One of Chicago’s most storied hotel properties has carried on its legacy – by borrowing again.
The Palmer House Hilton, located at State and Monroe in downtown Chicago first opened in 1871 only to burn down two weeks later in the Great Chicago Fire. Builder Potter Palmer immediately secured a loan to rebuild – $1.7 million in what was considered at the time to be the largest individual loan ever. It was built again.
This week, 143 years later, the venerable property went again to the financing well, albeit in somewhat greater volume. In a refinancing deal announced this week, the property traded in its $365 million debt for a lower- and floating-rate $420 million debt as REJournals.com reports:
The deal brought together Thor Equity Partners, a bond issue / CMBS loan by Morgan Stanley (five years floating rate) and Jones Lang Lasalle who represented the equity firm.
I’m not sure how I missed this, but miss it I did. NAR’s June 2014 Commercial Regulatory Report is available for free download, containing updates and summaries of recent NAR actions in the regulatory space, including FAA, EPA, SEC, GSA and SBA. If any property in your portfolio involves air, ground or finance (find me one that doesn’t!) you need to check out the report.
Check it out below or download a PDF from Realtor.org
Capping a wave of casino closures on the Atlantic City boardwalk is Revel, the $2.4 billion, 47-story hotel tower that debuted in April 2012. The September shutdown of the starkly designed gambling palace hits the New Jersey economy hard, contributing to closures that take away about one third of AC’s gaming space.
What changed to turn AC’s multi-decade run as a gaming mecca into a parade of glittering vacancies? Some point to Pennsylvania, whose recent expansions to gaming laws are keeping its players in its own state to play at standalone casinos such as Mount Airy, Sands, Rivers and SugarHouse.
Others suggest that the younger gaming customer tends to be a poker player, and Revel does not offer poker. As the NYT writes:
Internet gambling, which became legal in New Jersey last year, so far has not been a significant threat to the casinos. After initially forecasting that online betting could increase industry revenue by $1.2 billion in the first year, state officials sharply revised down forecasts for both revenue and expected tax receipts, which were scaled back to $34 million from $180 million.
“It hasn’t come close to what their projections were,” said Anthony S. Graziano Sr., executive director in the Coastal New Jersey office of Integra Realty Resources, a national real estate valuation firm.
Competition from out of state, especially in Pennsylvania, has been the main threat in Atlantic City, overshadowing any issues from the recession or Hurricane Sandy in 2012. Customers in eastern Pennsylvania now have a choice of gambling halls in Philadelphia, Bethlehem, Chester or Valley Forge, removing the need to drive an hour or more out of state.
The 2Q14 CCIM Quarterly Market Trends Report has “dropped,” as the kids say. What’s in the fine print? Growth. The second quarter of this year has extended a strong national trend in increased dealmaking for industrial real estate. The businesses of making and moving stuff — manufacturing, logistics, warehousing — are lending strength to markets in associated properties, with 82 percent of CCIM members reporting they had received more serious inquiries from buyers over the same time period last year.
Industrial transaction activity jumped for 70 percent of CCIM Institute members who responded to a May/June 2014 transaction survey. Members of the CCIM Institute, a global commercial real estate affiliate of the National Association of Realtors, also experienced positive overall transaction and investment activity in the second quarter, according to the organization’s Quarterly Market Trends report. Approximately 54 percent of CCIM respondents reported greater overall deal flow than the same period last year and 66 percent reported more inquiries from serious buyers year over year in 2Q14.
Industrial asset prices were higher for 52 percent of respondents and remained flat for 40 percent of members. Capitalization rates for industrial properties held steady for 60 percent of members; 32 percent said cap rates declined YOY. Industrial investments also registered highest on the investment value vs. price scale, coming in at 3.2 percent on a scale of 1 to 5 (with 1 being lowest and 5 being highest).
Industrial isn’t the only sector that has enjoyed year-over-year growth, with retail, office, multi-family and hotel also posting gains.
In what one architect referred to as “the last step in the rebranding of something that has disappeared,” New York’s World Trade center has settled on a new visual identity.
The work of a distinguished corporate branding shop headquartered in New York, the new abstract trident logo recalls shapes of structures both standing and lost. It manages to connote remembrance of the aftermath of the 2001 attacks while at the same time encompasses redevelopment, echoing structures standing and proposed today on the site. From David W. Dunlap’s piece in the New York Times:
Can you see a trident — an abstract trident recalling those three-fingered steel columns at the base of the twin towers, still standing after the 2001 attack, symbolizing New York City’s resilience?
