Commercial Real Estate Trend: U.S. Retailers to Expand Internationally Post-Recession

As the economic recession strengthens its hold, you may have noticed a number of major retail and restaurant brands changing their commercial real estate habits. Whether it’s big box retailers halting construction or cancelling plans for new U.S. sites, or fast food retail chains moving slower in approving franchise licenses or closing underperforming locations, the change in their growth plans is evident.

While many of these changes can be attributed to the current economy, it doesn’t mean that when the recession ends and people begin to ramp up their spending habits again, that these big name brands will resume their manifest destiny plan across the U.S. In discussions with retail brands across North America – from big box home improvement and entertainment/electronics retailers to small network retailers – it is clear that the greatest potential for growth is to look beyond the U.S. for future expansion.

Opportunities abound in markets around the world, like the growing consumer bases in China and India, that are much more attractive than picking a new pad site somewhere in the U.S. that just further segments an existing market. Companies are thinking long-term and international. That doesn’t rule out any new U.S. sites, but the long-term strategy will be to market their U.S. locations heavily to capture market share, and to expand globally to increase it.

George Anderson is Vice President of NAI Global Market Analytics, a service for retailers, banks, financial insitutions and corporate end users. Working together with NAI ReStore, the retail arm of NAI Global, NAI Global Market Analytics helps clients optimize their store, branch and distribution networks.

To learn more about Market Analytics and other services provided to Retail Clients from NAI Pittsburgh please click NAI PITTSBURGH RETAIL.

Agency Representation: Industrial Expertise

John C. Bilyak, Jeffrey Adams and William Leone, SIOR of NAI Pittsburgh Commercial represented the landlord in the 147,310 SF lease to Elliott Company at I-70 Commerce Center in Pittsburgh, PA.

NAI Pittsburgh Commercial offers expertise in Landlord/Agency representation. Please visit NAI Pittsburgh to learn more about our expertise and services offered.

Tenant Representation: Benshaw, Inc.

Paul D. Horan and John C. Bilyak of NAI Pittsburgh Commercial represented Benshaw, Inc. in the 183,000 SF lease by Benshaw, Inc. in the RIDC Industrial Park in O’Hara Township, PA.

More Wins: Pittsburgh Development & Capital Projects

The Pittsburgh region landed a total of 290 corporate investment and development projects last year with the potential for more than 10,000 new jobs.

The Allegheny Conference on Community Development and the Pittsburgh Regional Alliance Wednesday announced the numbers, which were down slightly from 2007, when the region saw 308 development projects.

“The 2008 numbers quantify an impressive level of activity in southwestern Pennsylvania, particularly in a year of severe economic challenges nationwide and underscore Pittsburgh’s resilience,” said Michael Langley, CEO of the organizations, in a statement.

"Almost on a daily basis we hear negative stories from around the country about the economic trouble the country is going through and the world is going through," Michael Langley, the chief executive officer of both the conference and the regional alliance, said at a news conference yesterday. "Today we're not going to let the good news get lost about the Pittsburgh region."

When Site Selection magazine put together its list of top metropolitan areas (populations of more than 1 million people) in terms of major development projects under way, Pittsburgh came in seventh. The city was behind much larger metro areas, such as New York, Houston, Dallas and Chicago. Mr. Langley said if the population were taken into account, spending per capita would have shot Pittsburgh up the list.

Site Selection compiled that list by considering metropolitan areas with projects that cost more than $1 million, created at least 50 new jobs or added more than 20,000 square feet in new floor space. Retail space, government projects, schools and hospitals were excluded from consideration.

Specifically, the conference and the PRA pointed to billion-dollar investments by U.S. Steel and Allegheny Technologies in their local manufacturing operations.

All told, the projects resulted in capital investments of more than $4.2 billion in the region.

NAI Pittsburgh Commercial is a Pittsburgh proud locally owned and operated company. To see some of the investment and development opportunities available in the Pittsburgh region CLICK HERE

Highest Priced Commercial Real Estate Markets

New York City Reclaims Title as Highest Priced Commercial Real Estate Market Worldwide
New York City Peak Rents Top $225 per SF

San Francisco, Boston and Washington, DC Top List of Highest-Priced U.S. Office Markets

New York City’s Midtown Manhattan market reclaimed its title as the highest priced office market in the world in 2008, according to NAI Global’s 2009 Global Market Report. Premium space in Midtown Manhattan peaked at $225 per square foot in 2008, before the sinking economy could take its toll.

London’s Mayfair region held the “highest priced office market” title in 2008 with a peak rent of $265 per square foot per year. In 2009 the market took second place as peak rents fell $56 per square foot to $209 per square foot per year. Hong Kong, the third highest-priced office market in the world, reported peak rents of $186 per square foot per year for 2008, a drop of $77 per square foot from the 2007 high of $263 per square foot per year.

