on the list of towns with the highest percentage of single people, with 69.5 percent.

The top five towns in the 2010 rankings were: Eden Prairie, Minn.; Columbia/Ellicott City, Md.; Newton, Mass.; Bellevue, Wash.; and McKinney, Texas.

Published in: on July 14, 2010 at 06:43  Leave a Comment  
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Market Update-Interest Rates

Rates continue to remain at record lows, however up a tick toward end of the week as the stock market rebounded.   At week’s end rates averaged 4.625% to 4.75% for 30 year fixed rate mortgages!

 

This coming week will help give some guidance as to the direction markets will take through the summer as the three largest banks; Bank of America, JP Morgan Chase and Citigroup all announce 2

nd quarter earnings results.   These results and even more so the projections they give for upcoming quarter and year will allow the financial markets to further evaluate how quickly the economy is beginning to rebound from the most recent recession.

 

Have a great weekend!

Published in: on July 10, 2010 at 14:54  Leave a Comment  
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Economists React: June Jobs Report ‘Bereft of Good News’

 

Economists React: June Jobs Report ‘Bereft of Good News’

Jul 7, 2010 10:00 AM, By Matt Valley, NREI Editor-in-Chief

Call it a June swoon for the U.S. labor market. Total nonfarm payroll employment declined by 125,000, raising concerns about a delay in the recovery of the troubled commercial real estate market. The setback marks a stark contrast from May when payroll employment swelled by 433,000 due largely to the hiring of 411,000 temporary Census workers.

The private sector added a modest 83,000 jobs in June, but below economists’ expectations of 110,000. Private employers added 33,000 jobs in May, according to the U.S. Labor Department, below the initial estimate of 41,000.

How much of a hole does the U.S. labor market find itself in at the moment? Well, consider that through June of this year, private-sector employment has increased by 593,000, but is still 7.9 million below its December 2007 level.

The good news is that the unemployment rate fell from 9.7% in May to 9.5% in June, but economists are quick to point out that this was largely because 652,000 workers dropped out of the labor force, reducing the labor force participation rate from 65% to 64.7%. More people became discouraged and stopped looking for work.

Meanwhile, average hourly earnings and the average length of the workweek were unchanged in June, indicating that incomes have been slow to ramp up.

NREI caught up with three respected real estate economists to get their reaction to last Friday’s jobs report and what it means for commercial real estate.

Viictor Calanog

Victor Calanog, director of research, Reis: “We expected this recovery to be slow and weak, but now it’s sinking in just how tough of a grind it may be. Not long ago, the White House expected jobs to grow by 195,000 per month through 2010. The actual average monthly gains for private-sector hiring are approximately half that amount, or slightly more than 99,000 per month for the first six months of the year.

“It is useful to note, however, that job growth tends to occur in fits and starts. After the last recession ended in late 2001, job growth was negative for 15 out of the following 21 months until the economy began posting consistently positive results in October 2003. Still, given upheavals in the international economy, it is worrisome how domestic numbers continue to fall below expectations, appearing woefully bereft of good news.”

Bob Bach

Bob Bach, chief economist, Grubb & Ellis: “The June report reveals a labor market that is expanding slowly, and it confirms other recent economic reports on retail sales, manufacturing and housing showing that the recovery has lost some momentum. The reasons for this include European debt woes, the waning effects of the stimulus, lingering caution on the part of both businesses and consumers, and severe deficit problems in state and local governments.

“The odds of a double-dip recession have increased. The question is being asked more frequently in the current environment than it was a few months ago, but the jury is still out. If the economy continues to lose momentum, then a double dip is more likely. But if the economy can stabilize, even at this lower level, the recovery will remain intact. We’ll know more over the next few weeks.”

Hessam Nadji

Hessam Nadji, managing director of research services, Marcus & Millichap: “My biggest concern is that private-sector hiring is not gaining enough traction. The risk of a double-dip recession has risen mainly due to a renewed loss of confidence spurred by the EU (European Union) debt crisis, a proposed premature wide-scale austerity plan that is a sure early-recovery killer, and a sharp reversal of the yield curve, which is most concerning of all. [The spread between long-term and short-term U.S. Treasury yields has narrowed considerably of late, which tends to foretell slower economic growth.]

“This means that the commercial space recovery is delayed. The bottom will still occur in 2010, but recovery is pushed back well into 2011. Apartments are the exception. They are getting even more traction than the first quarter of 2010.”

Economists React: June Jobs Report ‘Bereft of Good News’

Published in: on July 8, 2010 at 11:52  Leave a Comment  
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Market Update- Interest Rates

*4.375%              

30 Year Fixed Rate                         

Normal Closing costs

 

*4.75%                

30 Year Fixed Rate                         

$250 closing costs

 

*4.125%              

10 Year ARM                     

Normal Closing Costs

 

*3.875%              

15 Year Fixed Rate                         

Normal Closing Costs

 

*4.25%                

15 Year Fixed Rate                         

0 Points

$250 closing costs

 

*4.625%

FHA/VA 30 Year Fixed

0 Points

 

Other loan programs available. Please call for details.

*The above  interest rates are based on 80% LTV and a 30 day lock. $399 closing costs are based on loan amounts above $100,000. Loan amounts below $100,000 are subject to be slightly higher. The rates are for conforming loan amounts up to $417,000 owner occupied. The interest rates are subject to change based on market conditions and are subject to credit approval, credit scores and underwriting. Full Documentation required. . The interest rates above 80% LTV can be different based on the CLTV, credit scores, and loan programs. Please call me for more details. 1st National Bank is an equal housing lender. For Realtor/Builder use only.  Loan programs and loan guidelines are subject to change without notice. Restrictions apply. The low closing cost interest rates are based on using specific title companies. If another title company is used, closing costs can be higher.

7-7-2010                    

TR Wise

Sales Manager

1st National Bank

7451 Mason-Montgomery Road

Mason, Ohio 45040

Office/Cell (513) 238-0999

Fax              (513) 672-0479

Published in: on July 8, 2010 at 05:14  Leave a Comment  
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Land Purchased for I-75 Expansion

Camp Washington land to be sold for I-75 project

Cincinnati City Council has approved unanimously the sale of surplus City-owned property to the State of Ohio as part of the $664 million I-75 Mill Creek Expressway project.

The five parcels, totaling approximately 4.3 acres and roughly bounded by Central Parkway, Colerain Avenue, Bates Avenue and Sassafras Street, will be sold for $2.42 million.

The property is needed for the project’s $99.6 million fourth phase, which will rebuild 1.32 miles of interstate from the Western Hills Viaduct to the Monmouth Street overpass – including the complete reconstruction of the Hopple Street interchange.

Under the terms of the sale, the Ohio Department of Transportation will have the right to enter the property on or after June 6, 2012, and can take exclusive possession on April 1, 2013.

Work is underway on Phase 2, the $7.2 million removal and reconstruction of the Monmouth Street overpass. Property acquisition has begun for four of the project’s eight phases, with reconstruction of the Mitchell Avenue and the I-74/Colerain/Beekman interchanges scheduled to begin next year.

Phase 2 will be completed by August 2011, and the entire project will wrap up in spring 2020.

Published in: on July 7, 2010 at 13:28  Leave a Comment  
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