Magazine article Journal of Property Management

Exclusions Controversial

Magazine article Journal of Property Management

Exclusions Controversial

Article excerpt

MALL VISITS DOWN

Mall visits fell to 3.1 per month in 1999 from 3.7 per month in 1998, and the cause may be the Internet, says John McMahan, chairman of San Francisco's McMahan Group. Speaking before a trends conference in Chicago sponsored by Piper Marbury Rudnick & Wolfe, McMahan noted that Internet purchases accounted for 5 percent of all retail sales in 1999; that figure rose from only 1.7 percent in 1998. When combined with the fact that 75 percent of all retail property is 10 years of age or older, McMahan predicts that retail overcapacity could be 15 percent or more in the near future.

GERMANS BUYING IN

German investors, finding the U.S. real estate market highly appealing during the late 1990s, will continue to invest with gusto over the next three years, according to a study initiated by the investment banking business of Jones Lang LaSalle. Sixty German investment groups surveyed indicate that investment in U.S. properties through 2003 will total at least $4-to-$6 billion in equity.

According to David R. Brown, managing director of Jones Lang LaSalle investment banking, German investors are influenced by regulatory and tax provisions that favor investment in the U.S. and other markets and provide greater returns than those available in their own market. Willing to invest as joint-venture partners, or in some cases through investments in private operating companies and REITs, the German investors focus on properties of high quality, the survey showed.

"Historically, most German investors have concentrated on fully leased Class A office properties. Because of the amount of capital they will invest, German groups are now willing to consider other property types, including high-end urban retail and office property located in suburban areas," says Brown.

DOES 24 BEAT 9-TO-5?

Recent investment wisdom has favored so-called "24-hour cities," but what is the real impact on investment performance? That was the question posed by Hugh Kelly, chief economist for Landauer Realty Group, Inc. and its parent, Grubb & Ellis Company, at the recent IREM Asset Management Symposium. Charting such activities as hourly electrical load, traffic volume, and Internet use, Kelly concluded that while there are clearly cities that operate for most of every 24 hours, the line between 24-hour and 9-to-5 cities is not a constant. "Predictions of which cities are 24-hours will be of short duration," says Kelly, noting that some cities such as Los Angeles exhibit a 24-hour pattern without possessing the central downtown and transportation often associated with the 24-hour cities of New York, San Francisco, and Chicago.

Kelly next explored whether or not the preference for 24-hour cities was supported by higher property performance in those areas. He found mixed results, with 24-hour cities generally having somewhat higher rents, but exhibiting higher volatility, especially in down markets.

EXCLUSIONS CONTROVERSIAL

National Lease Advisors surveyed real estate professionals regarding controversial lease clauses. The participants in the survey included tenants, landlords, developers, property managers, facility managers, real estate brokers, attorneys, tenant representatives, corporate real estate executives, and lease administrators. …

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