Archive for the ‘Residential’ Category
Thursday, September 2nd, 2010
America’s states are under water in more ways than one. This writer got a close-up view of how our aging infrastructure is being taxed by the elements. A summer storm that brought as much as eight inches of rain in just two hours in the wee hours of Saturday, July 24 wreaked havoc in Chicago’s near western suburbs as streets, viaducts and even condominium garages flooded with dirty water when overfilled sewers backed up. Mine was among them.
One of the hardest hit communities was my home of Forest Park, IL, a diverse suburb of approximately 15,000 just west of the more famous Oak Park and best known for its Irish bars and many cemeteries. Although President Obama has declared Cook and seven other Illinois counties as federal disaster areas because of the storm and flood, the federal money likely won’t solve Forest Park’s problem of outdated storm sewers that cannot handle rainfalls such as the one that occurred on July 24. At a recent meeting with Senator Dick Durbin (D-IL), Mayor Tony Calderone and Village Administrator Tim Gillian said that flood-ravaged Forest Park needs a minimum of $60 million to make necessary upgrades to the storm sewer system. “The Village of Forest Park will never have $60 million to do a project like that,” Gillian said. Calderone noted that the $60 million figure came from a 2000 study by village engineers. The project would now likely cost $70 million. “This is a complex issue, with no simple answer. That improvement would take the temporary burden off of one half of the system. If the pipes downstream could not handle any more water, then the water would still back up here,” Calderone said in a reference to public dissatisfaction about the projected 2019 completion date for the area’s Deep Tunnel project.
One possibility for small suburbs like Forest Park is the proposed U. S. infrastructure bonds, a vehicle designed to finance public works. Richard Keston of the Keston Institute for Public Finance and Infrastructure Policy (part of the University of Southern California), said “I don’t see anyone having a sustainable (funding) model in place for general government, let alone infrastructure. Why not create a vehicle where the federal government could issue infrastructure bonds?” Debt associated with a national infrastructure investment fund would be backed by fee revenues from projects undertaken by state and local governments.
Tags: Dick Durbin, FEMA, Flood, Illinois, Infrastructure Bonds, Keston Institute, Metropolitan Water District, President Barack Obama, Richard Keston, Tim Gillian, Tony Calderone
Posted in General, Residential | No Comments »
Thursday, August 5th, 2010
The next item on President Barack Obama’s ambitious agenda is likely to be overhauling Fannie Mae and Freddie Mac, the government-backed mortgage firms that so far have cost American taxpayers $145 billion to keep afloat. The two firms, which own more than half of the nation’s $11 trillion in home mortgages, collapsed along with the housing market and were taken over by the federal government in September of 2008.
Many Congressional Republicans believe that scrapping Fannie and Freddie is mandatory; Democrats disagree and President Obama is expected to support reforms backed by consumer, real estate and banking groups. The core of the emerging consensus is to preserve the 30-year, fixed-rate mortgage. Susan Woodward, former chief economist at the Department of Housing and Urban Development (HUD) and a founder of Sand Hill Econometrics, said “People regard it as a right as Americans to get a 30-year, fixed-rate loan.”
Banks and builders agree with consumer advocates representing homebuyers that it’s good for the government to promote residential lending by supporting what Fannie and Freddie have done for years - purchasing mortgages and bundle them into securities that they sell to investors. When the system works as intended, the MBS market creates additional money that is funneled back into the market to make new affordable loans. The task is to determine how to accomplish this without the lax practices that the taxpayers had to pay for when catastrophic losses occurred in 2008.
The Obama Administration and leading Democrats strongly believe that the federal government should have a role in promoting homeownership. Shaun Donovan, HUD Secretary, said “We should not compromise any of our core policy goals in the decisions we make in structuring our house financing system.”
Tags: Barack Obama, Barney Frank, CMBS, congress, Consumer Federation of America, Department of Housing and Urband Development, Fannie Mae, Federal Deposit Inusrance Corporation, Federal Housing Finance Agency, Freddie Mac, George W. Bush, lobbyists, Mortgage Bankers Association, Sand Hill Econometrics, Shaun Donovan, taxpayer money, Treasury Department, Wall Street
Posted in Economics, Financing, Residential | No Comments »
Tuesday, July 27th, 2010
Commercial real estate is currently experiencing a perfect storm, one that will utterly change the way corporations utilize their office space in the future. This is the opinion of John Vivadelli, CEO and founder of AgilQuest Corporation and a well respected industry expert in the fields of alternative office environments; real estate metrics and cost management; and business continuity.
