@properties Is #1
2009 was a challenging year for businesses across the globe. Some companies took it sitting down. Not @properties. We invested in new marketing and technology, opened new offices, and expanded programs to serve you better. The result: Our independent locally-owned company is stronger today than ever before. In fact, @properties far and away leads the Chicago market in more key categories than any other real estate company. And that means more resources, better service and ultimately better results for you.
@properties is clearly #1.
2009 Market Performance #1 in Market Share (City): 12.4%
#3 in Market Share (Northern Illinois Region): 4.4%
#1 Increase in Market Share (City): 28.0%
#1 Increase in Market Share (Northern Illinois Region): 18.8%
#2 Increase in Market Share (North Shore): 68.6%
#1 New Construction Market Share (City): 16.5%
#1 Buyer's Representative (City): 12.0%
#1 Seller's Representative (City): 12.9%
#1 Average Market Time (Northern Illinois Region): 147 Days
#1 Selling Price to Original Listing Price (Northern Illinois Region): 93.8%
For more information on @properties' services or your local market area, please contact me. I'm here to help.
Source: MRED, LLC, 1/1/09-12/31/09. Based on top 10 companies per category. Market share figures are based on sales volume.
Wednesday, January 20, 2010
Friday, January 8, 2010
Local commercial delinquencies dip in likely ‘anomaly’
By Alby Gallun, Dec. 14, 2009
(Crain’s) — Local banks reported a lower percentage of troubled commercial real estate loans in the third quarter, though delinquencies are likely to resume their climb over the next year because of depressed property values and the languishing economy.
The delinquency rate for commercial mortgages at Chicago-area banks fell to 5.9% in the quarter, down from 6.2% in the second quarter, according to Foresight Analytics LLC, an Oakland, Calif.-based research firm. That’s still up sharply from a rate of 3.5% a year earlier.
The third-quarter drop is probably a “statistical anomaly,” not the beginning of a turnaround, says Foresight Partner Matthew Anderson.
With occupancies and rents at many properties continuing to decline, more borrowers will struggle to keep up with their monthly loan payments, especially those who piled on debt when lending was loose.
Other investors will default as loans come due and they struggle to find replacement financing.
Though distress continues to build, regulators are showing flexibility in how banks deal with problem loans, one reason Mr. Anderson expects it could take a lot longer to clean up the financial mess than many observers previously believed.
And many vulture investors could find it harder than expected to scoop up distressed properties on the cheap.
“You’ve got almost all the ingredients for a massive wave of foreclosures or loan sales,” he says. “The part that’s missing is the regulatory pressure.”
Chicago is faring worse than the nation as whole, probably because the job market, a key driver of demand for real estate, is especially bad here, Mr. Anderson says.
Chicago’s third-quarter delinquency rate ranked 14th highest among the 100 biggest U.S. metropolitan areas, and it exceeded the national rate of 4.6%, according to Foresight.
Though he doesn’t offer a forecast for Chicago, Mr. Anderson expects the U.S. delinquency rate to peak at 7.5% to 8.0% near the end of 2010. That would be the highest since 1991, during the last commercial property crash, when the rate hit about 9.5%.
The Foresight data, which is based on bank regulatory filings, does not cover loans packaged and sold off as commercial mortgage-backed securities (CMBS), a segment of the market blamed for some of the biggest lending excess during the boom.
Foresight calculates the delinquency rate by dividing the dollar value of delinquent loans by the value of all outstanding mortgages on operating commercial properties. A loan is classified as delinquent if it’s at least 30 days past due.
Foresight also tracks the delinquency rate for construction and land loans, which hit a new high locally of 24% in the third quarter, up from 21.3% in the second quarter and 13.7% in the year-ago period.
One big source of distress: residential builders who have finished projects but are struggling to sell them out. Others are sitting on undeveloped property that has plunged in value, and they can’t develop it or refinance.
Though banks are required to write off bad loans, federal regulators issued new guidelines in October that could take some of the pressure off. The new rules encourage “loan modifications and restructurings, which will curb defaults associated with the wave of upcoming maturities,” Real Capital Analytics, a New York-research firm, writes in a recent report.
That’s good news for some banks on the edge, but “it could have the unintended consequence of stretching out the whole adjustment process,” Mr. Anderson says. Originally, he expected banks to clear out their bad loans within two years. Now he expects it to take four to five.
In the Chicago area, 398 commercial properties and developments are in various stages of distress, accounting for $5.6 billion in loans, according to Real Capital. The retail sector represents the biggest source of trouble, with $1.3 billion in troubled loans, followed by hotels, at $1.0 billion, and apartments, at $848 million.
(Crain’s) — Local banks reported a lower percentage of troubled commercial real estate loans in the third quarter, though delinquencies are likely to resume their climb over the next year because of depressed property values and the languishing economy.
