Archive for the ‘News’ Category

If you have ever been to the St. George McDonald’s located on 798 E St. George Blvd, you can attest that it has one of the screwiest drive-thru window set up’s ever.

In order to solve that problem, as well as give the whole building a face-lift, it will soon be completely demolished and rebuilt in 2010. The new and improved McDonald’s will even have a two-lane-drive thru.

For more information on the happenings in St. George Commercial Real Estate, contact Brandon Vandermyde at 435-627-5735.

Successful Leasing Strategies in a Volatile Market

This International Council of Shopping Centers (ICSC) held a webinar his past week called “Successful Leasing Strategies in a Volatile Market” which consisted of a panel of industry experts who gave their professional opinion on the most effective leasing strategies in the current market situations.

Hessman Nadji opened up the session with an overview of the driving economic forces in today’s market, and addressed his predictions on the future recovery, Nadji stated “There is plenty of positive evidence that suggests the worst is over in what is now being called the “Great Recession,” but stated that there are still plenty of obstacles before us.

“We’ve seen the steepest job loss since the great depression, but now that loss has moderated, showing the end is near. We anticipate the job loss cycle will hit bottom by the end of 2009 and the economy should be poised for recovery in 2010”,Nadji said.

CoSatar reports that retail sales where better last month than expected, Nadji warned the retail industry to still be ready for the worst case scenario because a recovery will be “muted and difficult” and consumers will still face issues with debt and lack of jobs.

Traditionally in past recessions, consumers home-buying confidence will increase as the Feds decrease the interest rates, decreasing the duration of the recession. The affects on consumers during this recession have been much deeper than what we have experienced in the past, and the recovery is taking much longer than most economists predicted.

“The effect of store closures on retail vacancies has been incredibly sharp because retail was the only sector in which construction actually went up during 2001-2003 because there was so much consumer stimulation going,” Nadji said. CoStar expects that vacancy rates (which are extremely high) will continue to rise well in to 2010.

What Should Landlord’s Do?

Marty Mayer, president of Convington, an LA-based Stirling Properties, said “keeping existing tenants intact is key.” If a tenant moves out, there are several additional costs incurred by the landlord including leasing commissions, tenant improvements, cost of the vacancy itself.

Another option landlords should strongly consider is allowing the tenant to reduce the amount of s.f. they occupy. It may save the tenant from going dark, which will limit the amount vacancies landlords are currently battling.

Amongst all the controversial discussions amongst local and national economists, there have been several debates on when things will turn in the economy. There has been a glimpse of good news as home sales are slightly up this year over last year in St. George, the stock market has been inching up, but consumers are still timid in spending money.

Locally there is some positive news- According to CNBC, Utah is rated the 5th Best State for Doing Business in 2009. Utah’s national unemployment rate is 6.1% whereas the national average is 9.7%.

In a recent survey distributed by Loopnet.com, they questioned three key groups in commercial real estate (the broker, the investor, and current property owners). The survey was to determine the confidence these groups have in when the Commercial Market will begin to turn around. Main points of interest were:

• Timing of Recovery in Transaction Volume (when will the transaction numbers begin to increase relative to 2009.)
• How much further will prices decline?
• When will pricing hit bottom?
• How much further will the prices decline?
• What is the best investment opportunity?

TRANSACTION VOLUME

According to Loopnet, the confidence of Investors have slipped since last quarter. Only 10% feel that there will be a recovery in 2009 and 33% of the investors feel that it will be in 2011.

Although this isn’t great news, 56% of the investors feel that mid-year 2010 we should see the transaction number start to increase.

Breakdown by Quarter and Role

PRICING

Although there is some consistency in the opinions regarding the transaction volume increasing, there is a pretty vast difference in how much further prices will decline. Of those surveyed, most believe that there is still an 11-20% drop ahead of us.

Current owners are a little more optomistic than are investors. 28% of the owners believe that pricing has bottomed out already, or will only decline 5% or less.

WHERE IS THE BOTTOM?

The consensus was not clear on when the pricing will completely reach the bottom, but the majority surveyed (60%) expects it to happen between Q4 of ’09 and Q3 of 2010. 17% surveyed expect that the declines will continue through 2011.

BEST INVESTMENT OPPORTUNITY

Of those surveyed, 48% felt that Multifamily was the best opportunity when considering a long term investment.

The Commercial Sector in St. George, Utah that are currently being professionally marketed in St. George Utah, there are:

• 11 Multifamily properties available for sale
• 29 Office buildings/Office condo’s for sale
• 25 Retail buildings/Retail condo’s for sale

Contact me if you are interested in viewing a list of available properties for Sale or Lease anywhere in St. George, Hurricane, Washington, or Cedar City.

If you were to speak to someone in Utah about the current Utah Economic conditions they would probably have several complaints about how bad things are. In almost every aspect… they are right. However, if you compare our economy to the rest of the country, we are doing much better. According to the Utah Department of Workforce Services, the Unemployment rate across the country is 9.4% and Utah is at 5.4%.

A year and a half ago, several economists called Utah a Recession Proof economy because of the diversity of our states revenue sources. However, a year and a half ago, economists didn’t anticipate how bad things would get.

Where are we now?

Utah CEO Magazine reported the following statistics:

• As of June 18, 2009, the average interest rate for a 15-year fixed-rate mortgage as of June 18, 2009. The average interest rate for a 30-year fixed-rate mortgage is 5.38%.
• Gasoline prices in the western U.S. were down 37.8% from May 2008-2009.
• An average of 88 residential building permits per month were pulled in Washington County from March’09-May’09. Salt Lake county only averaged 287, and has nearly seven times the population of Washington County.
• An average of 16 commercial permits were pulled per month in Washington County. Salt Lake County was around 60 commercial permits per month.

The filing for Bankruptcy increased 59% in Utah this year over last.

The number of non-agricultural jobs lost from April 2008 to April 2009 was 39,800 in the state of Utah.

Although these numbers are astounding, our local economies are doing substantially better than national averages.