It is there, in the World Trade Center’s new logo, which was revealed on Wednesday when the latest display panels were installed along a construction fence on Vesey Street.
Do you discern two parallel spaces in the upper half of the logo? They are intended to evoke the memorial beacons of the Tribute in Light. And the two bars on the lower half of the logo? The deep pools of the National September 11 Memorial.
Look again, and the five bars might be taken for five towers: 7 World Trade Center, long finished and open; 1 and 4 World Trade Center, nearing completion; 3 World Trade Center, under construction; and 2 World Trade Center, still on the drawing board.
And yes, now that you mention it, the whole thing is a stylized W — for World Trade Center, of course, but also for Westfield World Trade Center, the name of the luxury shopping center that is to open there next year.
A Classic Approach
Reaching back to the golden-era work of 20th century giants in corporate identity design such as Paul Rand and Saul Bass, the new WTC logo seems to act, as do so many of Rand’s and Bass’s, as a touchstone. The eye is guided by deceptively simple contour of shape, such arrangement offering a context for the work, appropriate in the wider world and ready to take its place as a background element in a crowded visual landscape.
And it’s because of that format that some might find the work wanting. The “say it, then blend in” principles of corporate identity design are eternally at odds with the gravity of 2001′s events and the remembrance they command.
But reactions to this logo that find it lacking are better understood as reactions to logos themselves and how they work. When seen as a complex identity packed into a simple set of shapes — when regarded as a classic American corporate logo — it really is a triumph of the trade.
Pretending the property business is easy, St. Louis and its hot industrial market, retail lagging the recovery (but not in Miami) and Macy’s goes shopping for commercial real estate talent – it’s all here in the Commercial Real Estate News Roundup for August 11, 2014.
- Low rates boost REITs, commercial real estate stocks, CNBC, Aug. 8, 2014 – In that part of the finance world where low interest rates make performing real estate look like a cash machine in comparison, REIT plays are looking juicier.
- Twin Cities commercial real estate draws out-of-state, foreign dollars, Minneapolis Star-Tribune, Aug. 8, 2014 – International capital flows find themselves attracted to the spots laying in between the 10,000 lakes.
- Investors in real estate getting hip to new ploy, Columbus Dispatch, Aug. 10, 2014 – Crowdfunding moves into prime time in the real estate industry
- New PivotDesk offering connects real estate brokers and small startups, Beta Boston, Aug. 8, 2014 – Tech entrepreneurs: flush with venture capital, ready to change the world and suddenly in need of actual office space.
- This Startup Wants To Be The E-Trade Of Real Estate, Business Insider, Aug 9, 2014 – Retail investment vehicles and property. The latest in the ongoing struggle to pretend property investment is easy.
- Exclusive: Prologis building $10M Orlando industrial spec building, Orlando Business Journal, Aug. 7, 2014 – One sign of a healthy market – spec developments in industrial. South Florida’s happy story lies therein.
- With Pappas Center’s recent gains, industrial is alive and well in Boston’s Seaport, Boston Business Journal, Aug. 8, 2014 – Waterfront development making Boston’s unique mix of industrial base a fine few quarters.
- St. Louis industrial market surging, St. Louis Post-Dispatch, Aug. 7, 2014 – Under the Arch, industry!
- Retail buildings on Miami Beach’s Lincoln Road sell for record $342 million, Miami Herald, Aug. 6, 2014 – Unconcerned by rising Atlantic waters, buyers here pay retail for retail.
- Macy’s adds veteran to real estate team, Cincinnati Business Courier, Aug. 11, 2014 – Macy’s goes shopping, finds a great deal on a CBRE exec.
- Retail real estate recovery continues in uneven fashion, Sacramento Business Journal, Aug. 4, 2014
- High rents, low inventory push S.F. multifamily market to new heights, SF Chronicle, Aug. 11, 2014
- Residential Construction in New York City Lags, WSJ, Aug. 10, 2014
- Apartment demand is sky high, supply low, Tampa News-Press, Aug. 10, 2014
- Millennials driving Phoenix multifamily market, but a drag on housing, Phoenix Business Journal, Aug. 6, 2014
- Porn Out, Hotels In as Sunset Strip Reborn: Real Estate, Bloomberg, Aug. 5, 2014 – It’s not often that the terms “aging landmark” and “erotica store” find themselves in the same sentence, but that’s L.A. for you.
