well in comparison to the general office category. For example, in Las Colinas, TX, Health Management Systems
has expanded by 24,323 square feet at
Corporate Point. The company, which
has signed for the expansion two years
after leasing 59,426 feet at the Corporate Point project, will expand into its
new space on the eighth floor in November 2009. The property is a 10-story,
223,498-square-foot building at 5615
High Point Dr.
Another category responsible for expansions is high-tech. In Beaverton, OR,
digital audio specialist Biamp Systems
has inked an 11-year lease for 71,000
feet of headquarters space at Nimbus
Corporate Center at 9300 SW Gemini
Dr. In addition to an expansion, the
lease represents an upgrade for Biamp,
which will be relocating to the new
space from 48,000 square feet of industrial, some of it at 10074 SW Arctic Dr.,
also in Beaverton.
Other firms adding space in recent
weeks include the law firm of Gordon &
Rees in Denver, which is expanding by
5,000 square feet in a 19,127-square-foot
deal at 555 17th St. The firm is migrating
from 370 17th St., where it held about
14,000 feet. In Schaumburg, IL, Financial Management Systems has expanded
into 25,000 feet at 1000 E. Woodfield Rd.
The firm, which was previously located
in 22,000 square feet, also extended
through late 2014.
In light of the recession and weakening office markets throughout the US,
brokers say that a lease need not be an
expansion to be notable. Large renewals
like those of Bank of New York Mellon
and the law firm of Sullivan & Worcester, both in Boston, can also provide a
lift for the market. Mellon is staying in
its 20 floors of One Boston Pl., signing
a long-term renewal for almost half of
the 800,000-square-foot class-A office
tower. The lease is a five-year extension
of Mellon’s current lease, set to expire
in 2013.
Sullivan & Worcester, also based in Boston, is renewing its 115,265-square-foot
lease at One Post Office Square. The law
firm, which has been at the property since
1982, is signing on for a long-term lease
at the 41-story, 830,000-square-foot class A
CBD property, jumping on an early exten-
sion of a deal which was set to expire in
2011.—Bob Howard, GlobeSt.com
INLAND EMPIRE
INVESTORS TO SCOOP UP
REPRICED ASSETS IN 2010
With economists universally proclaiming
the end of the recession, and industrial
building prices in the Inland Empire in a
two-year decline, some insiders are questioning when investors will swarm in to
scoop up the repriced assets. According
to Mark Zorn, an executive vice president of DAUM Commercial Real Estate
Slover in Fontana. It traded in June of
this year at approximately $29.3 million
equating to a 9.1% contracted return and
an 8.4% current-market rent return.
Unlike the Inland Empire residential
market, Cole explains, “the industrial
market has not experienced widespread
foreclosures, and sellers are attempting to ride out the storm.” However, he
notes that DAUM has handled 15 industrial building REO sales thus far this
year, and he has been told to prepare
for more.
“There will definitely be investor opportunities in REO properties over the
next two years,” he explains. “If the black
cloud of CMBS coming due over the next
three years is the worst-case
scenario, the market will
be flooded with properties. We are beginning to
hear rumors that much
of this debt will be renegotiated or extended,
but it is too soon to know
for sure.”
Cole adds that qualified investors are on the
sidelines, poised to start
buying, but are “
perhaps waiting for the final
shakeout to cause sellers
to close the gap between
their expectations and
buyer requirements.”
However, he expects
many more sale opportunities in 2010
and thinks investors will become very active when the economy shows signs of continued improvement and when industrial
building prices show signs of stabilizing.
“The bottom line is that astute investors
will move more confidently through 2010,
but cautiously.”—Natalie Dolce —SOCAL
Jasmine Distribution Center on Slover in Fontana traded in June at
approximately $29.3 million equating to a 9.1% contracted return
and an 8.4% current-market rent return.
Services’ Inland Empire office, there is
evidence that REITs are raising cash in
preparation for expecting buying opportunities, but as Zorn says, “investors are
cautious about a number of factors.”
The factors Zorn points to include:
final rent stabilization; vacancy in the
market; credibility of the tenant in the
asset; contracted lease expiration on the
asset; bottoming of building values; and
the question of whether or not there will
be a better deal in the market tomorrow.
Kerry Cole, an executive vice president of DAUM’s Inland Empire office,
notes that “investors are evaluating assets
with some padding if there is a long-term
lease in place because the contracted
lease rate may be higher than the current
market rate would dictate.” He points to
the sale of the 650,000-square-foot, three-building Jasmine Distribution Center on
Correction
In the “Women of Influence” feature in the
September/October issue, the incorrect
headshot was used for the entry of Diane
Coles, director of Workplace Services at
SCAN Health Plan. The corrected entry
can be viewed online in our digital version
at http://anax5a.pressmart.com/Southern-
California/ index.aspx.
