NEWS FRONT
Blue Chip Law Firms Go Green
NEW YORK CITY—Eco-friendliness may have
come to the legal sector later than other
industries, but law firms are catching up.
Take, for instance, high-profile examples
such as Nixon Peabody’s appointment of a
chief sustainability officer and Proskauer
Rose’s pursuit of LEED Gold certification for
its 406,000-square-foot space at 11 Times
Square. In a recent report, CB Richard Ellis
says that 49 of the Am Law 100 firms—as
ranked by the American Lawyer—have a stated
environmental program, and 11 are pursuing or have achieved LEED certification in at
least one office. American Lawyer and Real
Estate Forum are both published by ALM.
The ways top law firms come to sustainability vary, as do their reasons for going
green. Extending the firm’s brand identity
is one element, “but there are many other
benefits,” says Sally Wilson, CBRE’s global
director of environmental strategy.
One factor is the rise in requests from law
firms’ clients to disclose “what sustainability
means to them and how they’re leveraging
that in their business,” says Wilson. “Secondly,
especially among larger law firms, they’re
finding financial benefits from investing in
more energy-efficient space. On the brand-
ing side, clearly it’s good for recruiting and
retention, especially among younger attor-
neys.” Law firms also see it as a means for
boosting employee productivity and
morale, according to CBRE’s report.
WASHINGTON, DC—James M. Underhill has
been named CEO of the Americas at
Cushman & Wakefield. Previously, he was
EVP and area leader for the Mid-Atlantic
and Northeast regions at C&W.
For more executive moves plus
job opportunities, please visit
www.globest.com/executivewatch.
Vital Signs
Top 10 Stories of the Decade
To mark the 10th anniversary of
GlobeSt.com, the editors polled
its national readership and asked
them to rank “ 10 Top 10s,”
including the top 10 stories of the
past decade. The Wall Street collapse of 2007 took the spot as
the Top Real Estate Story of the
past 10 years, with a total of 72%
of survey respondents picking it
as their first, second or third
choice.
Wall Street Collapse of 2007 - 255 responses
Terrorist Attacks of 9-11 - 170
Rise of Distress as an Opportunity - 118
Gro wth of Public Markets - 112
Equity Office Properties Sale - 70
Peter Cooper Village/Stuyvesant Town Default - 67
Mega-Merger Mania of the Early 2000s - 56
Resurrection of the Public Markets in 2010 - 50
Congressional Vote on Carried Interest - 44
The Rebuilding of Downto wn Manhattan - 39
0 25 50 75 100 125 150 175 200 225 250
Source: GlobeSt.com
Price Trifurcation On the Rise in the US
Commercial real estate fundamentals are improving, yet commercial properties experienced their third consecutive month of price
declines, falling 3.3% in August. The price of commercial properties, on average, was three to four percentage points lower in each
of the past three months. Average price declines, however, disguise
the good, the flat and the ugly.
Commercial real estate markets in the US
have become trifurcated. Property values are
rising for high-quality
buildings located
within the central business districts of high capital-attracting cities,
but they remain flat for lower-valued but performing assets situated within smaller markets.
Meanwhile, values are declining sharply for
distressed properties sold across all US markets.
Analyzing the interplay of the three market components provides insight into commercial real estate value trends. Prior to
2009, the Moody’s/REAL Commercial Property Price Indices
average was driven by repeat sales of performing properties, as
few distressed sales were observed. During the recent downturn,
however, the number of distressed sales has significantly increased,
producing large overall negative rates of return. Slightly over
25% of repeat sales deals in August were considered distressed,
By Joseph Baksic
and the annualized rate of return for them was negative 16%.
This distressed trade data masks some positive news recorded in
select areas of the country. The component of the price index associated with high-quality performing assets located in the cities of New
York, San Francisco and Washington, DC showed the greatest price
increase during the month of August, continuing the price rebound
evidenced for much of the year in certain major US markets. Los
Angeles, Chicago and Boston are also showing positive and improving price returns. However, such transactions account for a smaller
share by count of properties sold and fail to compensate for the distressed sale declines observed. Distressed sale data is a drag on CPPI
and outweighs the positive and flat results of the performing assets.
Consequently, the CPPI for August fell below the previous
recession low that was observed during October 2009. Commercial
real estate prices have retreated to early 2002 levels as this tug-of-war between performing and distressed properties continues to
contribute to price uncertainty. As price return differentiation
increases, we expect property-value movements to remain
choppy due to the uncertain macroeconomic environment and
low transaction volume.
Joseph Baksic is vice president and senior analyst of commercial real estate
finance at Moody’s Investors Service in New York City. He may be contacted
at joseph.baksic@moodys. The views expressed here are the author’s own.