The delinquency rate for commercial mortgages at Chicago-area banks fell to 5.9% in the quarter, down from 6.2% in the second quarter, according to Foresight Analytics LLC, an Oakland, Calif.-based research firm. That’s still up sharply from a rate of 3.5% a year earlier.
The third-quarter drop is probably a “statistical anomaly,” not the beginning of a turnaround, says Foresight Partner Matthew Anderson.
With occupancies and rents at many properties continuing to decline, more borrowers will struggle to keep up with their monthly loan payments, especially those who piled on debt when lending was loose.
Other investors will default as loans come due and they struggle to find replacement financing.
Though distress continues to build, regulators are showing flexibility in how banks deal with problem loans, one reason Mr. Anderson expects it could take a lot longer to clean up the financial mess than many observers previously believed.
And many vulture investors could find it harder than expected to scoop up distressed properties on the cheap.
“You’ve got almost all the ingredients for a massive wave of foreclosures or loan sales,” he says. “The part that’s missing is the regulatory pressure.”
Chicago is faring worse than the nation as whole, probably because the job market, a key driver of demand for real estate, is especially bad here, Mr. Anderson says.
Chicago’s third-quarter delinquency rate ranked 14th highest among the 100 biggest U.S. metropolitan areas, and it exceeded the national rate of 4.6%, according to Foresight.
Though he doesn’t offer a forecast for Chicago, Mr. Anderson expects the U.S. delinquency rate to peak at 7.5% to 8.0% near the end of 2010. That would be the highest since 1991, during the last commercial property crash, when the rate hit about 9.5%.
The Foresight data, which is based on bank regulatory filings, does not cover loans packaged and sold off as commercial mortgage-backed securities (CMBS), a segment of the market blamed for some of the biggest lending excess during the boom.
Foresight calculates the delinquency rate by dividing the dollar value of delinquent loans by the value of all outstanding mortgages on operating commercial properties. A loan is classified as delinquent if it’s at least 30 days past due.
Foresight also tracks the delinquency rate for construction and land loans, which hit a new high locally of 24% in the third quarter, up from 21.3% in the second quarter and 13.7% in the year-ago period.
One big source of distress: residential builders who have finished projects but are struggling to sell them out. Others are sitting on undeveloped property that has plunged in value, and they can’t develop it or refinance.
Though banks are required to write off bad loans, federal regulators issued new guidelines in October that could take some of the pressure off. The new rules encourage “loan modifications and restructurings, which will curb defaults associated with the wave of upcoming maturities,” Real Capital Analytics, a New York-research firm, writes in a recent report.
That’s good news for some banks on the edge, but “it could have the unintended consequence of stretching out the whole adjustment process,” Mr. Anderson says. Originally, he expected banks to clear out their bad loans within two years. Now he expects it to take four to five.
In the Chicago area, 398 commercial properties and developments are in various stages of distress, accounting for $5.6 billion in loans, according to Real Capital. The retail sector represents the biggest source of trouble, with $1.3 billion in troubled loans, followed by hotels, at $1.0 billion, and apartments, at $848 million.
Tuesday, January 5, 2010
Downtown apartments slip as glut looms
(Crain’s) — After taking two steps forward, downtown apartment landlords took one step back in the third quarter.
Demand for apartments remains surprisingly strong, but competition for tenants is heating up amid a swelling supply of new units. That’s one reason rents and occupancies at high-end downtown buildings slipped in the third quarter after rising in the first two, resuming a downward trend that began more than two years ago, according to a report by Appraisal Research Counselors.
“It’s really not a signal that it’s a weak market,” says Ron DeVries, vice president at the Chicago-based real estate consulting firm. “Demand is strong. We’ve just got a supply bubble right now.”
The average net effective rent at Class A downtown apartment buildings fell to $2.10 a square foot in the third quarter, down 3.2% from the second quarter and 7.1% from the year-earlier period, according to Appraisal Research.
Effective rents, which include concessions such as free rent, have fallen 10.6% from their peak of $2.35 in third-quarter 2007.
The average Class A occupancy also declined, to 91.9%, down from 93.4% in the second quarter and 92.8% in the year-ago period.
Demand for apartments typically falls in a recession as more renters try to save money by doubling up or moving in with their parents. But that hasn’t happened in downtown Chicago, where more people are renting now than were before the economy went south.
Renters occupied 17,617 downtown apartments surveyed by Appraisal Research at the end up the third quarter, up 16.7% from 15,093 two years earlier. Appraisal Research tracks about 80% of the apartments in downtown Chicago.
Normally, apartment landlords lose a certain percentage of tenants who move out to buy a condominium or single-family home. But the turnover rate has slowed dramatically, possibly because would-be buyers are hesitant to commit to a mortgage when the economy is so shaky and condo vales could fall further, Mr. DeVries says. Other renters simply may not be able to qualify for a mortgage.