“The global economic crisis is impacting property markets big and small,” said Jeffrey M. Finn, NAI Global President & CEO. “Once strong markets are suddenly facing high vacancy rates and tenants that are taking their time making new space decisions. New York City, in many ways the capital of commerce for the world, saw enough demand to keep prices stable through much of 2008 before the wheels fell off late in the year. Rents are expected to drop significantly in most major world markets in 2009.”
The most expensive space in New York was for premium space at 9 West 57th Street, according to Henry Goodfriend, Executive Managing Director in NAI Global’s New York City office. “At one point we had several buildings with asking rents approaching $250 per square foot, but the market has changed dramatically and those landlords aren’t quoting rates anymore,” he stated.

New York’s peak rents are more than double the highest rents reported in any other U.S. Market. Midtown was followed by San Francisco with peak rents of $110 per square foot downtown, New York City Downtown Manhattan with peak rents of $65 per square foot, and Boston with top rents of $65 per square foot in the Financial District.
San Mateo, California, topped the list of highest-priced suburban office markets in the U.S. with peak rents of $228 per square foot per year, nearly three times the peak rent for Class A space in the second highest priced market. San Mateo is home to Sand Hill Road, a prestigious address for top venture capital firms. Santa Clara County, aka Silicon Valley, was second with top-end rents of $81 per square foot, follow by Los Angeles at $62 per square foot.

Overall, California markets claimed four of the 10 priciest suburban markets in the U.S. Northern New Jersey, at $53, Northern Virginia, at $45, and Miami, at $47.50, also made the list. NAI Global is one of the world’s largest commercial real estate services providers. Headquartered in Princeton, New Jersey, NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries. Now in its 23rd year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in more than 200 property markets worldwide.

Worth Repeating: Moody's Pittsburgh Tops in Commercial Real Estate

Moody’s Investor’s Service has ranked Pittsburgh the best commercial real estate market in the United States.

The area’s commercial real estate market outranked every other major metropolitan area in the country in the fourth quarter of last year, according to a recent report from credit rating agency Moody’s Investors Service.

Moody’s quarterly report measured the health of commercial real estate markets that support the majority of loans in mortgage-backed securities. It focused on office, apartment, and hospitality markets.

Pittsburgh received an overall average score of 77 out of a possible 100. Other top scorers were Oklahoma City, 74; San Francisco, 74; Honolulu, 72; and Los Angeles, 68.

The lowest scoring markets were Riverside, Calif., 36; Jacksonville, Fla., 33; Trenton, N.J., 33; Detroit, 26; and Phoenix, 24,

Source: Pittsburgh Post-Gazette and Pittsburgh Business Times (01/22/2009)

NAI Pittsburgh Commercial is a Pittsburgh proud, locally owned and operated member of the NAI Global managed network. To learn more visit www.NAIPittsburgh.com

Pittsburgh's own U.S. Steel: Attracting green technology jobs

Industries of the Future Choosing Brownfields as Their New Home

U.S. Steel's Keystone Industrial Port Complex (KIPC) was featured in a recent U.S. Environmental Protection Agency newsletter for its success in attracting revolutionary "green" technology jobs from around the world to this 4,000-acre brownfield site in Pennsylvania. NAI Global serves as advisor to U.S. Steel and along with NAI Mertz oversees sales and leasing activity at the KIPC site. Brownfield projects like KIPC are expected to benefit from "green" provisions in President Obama's economic stimulus package.

Click here to read the article

NAI Pittsburgh Commercial is a part of the NAI Global managed network of commercial real estate firms. Click here to learn more about NAI Pittsburgh's Corporate Services.

Restaurant Franchising: Economy slowing but providing opportunities

While the economy has slowed down restaurant franchising, it also has opened up opportunities

Tuesday, March 10, 2009
By Teresa F. Lindeman, Pittsburgh Post-Gazette

The franchisees building Sonic drive-in restaurants along the Pittsburgh region's southern edge liked one potential site but there was a drawback. The owners wanted only to sell, and with lenders tightening up on credit, the franchisees weren't ready to buy.

"We called back and said, 'We don't want to go out for [new] financing. Can you lease a few years?' " said Chris Whalen, a partner in White Oak-based NCH Hospitality.

The landowners -- recognizing the economic realities -- were willing to talk. "There has been a little bit of loosening," Mr. Whalen said. "You can feel it change."

It may take a willingness to adapt to keep movement going in what has been one of the region's -- and the nation's -- more active development markets for years: restaurant franchise growth.

As consumers eat at home more and lenders pull back on credit, a number of chains have indicated they won't be cooking up new stores as fast as fries in a hot cooker this year. Restaurant operators, such as the parent of Olive Garden, Red Lobster and The Capital Grille as well as those opening Chipotle and Wendy's, have said they would move at a slower pace.

Yet the slowdown also has opened up opportunities, according to some in the businesses who see less competition for prime locations and more willingness by land owners to work with potential tenants.

And for those who've always sold themselves as a value, this may be a good time to reinforce and improve that image.

NAI Pittsburgh has several opportunities for Restaurant Franchisees: Listing Information: NAI PITTSBURGH RETAIL

For the rest of the Post-Gazette article click here

State building sale draws one offer that meets price

$4.5 million sought for Downtown site

Saturday, March 07, 2009
By Mark Belko, Pittsburgh Post-Gazette

Developers aren't exactly rushing to buy the State Office Building, Downtown.

