A leading US office real estate services and investment firm has reported robust second quarter 2010 revenues of $140.7 million, an increase of 11 per cent, compared with revenue of $126.8 million for the second quarter of 2009.
Grub & Ellis, headquartered in Santa Ana, California offices, the company says for the first six months of 2010, the company reported revenue of $273.2 million, an approximate 10 percent increase over revenue of $249.0 million for the comparable period of 2009.
The company reported a net loss attributable to Grubb & Ellis Company on a GAAP basis of $17.5 million, or $0.31 per common share, for the second quarter of 2010, compared with a net loss of $32.8 million, or $0.52 per common share, for the second quarter of 2009. For the first six months of 2010, the company reported a net loss attributable to Grubb & Ellis Company of $41.2 million, or $0.73 per common share, compared with a net loss of $74.3 million, or $1.17 per common share, in the first six months of 2009.
Grubb & Ellis say they have continued to execute on its strategy of increasing its owned office presence in major U.S. markets by acquiring its Las Vegas affiliate, and opening an owned brokerage sales office in Cincinnati.
In June, the company launched Grubb & Ellis Landauer Appraisal & Valuation, a national appraisal business that supports the company's strategy of expanding into complementary businesses to better serve the needs of its clients and expand its revenue base. Grubb & Ellis Landauer will be operational in September and expects to have eight to 10 offices and 100 appraisal professionals across the country by year-end.
"Grubb & Ellis continued to make meaningful progress toward our financial goals and strategic initiatives in the second quarter as reflected by the 43 percent improvement in adjusted EBITDA," said Thomas P. D'Arcy, president and chief executive officer of Grubb & Ellis. "Our Transaction Services business generated robust revenue growth again this quarter, a reflection of our recruiting success and the continued recovery of the market.
Thomas Properties Group and Brandywine Realty Trust have agreed to establish a partnership to own a major Philadelphia office block.
Commerce Square in Philadelphia, Pennsylvania is currently owned solely by Thomas Properties Group, which is headquartered in Los Angeles offices. The twin 41-story office towers comprise 1.9 million square feet of grade A office space. Brandywine will contribute a total of $25m of preferred equity to the partnerships that own One Commerce Square and Two Commerce Square, and will become a 25 per cent limited partner in both properties.
Brandywine's preferred equity will be invested $5m at closing with the balance invested by December 31, 2012. The capital will be invested in maintaining Commerce Square's trophy status, with renovations to the buildings' operating systems, common areas and tenant amenities. Brandywine's equity will be used in various capital projects, including upgrades that are intended to achieve LEED status for both properties.
James A. Thomas, Chairman and CEO of TPGI, stated: "This new alliance with Brandywine will bring a highly respected company with deep roots in Philadelphia into partnership with us in Commerce Square and will provide substantial capital to improve these premier properties and maintain their position among the highest quality buildings in the city centre. Brandywine and our firm share common values and objectives and we are confident this will be a mutually beneficial partnership.”
Commerce Square is currently over 89 percent leased and its tenants include Delaware Investments, Ernst & Young LLP and Grant Thornton LLP, McCormick Taylor Co. One Commerce Square and Two Commerce Square were developed by a TPGI predecessor company in 1987 and 1992, respectively. The properties are comprised of 1.85 million square feet of office space and 47,000 square feet of retail space. The towers encircle the award-winning Court at Commerce Square designed by world-renowned landscape architect Laurie Olin in collaboration with Pei Cobb Freed & Partners.
TPGI's wholly-owned affiliates will remain the sole general partners in each partnership and will continue as property manager and leasing agent for Commerce Square.
Offices in France are leading the pack as the Europe, Middle East and Africa (EMEA) region has gained momentum in the office rental rebound in the past quarter, now closely trailing the Asia Pacific region, which leads the global recovery in this sector.
According to the latest Global Office Rental Cycle report by CB Richard Ellis, which measures prime rents, take-up levels and vacancy rates across 17 global markets, almost half of the EMEA region’s markets are now experiencing rental growth or stability.
Offices in Paris, in particular, experienced a notable increase in rents in Q2 2010. Prime rents rose by three per cent, and CB Richard Ellis expects further rises over the coming months. This has been triggered by improving demand and a shortage of good quality space in core areas where supply pipelines are starting to tighten.