“The path to home ownership is a lot tougher right now,” Mr. DeVries says.
While that’s good for landlords, the current building boom isn’t. Developers have added 3,270 units to the downtown apartment market in 2008 and 2009 and will complete another 2,236 next year, boosting the total downtown inventory by 25%, according to Appraisal Research.
“I could still see demand remaining reasonable, but I could see pressure on rents because of the supply,” says Michael Newman, president and CEO of Golub & Co., the Chicago-based developer of Streeter Place, a new 480-unit apartment tower at 355 E. Ohio St.
Golub is offering tenants two months of free rent on a 12- to 14-month lease in the building, which is about 55% leased, he says. Though the property is not meeting financial projections set a few years ago, when the market was much stronger, “we’re kind of happy where we’re at,” considering the state of the economy, Mr. Newman says.
The so-called shadow rental market is another concern. Amid a glut of condominiums, more downtown condo owners are renting out their units rather than trying to sell them. And they’re competing with traditional landlords for tenants.
There were 1,747 downtown condos listed for rent on the Multiple Listing Service at the end of the third quarter, up 45% from the year earlier, according to Appraisal Research.
Whether the market can absorb all the extra supply will depend in part on the job market, the key driver of demand for apartments, says Anthony Rossi, president of RMK Management Corp., a Chicago-based property manager. He’s also a partner in the Parc Huron, a 221-unit apartment building under construction in River North.
“The big thing that we’ve got to hope for is that employment stabilizes and comes back,” Mr. Rossi says. “That will make everybody a little more comfortable.”
By Alby Gallun, Nov. 23, 2009
Demand for apartments remains surprisingly strong, but competition for tenants is heating up amid a swelling supply of new units. That’s one reason rents and occupancies at high-end downtown buildings slipped in the third quarter after rising in the first two, resuming a downward trend that began more than two years ago, according to a report by Appraisal Research Counselors.
“It’s really not a signal that it’s a weak market,” says Ron DeVries, vice president at the Chicago-based real estate consulting firm. “Demand is strong. We’ve just got a supply bubble right now.”
The average net effective rent at Class A downtown apartment buildings fell to $2.10 a square foot in the third quarter, down 3.2% from the second quarter and 7.1% from the year-earlier period, according to Appraisal Research.
Effective rents, which include concessions such as free rent, have fallen 10.6% from their peak of $2.35 in third-quarter 2007.
The average Class A occupancy also declined, to 91.9%, down from 93.4% in the second quarter and 92.8% in the year-ago period.
Demand for apartments typically falls in a recession as more renters try to save money by doubling up or moving in with their parents. But that hasn’t happened in downtown Chicago, where more people are renting now than were before the economy went south.
Renters occupied 17,617 downtown apartments surveyed by Appraisal Research at the end up the third quarter, up 16.7% from 15,093 two years earlier. Appraisal Research tracks about 80% of the apartments in downtown Chicago.
Normally, apartment landlords lose a certain percentage of tenants who move out to buy a condominium or single-family home. But the turnover rate has slowed dramatically, possibly because would-be buyers are hesitant to commit to a mortgage when the economy is so shaky and condo vales could fall further, Mr. DeVries says. Other renters simply may not be able to qualify for a mortgage.
“The path to home ownership is a lot tougher right now,” Mr. DeVries says.
While that’s good for landlords, the current building boom isn’t. Developers have added 3,270 units to the downtown apartment market in 2008 and 2009 and will complete another 2,236 next year, boosting the total downtown inventory by 25%, according to Appraisal Research.
“I could still see demand remaining reasonable, but I could see pressure on rents because of the supply,” says Michael Newman, president and CEO of Golub & Co., the Chicago-based developer of Streeter Place, a new 480-unit apartment tower at 355 E. Ohio St.
Golub is offering tenants two months of free rent on a 12- to 14-month lease in the building, which is about 55% leased, he says. Though the property is not meeting financial projections set a few years ago, when the market was much stronger, “we’re kind of happy where we’re at,” considering the state of the economy, Mr. Newman says.
The so-called shadow rental market is another concern. Amid a glut of condominiums, more downtown condo owners are renting out their units rather than trying to sell them. And they’re competing with traditional landlords for tenants.
There were 1,747 downtown condos listed for rent on the Multiple Listing Service at the end of the third quarter, up 45% from the year earlier, according to Appraisal Research.
Whether the market can absorb all the extra supply will depend in part on the job market, the key driver of demand for apartments, says Anthony Rossi, president of RMK Management Corp., a Chicago-based property manager. He’s also a partner in the Parc Huron, a 221-unit apartment building under construction in River North.
“The big thing that we’ve got to hope for is that employment stabilizes and comes back,” Mr. Rossi says. “That will make everybody a little more comfortable.”
By Alby Gallun, Nov. 23, 2009
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