Prior to founding AgilQuest, Vivadelli was instrumental in developing IBM’s workplace management system in the 1990s to support the company’s transformational workforce mobility program, creating their “office of the future”. This new workplace strategy resulted in reconfiguring the technology giant’s real estate footprint by shedding millions of square feet that saved hundreds of millions of dollars annually. AgilQuest provides the services and systems necessary for companies and governments to achieve similar results.
According to Vivadelli, this perfect storm is impacting both the supply and demand sides of commercial real estate.
On the supply side, the United States has approximately 12.5 billion sq. ft. of commercial office space, which carry an estimated $1.2 to $1.4 billion in loans that will come due in the next two years. Many of these loans will not qualify under new reserve requirements. While the average base vacancy rate is currently 17 percent nationally; that statistic does not include shadow space - square feet that are paid for but not occupied - which adds another 5 to 20% to the overall vacancy rate. Additionally, with the upcoming implementation of FASB Rule 13, both owned and leased properties will have to be reported on corporations’ balance sheets. Off-balance-sheet leasing will no longer be an option.
On the demand side, he sees a fundamental shift downward in real estate absorption. The nation’s unemployment rate is approximately 10 percent, with an additional seven percent who have opted out of looking for a job. Some of these jobs will never return. Add to that the number of workers who perform their jobs remotely and stay connected to the office via PDA, cell phone and laptop, and the average actual occupancy rate between 8 a.m. and 5 p.m. is between 30 and 50%. That means over half of all office space across Corporate America is vacant on any given day. Considering that an average of $60 is allocated per sq.ft., that adds up to $360 billion that companies are paying to landlords for office space that is empty and they don’t need. This wastes 1.5 quads of energy and results in 40 million metric tons of unnecessary carbon released every year. As companies recognize the scale of the problem, the real estate industry will see a profound shift in how we use space.
John Vivadelli: The Real Estate Perfect Storm:
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Tags: AgilQuest, balance sheet, commercial real estate, IBM, John Vivadelli, synthetic leases, unemployment rate, vacancy rates
Posted in Development, General, Industrial, Office, Residential | 1 Comment »
Monday, July 12th, 2010
Three years after an EF5 tornado tore apart tiny Greensburg, KS, the town of approximately 900 is making a conscious effort to rebuild itself as a green community.
City officials, residents and business owners are leading by example, making Greensburg a national model for environmentally conscious living.
For example, a wind farm five miles south of town now provides the majority of Greensburg’s energy. Newly rebuilt houses supplement the wind power with dedicated solar panels. Streetlights use LED lighting, which cuts energy use, operating and maintenance costs by approximately 70 percent. Cisterns capture rain, which is used to water the town’s plants and trees. The construction of zero energy homes and high-performance modular homes is encouraged to further Greensburg’s quest to become a green town.
This is the nation’s first project of its kind and is a key element in developing eco-tourism, a vital element in Greensburg’s successful comeback following the tornado’s devastation. By partnering with local builders, Greensburg is providing educational opportunities to contractors and homeowners alike who can spread the message of what they have learned in going green.
Tags: cisterns, eco-friendly, eco-homes, FEMA, Green Town, Greensburg, Kansas, LED lighting, modular homes, solar-panel, Steve Hewitt, tornado, wind farm
Posted in Development, Green, Industrial, Office, Residential | No Comments »
Wednesday, July 7th, 2010
Bank repossessions of homes rose 44 percent in May over the same month last year, reaching an all-time high and with increases occurring in every state as lenders stepped up the rate of seizures. Realty Trac, Inc., an Irvine, CA-based data company that tracks foreclosures, reports that bank repossessions totaled 93,777 in May, with filings — including default and auction notices — soaring to 322,920. In other words, one out of every 400 households in the United States has now received a filing.
According to Rick Sharga, Realty Trac’s senior vice president for marketing, “We’re nowhere near out of the woods. We’re likely to set a record for home seizures if June is anything like May. The second quarter won’t be the peak. I’m not even sure 2010 will be.” April previously held the record for the most seizures - 92,432 of them. Sharga believes that an additional 5,000,000 delinquent mortgages will end in foreclosure.
Approximately 25 percent of American homeowners are under water - they owe more than their homes are worth - notes Zillow.com. Bank sales of foreclosed houses comprised more than 20 percent of all transactions in March. Some of the largest lenders - primarily Wells Fargo & Company and Bank of America - are giving homeowners who owe more than 120 percent of what their houses are worth a helping hand by cutting the principal. “Marginal people, those types who were working as laborers, are most affected by foreclosures,” said Albert Kyle, a finance professor at the University of Maryland’s R. M. Smith School of Business. “A lot of foreclosures are occurring in modest homes.”