- Hotels and Resorts: Investing Essentials, Motley Fool, Aug. 6, 2014
- Floating snowflake could be the world’s coolest hotel, CNN, Aug. 6, 2014
- Jailed Indian tycoon tries to sell New York Plaza, CNBC, Aug. 10, 2014
- Goodman wins bid to develop archdiocesan land, Philadelphia Inquirer, Aug. 10, 2014
- Industrial park land up for sale, NV Daily, Aug. 6, 2014
- Boca Raton city-owned real estate adds up to some serious green, Sun-Sentinel, Aug. 11, 2014
When the now-embattled Chicago Mayor Rahm Emanuel announced, shortly after his 2011 election, his plan to create an infrastructure trust, the idea sounded pretty good — at first. When the details came out – that the trust would be a private, opaque financing platform separate enough from government to not be beholden to public inquiry or FOIA requests — many privatization-weary Chicagoans braced for the worst. And why not? It turns out that so many Wall Street style “innovations” in real estate and infrastructure finance (the Chicago-style TIF comes to mind) do less to address civic need than they do to provide unaccountable disbursements to developers of already-desirable city land.
At the time, Bill Clinton characterized the idea as an “infrastructure bank”. But banks have one typical advantage that the Chicago Infrastructure Trust doesn’t: capital to allocate. As it turns out, far from a bank, the Trust is little more than a lightly-staffed financial innovation laboratory headed by a private equity guy. This is the lesson in a recent Crain’s Chicago Business piece, confusingly titled “Emanuel’s Infrastructure Trust Looks To Help Commercial Landlords“. I say the piece is confusingly titled because it appears the “help” landlords can look forward to consists mainly of a tax hike:
Yet Mr. Beitler manages to keep expectations high by touting a $1.5 billion pipeline of potential deals, including a voluntary property tax assessment of commercial properties to pay for energy-related improvements. The trust is evaluating a dozen proposals totaling about $1 billion from 15 firms for the Property Assessed Clean Energy program, although not all those Pace bids will be accepted, he adds.
The trust’s slow progress is the result of several factors, including the novelty of a middleman trying to bring together City Hall and investment firms. Despite its hype, the trust is a small venture, financed with an estimated $1.5 million in city funds over its first two years (see the PDF). And the deals are difficult to do, with Mr. Beitler discarding more than a dozen proposals.
While the cash-strapped city’s need for “transformative” improvements in transportation and other infrastructure has not gone away, the trust has suffered from overly ambitious predictions.
“When the trust was set up there were certainly some high expectations set up for it,” says Peter Skosey, an expert on infrastructure finance and executive vice president of the Chicago-based Metropolitan Planning Council, where the trust’s board holds its meetings. “Many of those expectations weren’t warranted.”
So it’s an infrastructure trust, if you consider swimming pools infrastructure. It’s an aid to commercial landlords – if those landlords aren’t paying enough taxes. It’s a bank – but it has no money to lend. And it’s somehow a boon to the public – as long as the private equity deals are complicated enough and profitable for a very few.
If you watch industry press releases and social media, sometimes it seems the commercial real estate software business is dominated by a mix of relatively recent applications that were born on the internet. A closer look can show a different view. Sometimes we are reminded that, dot-com whizbang IPOs aside, the fundamental financial and legal plumbing work of commercial real estate portfolio management is really an older set of well-known problems. Problems requiring breadth and depth to solve best.
Consider: professionals managing property portfolios — either as tenants or landlords — above all need decision support. They need to be able to put their eyes on exactly the piece or pieces of portfolio information that inform the business question of the hour — or the minute — so as to steer the ship into calm waters.
What won’t get you there is a pile of spreadsheets, schedules and word processing docs scattered everywhere. Icebergs have a funny way of introducing themselves to the hull of your ship while you or your team spend days distractedly lining up just the right view of contracts, contacts, events and leases.
Building a software tool for ship-steering from a corner office is a software design goal that usually means expensive development and extreme depth of experience in the various niches of the business. That kind of depth and expense comes not from last month’s loudly-trumpeted startup, but rather from venerable giants, giants such as IBM.
