Annual Review
& Forecast 66th
The starting point for this slow-as-molasses recovery was different
region by region, city by city and even submarket by submarket.
But allowing for local conditions, the one constant seems to be an
improvement, virtually across the board in all markets covered.
Office and retail space users alike are drawn to Boston’s identity
as a “knowledge-driven market in an increasingly knowledge-driven
economy,” says Carroll. And there are some big names interested in
the region, running the gamut from Google to locally based
Akamai and others like the out-of-market Pfizer. According to
Carroll, it seems that 2012 will not only bring reasons for these and
other companies to stay, but hopefully for more firms to come to
the area. He points out that the 1. 6 million square feet of office
product that is under way is already 100% pre-leased.
“After being challenged in 2008 and 2009, the Greater Boston
market enjoyed a very strong 2011 from a demand perspective
and a resurgence in new construction,” he explains. “It will be
interesting to see if the demand sustains itself through
2012.”—Jacqueline Hlavenka, Erika Morphy, Miriam Lamey
SOUTHEAST
What a difference a year makes. Commercial real estate mar- kets in the Southeast are making steady, and sometimes
notable, progress toward recovery—across all sectors. Although
new development is still spotty in most markets, major metros in
the Southeast are seeing financeable development plans and, in
some cases, groundbreakings.
In Miami, hospitality is the name of the commercial real estate
game. Large and small hotels, including the Miami Beach Courtyard
Marriott, the Gansevoort Hotel, Royal Palm Hotel, as well as the
Raleigh, the Standard and several boutique
hotels, are trading hands. At the same time,
new mixed-use developments with strong
hotel components, including the $3.8 billion
Resorts World Miami, are on the boards.
Suzanne Amaducci, shareholder at Bilzin
Sumberg Baena Price & Axelrod, says the
Miami hotel market is on fire right now
both in terms of business performance and
sales volume. Indeed, the Miami hotel market is one of the top 10 in the US for ADR
and RevPAR growth and transaction sales volume, and many predict this performance level to continue over the next five years.
“There are many different economic indicators you can look at
to confirm the growth in the industry: increased traffic at Miami
International Airport, Miami being the number-one cruise port,
increases in employment in the hospitality sector and the increase
in sales tax revenue,” Amaducci says. “Thankfully, Miami is a gate-
way city attracting domestic as well as foreign travelers and sig-
nificant levels of investment.”
Moving up the state to Orlando, office construction has stalled,
but there were pockets of growth in the fourth quarter of 2011.
According to CBRE, the Orlando market saw a slight increase in leas-
ing activity as lease rates continued to fall. For the first time since
2007, CBRE reported the 2011 year-end total absorption in Orlando
was positive at 582,035 feet. The hottest market is East Orlando.
Miami hotels’ performance and sales volume
are on fire. Office construction stalls, but
leasing’s up in Orlando. Atlanta’s office market
is on the mend, with spotlight on Buckhead.
“On the other end of the risk spectrum, we will see the pace of
distressed asset sales increase from a drip to more of a steady flow,
primarily as a result of special servicers bringing more assets to
market,” Lee says. “As real estate fundamentals improve in Atlanta,
the bid-ask spread should become more realistic as sellers examine
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FEBRUARY/MARCH 2012 REAL ESTATE FORUM 63