Tags: Bank of America, bank seizures, Business Week, foreclosures, housing market, realty Trac Inc, under water mortgage, Wells Fargo, zillow.com
Posted in Economics, Residential | No Comments »
Monday, June 14th, 2010
The end may be in sight to phase out CO2-emitting coal by 2030, according to Architecture 2030 a non-profit, non-partisan and independent organization established in response to the global-warming crisis. That conclusion comes from researchers at leading institutions such as NASA, NREL, Architecture 2030 and Columbia University.
The paper issued by the institutions - titled “Options for Near-Term Phaseout of CO2 Emissions from Coal Use in the United States” - will be published in the June edition of Environmental Science & Technology, the official publication of the American Chemical Society. According to the article, “The only practical way to preserve a planet resembling that of the Holocene (i.e., the world as we know it)…is to rapidly phase out coal emissions.”
Architecture 2030 notes that “This sets up an immediate choice. We can phase out coal CO2 emissions by 2030 and keep the planet we have or we can continue with ‘business as usual’ and hope for the best in one of the craziest games of risk the world has ever known. Which ending will we choose?”
Architecture 2030 is advocating to phase out coal CO2 emissions by the target year because they think “the game of risk” isn’t worthwhile and because the United States already has all the tools it needs to achieve that goal. “We don’t have to wait on ‘clean coal’ technology, technically known as carbon capture and sequestration (CSS), which is decades away and may not be proven economically or technologically feasible. We can phase out coal emissions with existing know-how and off-the shelf technologies.”
Tags: American Chemical Society, Architecture 2030, Building Sector, Columbia University, Ed Marzia, global warming, holocene, NASA, NREL
Posted in Green, Office, Residential | No Comments »
Tuesday, June 8th, 2010
If you’ve noticed a recent drop in mortgage interest rates, thank the PIGS’ (Portugal, Italy, Greece and Spain) troubles, which are causing jitters in the globe’s equity markets. Seeking a safe haven, investors are putting their money into U.S. Treasury notes. Because mortgage interest rates tend to rise and fall with 10-year U.S. Treasury note yields, this translates to good news for people contemplating a home purchase. Freddie Mac noted that the typical 30-year fixed-rate mortgage fell to 4.78 percent recently, down from 4.84 percent just a week earlier. The record low of 4.71 percent occurred in 2009.
According to the Mortgage Bankers Association, homeowners are refinancing at a rate not seen since last fall.
Tags: Freddie Mac, Greece, Italy, Mortgage Bankers Association, mortgage interest rates, PIGS, Portugal, Spain, US Treasuries
Posted in Economics, Financing, General, Residential, Student Housing | No Comments »
Thursday, June 3rd, 2010
Wells Fargo & Company and LNR Property Corporation are hunting for buyers for $1 billion each of distressed commercial real estate assets and loans. San Francisco-based Wells Fargo, the nation’s largest commercial real estate lender, is soliciting bids on $500 million to $1 billion worth of office and hotels. LNR, the nation’s largest CBMS special servicer, is looking for buyers for approximately $1 billion worth of defaulted loans.
“The availability of capital and better prices than a year ago are driving sellers to move things off their balance sheets,” says Matthew Anderson, managing director at research firm Foresight Analytics. “Depending on how the auction goes, you may see more of this.” According to Anderson, banks and special servicers currently are holding approximately $185 billion in distressed loans. Of those, Wells Fargo had $12.9 billion in non-performing loans in the 1st quarter. LNR is the special servicer for $24 billion in delinquent assets, according to Bloomberg.
Wells Fargo and LNR were left holding real estate debt once the global credit crisis and recession sent commercial values down a whopping 42 percent from their October of 2007 high. The majority - as much as 60 percent — of the assets that Wells Fargo is selling were inherited when the bank purchased Wachovia Corporation in October 2008. If Wells Fargo and LNR can sell the properties, the move would represent an improved market for distressed assets, according to Ben Thypin, an analyst with Real Capital Analytics, Inc.
“We’re certainly aggressive in terms of liquidating the portfolio,” said David Hoyt, who heads Wells Fargo’s wholesale banking arm. “At the moment, there is a lot of liquidity in the market to resolve problems.”
Tags: Bloomberg, Cerberus Capital Management LP, CMBS, distressed assets, Eastdil, Foreshight Analytics, global credit crisis, LNR Property Corporation, Real Capital Analytics, Wachovia Corporation, Wells Fargo
Posted in Development, Economics, Financing, General, Green, Industrial, Office, Residential | No Comments »
David Owen, a staff writer with 
The long-abandoned United States Steel South Works on Chicago’s South Side moved closer to undergoing transformation to a mixed-use development when the