IBM’s TRIRIGA is Big Blue’s entry into the real estate management market. Because Big Blue means big business, unsurprisingly, TRIRIGA has the look and feel of a Cadillac dashboard. It brings depth and breadth and ease of use to commercial space needs in five main areas:
- Real estate management
- Capital projects
- Space management
- Facility maintenance
- Energy management
Check out the video to see what Big Blue means when it builds a commercial real estate management solution. And before you ask, yes, you’re talking a Cadillac price: five figures a month. It’s no dot-com free service, but a review of the offering is a beautiful tour into the command centers of commercial property empires, one worth taking even if only to stimulate the imagination.
Commercial real estate comes to reality TV, a rush to get across town in Los Angeles, and brick-and-mortar’s resilience – it’s all here in the Commercial Real Estate News Roundup For July 30, 2014.
California is building once again, according to commercial real estate survey - Imperial Valley News, July 27, 2014 – The Golden State’s newest building surge reminds us that the world’s fifth largest economy has much to teach the world about sustained economic growth. And much to teach the doomsayers of the past 15 years about how to eat crow.
New Lenders Enter Property Market and Think Small, WSJ, July 22, 2014 – Bigger isn’t always better, and the small businesses of the nation once again have the attention of lenders.
Vermont commercial real estate market continues to show strength at mid-year, New England Real Estate Journal, July 24, 2014 – Led by suburban Burlington office offerings, Vermont’s commercial property picture looks as sweet as a pint of Ben & Jerry’s.
Lights, Camera, Sell: Harrison Man Films Real Estate Reality Show Pilot, Harrison Daily Voice, July 25, 2014 – It finally happened: commercial real estate is getting the reality TV treatment. Sadly, nobody in Hollywood has yet picked up my script for a show based on dairy farm land sales. I call it Moo Diligence.
Office real estate market finally catches up, Minneapolis Star Tribune, July 24, 2014 – Downtown Minneapolis hasn’t seen this much action since Prince filmed Purple Rain.
L.A. County office market improves as new leases edge out renewals, LA Times, July 24, 2014 – Renewals are falling behind new leases in L.A. as companies flush with cash seek new window views.
Washington’s biggest real estate battle is beginning to look like a blowout, Washington Post, July 22, 2014 – They’ve got a real “case of the Mondays” in DC. Monday Properties, that is.
Designing a Better Office Space, Entrepreneur, July 26, 2014 – It’s happening in even the stodgiest firms: color, open space and shiny stuff is taking over the white collar landscape.
La. leads nation in industrial construction value, The Advocate, July 26, 2014 – $4.9 billion in industrial projects have put Louisiana on top of the construction spending pile.
Illinois: Driven by logistics, DC Velocity, July 28, 2014 – The transportation and fulfillment explosion spurred by e-commerce is yet another reason the traditional crossroads of the USA – Illinois – has a rosy future in industrial development.
Liberty Property Trust makes plans for new warehouse park in Durham, Triangle Business Journal, July 25, 2014 – Concrete tilt walls and industrial grade construction are the path to profits in Durham.
Silver Line a draw for some new retailers, Washington Post, July 28, 2014 – Passengers and shoppers continue their overlap in DC.
Outlet mall’s opening a sign of shifting retail landscape in Charlotte region, Charlotte Observer, July 27, 2014 – The outlet mall, once the exclusive feature of off-location areas is remaking what it means to go shopping in Charlotte.
One Reason Retail Agents Should Celebrate, GlobeSt., July 28, 2014 – Study: most consumers prefer brick and mortar.
While it’s true that retail plus mobile internet over time equals fewer brick and mortar stores and more properties devoted to mail-order fulfillment, that’s not the whole story. Mobile technology applied by retailers to traditional retail store floors has not yet produced the “killer app” that fundamentally reshapes customer experience. If a new company called Pulsate has anything to say about it, that all changes now.
Pulsate’s key innovation is to notice that mobile-enabled retail shoppers are not merely seeking out the lowest price on goods sitting on retailer’s shelves. This practice, sometimes called “showrooming”, is the nasty e-commerce problem from the point of view of retailers loathe to spend shelf space on goods that people will merely buy online from another vendor after seeing them up close. Pulsate figured out that that customers are also expressing a preference when they whip out that Android of iPhone in a store.
This insight is key because that shopper’s preference can be known – and that means the retail store can beat the customer to the punch by delivering content to the customer at critical points in the retail foot traffic pattern.
Microbeacons and MacroFence. What?
Pulsate’s technology centers around concepts of Microbeacons and something called a MacroFence. To get the skinny on these brick and mortar retail technologies, check out this video by Robert Scoble, interviewing Patrick Leddy, CEO of Pulsate.