Office rental markets in Asia Pacific remained the driving force behind global real estate recovery, with most markets in the region either stabilising or moving into the growth phase during the second quarter (Q2) of 2010. Office in Hong Kong, Shanghai and Beijing are at the top of the Asia Pacific market due to a push for office space from the financial sector in central business locations,
Across the Americas, most major markets were still clustered around the ‘rental decline slowing’
position in the cycle at the end of Q2, meaning that rents are still falling but at a slower rate.
Dr Raymond Torto, global chief economist, CBRE, said: “Despite a generally weaker economic
outlook and the possible impacts of significant austerity measures, Europe is only slightly behind
Asia Pacific in terms of the percentage of office markets registering rental growth.
“The City of London continues to lead the other key global markets in terms of the scale of rental
growth seen to date. This is due to increased demand in the financial sector. Furthermore, despite expectations of a slowdown in growth, rents in London’s West-End remained stable in the second quarter.”
Continental Real Estate Companies (CREC), one of Florida’s largest office and commercial real estate services firms, has been selected by joint venture partners Flagler and AMB Property Corporation as the exclusive leasing and marketing agent for The Shops at Beacon Lakes. The new 45-acre retail development planned for west Miami-Dade County will run adjacent to the company's 4,800,000-square-foot Beacon of Miami offices at its Lakes business park.
US retail markets have been hit harder than American offices. The company, which runs 11.4 million square-feet of retail, office and multifamily space throughout Florida, says news of the leasing assignment signals that the project’s development team is prepared to begin aggressively marketing the property to prospective tenants. This marks a bright spot in a retail sector that saw new project completions fall by nearly 50 per cent nationwide in 2009, with only 70 million square-feet of retail product slated to deliver in 2010, the lowest level on record, according to national industry research.
Upon completion, The Shops at Beacon Lakes will consist of up to 470,000 square-feet of build-to-suit retail development near the intersection of the Florida Turnpike and the Dolphin Expressway (836). The 45 acre parcel, which is fully-entitled and approved for big box retail development, will be the first major retail project to take shape in South Florida’s burgeoning West Miami-Dade submarket in more than two years. The shovel-ready property has already been outfitted with new access roads, such as the 836 Extension and NW 137th Ave., also known as Beacon Lakes Blvd.
Sabrina Meerbott, senior vice president at CREC, believes The Shops at Beacon Lakes will generate widespread interest among national anchor tenants. “The Shops at Beacon Lakes offers major national retailers an opportunity to locate in an easily-accessible, build-to-suit location proximate to a large population base,” said Meerbott. “Future tenants can commit with confidence knowing this project is backed by two well capitalised, well respected real estate developers who have depth of knowledge and years of experience, namely Flagler and AMB.”
UK office property markets are looking less attractive in comparison to their global competitors, according to new figures.
The European all-property Fair Value Index published by DTZ scored 49 in Q2 2010. With the global all property index at 62, European markets have become less attractive. Office markets are the most challenging sector, with the UK is the least attractive, and offices and other property in Germany is the most attractive country in Europe.
The index, developed by the global property services firm with 140 offices in places like Barcelona and Hamburg among all key global cities, offers investors insight into the relative attractiveness of current pricing in global commercial property markets. An index score below 50 indicates there are more markets categorised as COLD (i.e. unattractive to investors as expected returns are below risk-adjusted required returns) than HOT (i.e. attractive to investors as expected returns exceed risk-adjusted required returns). At 49, the current index score implies that European commercial property markets are on average priced at fair value.
However, the all-property score of 49 hides significant differences between sectors. Whilst pricing in several European office markets has overshot fair value with the office index standing at 35, this is not true for the retail and industrial markets where the index scores stand at 65 and 57 respectively.
The all-property index score of 49 for Q2 2010 represents a decline from 61 for Q1 2010. This implies that the number of opportunities for investors in European markets has slipped away to some extent. However, compared to the score of 24 as of Q2 2009, pricing remains much more attractive than it was a year ago.
DTZ say t”he recent decline in attractiveness is due in large part to strong yield compression on the back of investor interest and lack of product, especially for offices and in the UK. Increased risk premiums in some markets – related to financial instability associated with sovereign debt levels – has also played a role.”
The global all-property Fair Value Index score for Q2 2010 stands at 62, well ahead of the European score of 49. This implies that offices in Asia Pacific (67) and the US (89), offer more attractive investor opportunities than in Europe.
