WHO'S DIGGING DIRT?

Retail Rebound Sparks Ground Movement
Developers respond to positive retail news and draw up plans to build new space across the country for when markets rebound.  Consumers are spending a bit more, which puts some confidence back in the retail segment.  When putting up lifestyle centers, enclosed malls or power centers, developers typically constructed according to clear definitions of what should go in each, however, the lines between product types have been blurred lately and developers such as Barrister Commercial Group, Northgate Properties LLC and Colonial Properties start mixing things up as each will cater projects to the different markets.

Senior Housing Offers Slew of Opportunities
The strength of the senior housing industry will carry a number of developers through the slow year, including Orchard Flower Partners, Cadence Capital Partners LLP and Vanco Construction Services.  The sector proves to be a good investment as this renter group generally relies on a fixed income and is not as sensitive to economic downturns.  Demand inches up and occupancy in the segment holds strong between the high 80% and low 90% range, with cities such as San Jose, Calif., Baltimore and Minneapolis leading the way.  Since many seniors are restricted to monthly spending budgets, developers that include affordable housing units in projects are often rewarded with a big dose of financial aid. 

Tenant Confidence Building
Office REITs such as Liberty Property Trust, Corporate Office Properties Trust, Mack-Cali Realty Corp. and Boston Properties get set to make a comeback as tenants gain some confidence.  Business sentiment has improved and companies are seeing demand for leasing pick up slightly, but tenants are still looking for flexibility and do not want to make long-term commitments for space as they continue to lower their own operating expenses.  Strong demand for Class A office space in high-end markets where solid industries are in place, such as Los Angeles, San Francisco, New York, Boston and Washington, D.C., will pave the way for solid growth as tenants in these areas begin to expand.  As office developers wait to truly start digging, don’t be surprised if many of them capitalize on solid investment acquisition opportunities.  More debt is available today compared to six to nine months ago, though a well-leased center and strong credit tenant mix is a must. 

Digging For Treasure
Lennar Corp. and Wilson Meany Sullivan combine forces to transform San Francisco’s Treasure Island from a naval base into a mammoth MPC, complete with homes, shops, hotels and parks.  Anticipate the $5B to $6B project to take at least 15 to 20 years to complete.  This MPC is just one of many that are hitting the drawing boards as part of the government’s Base Realignment and Closure Act which is opening up all kinds of development and redevelopment opportunities nationwide.  Lennar and Wilson Meany are going through entitlements right now and hope to break ground on Phase I by Q2 2011.