Rock Spring Centre

A new $320 million project is moving forward on 53 acres of coveted commercial property in upscale North Bethesda, MD. Rock Spring Centre will have 210,000sf of retail, 550,000sf of offices, a hotel and 90,000sf of entertainment, possibly including a cinema. National Harbor developer, The Peterson Cos. and DRI are partners in the development of this project. Peterson will own 90 percent of the retail and entertainment and 10 percent of the rest.

Construction is expected to begin this spring with completion of the retail and housing portions expected in 2014. The location is adjacent to I-270 and close to the Capital Beltway. The Grosvenor Metro Station is about 2.5 miles away.

US CRE Market on the Rebound

Lawrence Yun, NAR (National Association of Realtors) chief economist reports vacancy rate improvements across all commercial real estate sectors.

NAR forecasts commercial vacancy rates over the next year to decline 0.4 percent in the office sector, 0.8 percent in industrial real estate, 0.9 percent in retail and 0.2 percent in the multifamily sector.

Office vacancy rates are projected to fall from 16.4 percent in the current quarter to 16 percent in the first quarter of 2013. The markets with the lowest office vacancy rates currently are Washington, DC, at 9.5 percent, New York City at 10 percent and New Orleans at 12.4 percent.

Industrial vacancy rates are likely to decline from 11.7 percent in the first quarter of this year to 10.9 percent in the first quarter of 2013. The areas with the lowest industrial vacancy rates currently are Orange County, California at 4.8 percent, Los Angeles at 4.9 percent and Miami at 7.6 percent.

Retail vacancy rates are predicted to decline from 11.9 percent in the current quarter to 11 percent in the first quarter of 2013. The markets with the lowest retail vacancy rates today include San Francisco at 3.6 percent, Fairfield County, Connecticut, at 5.1 percent and Long Island, New York, at 5.4 percent.

Multifamily housing is likely to see vacancy rates drop from 4.7 percent in the first quarter of 2012 to 4.5 percent in the first quarter of 2013. Vacancy rates in the multifamily sector below 5 percent are generally are considered a landlord’s market with demand justifying higher rents. Areas with the lowest multifamily vacancy rates currently are New York City at 1.8 percent, Minneapolis and Portland, Oregon, both at 2.5 percent, and San Jose, California at 2.7 percent.

The SIOR (Society of Industrial and Office Realtors) Commercial Real Estate Index – an attitudinal survey of 297 local market experts measuring the impact of ten variables, rose 8.3 percent to 63.8 in the fourth quarter of 2011, following a gain of 0.6 percent in the third quarter. However, the index remains below the level of 100, which represents a balanced marketplace, last seen in the third quarter of 2007.

See complete report at:

CAP Rates in Aspen

Bill Small of Frias Commercial Real Estate argues that in Aspen, a 7.0 percent CAP rate is a reasonable mean from which to determine a property’s current value and adjust up or down based on location, quality of tenants and term of leases.

He writes that over the past four years, Aspen’s commercial rents dropped by approximately 30-50 percent depending on location and building quality – a decline similar to or greater than the national average drop in commercial rents. Aspen, however is different in that it has a finite supply of commercial space and thus low vacancy rates.

Optimism in Egypt

Reuters reports that the Egyptian economy is showing signs of stabilization and rebound following the political turmoil that led to the ouster of former president Hosni Mubarak. A recent court ruling ended a dispute surrounding state land purchased by Talaat Moustafa Group thus brining some confidence back into the real estate development sector.

SODIC, a property developer, says it plans to step up investment this year and the Ministry of Housing is hoping to kick-start activity by selling 8,000 plots of land around Cairo to Egyptians living abroad.

Government officials leaked to Egyptian media this week a tentative plan to stabilize state finances. It aims to make spending on public subsidies more efficient, reform income and real estate taxes and offer Egyptian expatriates 50,000 plots of land to raise $15 billion over the next four years.