State officials received just one offer of at least $4.5 million for the 52-year-old building by yesterday's deadline for submitting a proposal.

The Department of General Services would not identify the bidder nor reveal the amount of the bid. The state had set a minimum price of $4.5 million for the 16-story structure with a prime location near the entrance to Point State Park and the confluence of the three rivers.

The state will "fully assess the terms and conditions of the proposal" before deciding whether to go ahead with the sale, General Services spokesman Ed Myslewicz said.

The proposal was one of two received by the state before yesterday's deadline. The other proposal did not meet the state's minimum asking price, Mr. Myslewicz said.

State officials have said the state would save money by selling the building and relocating employees rather than repairing and maintaining the structure.

State officials readvertised for proposals last month after the Buncher Co., a prominent local developer, withdrew its $4.5 million offer to purchase the building.

For the rest of the article click HERE

Tenant Representation: Sid Harvey Industries, Inc

NAI Pittsburgh Commercial is pleased to announce the 12,000 square foot lease signing of Sid Harvey Industries, Inc at the former Prizant’s building at Route 51 and Readshaw Way in Baldwin Borough. Sid Harvey Industries, Inc is a premier wholesale distributor and manufacturer of heating, ventilation, air-conditioning, and refrigeration parts and equipment through 75 locations in eighteen states.

John Bilyak, Vice President of Industrial Brokerage and Edward R. Lawrence, Associate, of NAI Pittsburgh Commercial represented Sid Harvey Industries, Inc in the transaction.

Time for a Stimulus Package?

When thinking about a stimulus package, what most people forget is the impact of substitution. For example, if the government were to buy school lunches for every single student in America, what will happen to spending on school lunches? It is true that the government will spend more, but as a result, the private sector will spend less. This huge offset will in turn result in very little or possibly no net “stimulus” at all.

Second, as we have seen in the past three years, a bill has not been passed without being padded with ample pork. With all of the well-intended (effective or not) stimulus spending will come earmarks for pet projects. This will not stimulate the economy; but rather, will simply burn money.

And so historically what undercuts most stimulus packages in this country and in others are the substitution effect and the pork effect. In the 1990s the Japanese spent unprecedented sums in stimulus packages that did absolutely nothing except increase their national debt. Most projects were pork and the rest were offset by a decline in consumer spending.

In the U.S., the most productive targets for a stimulus package are infrastructure projects – where the consumer substitution effect is minimized. However, the problems with infrastructure spending are twofold. First, infrastructure projects take time, and second, long timelines inevitably degenerate into pork projects. When you really want to have a meaningful impact on infrastructure – building much-needed bridges, repairing damaged tunnels, road widening, etc. – nothing is spent in the first year or two. The real money will not get spent until three or four years into true infrastructure programs when planning and analyses are complete. Therefore, what unfortunately happens is that the legitimate infrastructure projects get pushed aside and the pork projects with shorter timeframes compete for immediate funding.

The preceding was an excerpt from Capital Markets Update: Is This the Worst Ever Yet?, the latest NAI Global white paper from Chief Economist Dr. Peter Linneman. The full white paper can be downloaded at www.naiglobal.com/Publications.

Congratulations to Propel Schools - NAI Pittsburgh Client

Two Charter Schools Honored
Thursday, March 05, 2009
By Eleanor Chute, Pittsburgh Post-Gazette

City Charter High School and Propel McKeesport are among the top 21 charter schools honored by New Leaders for New Schools, a nonprofit that focuses on school leadership.

Both schools received Effective Practice Incentive Community Awards that will enable them to share their effective practices with other educators. The schools were selected from 144 charter schools nationwide because of their ability to increase student achievement.

"We are proud to be recognized on a national level for our work in public education," said Richard Wertheimer, founder and CEO of City Charter High School.

Tina Chekan, principal of Propel McKeesport, said, "We do not accept the premise that poverty or family structure determines education performance or life outcome. Receiving this EPIC award is a testament to that premise."

NAI Pittsburgh Commercial wishes congratulations and continued success to Propel Schools. Paul Horan, principal of NAI Pittsburgh Commercial represents Propel Schools in real estate site selection and negotiation.

U.S. Experiencing Second Worst Recession in Modern Age

NAI Global Chief Economist Analyzes Recession, Recovery Opportunities in New White Paper

The economic recession that officially began in December 2007 is officially the second worst in American history since the end of the 1960s, according to a new white paper from NAI Global Chief Economist Dr. Peter Linneman. The 1973-1975 recession ranks the worst in modern American history, and Dr. Linneman poses several ways to end the current recession before it deepens to levels unseen since then.

“Our analysis shows that the U.S. is in the midst of the second-worst recessionary period of the last 40 years, and it is worsening quickly,” said Dr. Linneman. “Our challenge in moving forward is going to be avoiding the temptation to save everyone – failing businesses, industries and underwater homeowners alike. Losers must lose if winners are to prosper, and the catalyst for a return to growth will be these necessary market adjustments.”

The current recession is compared against significant recessions of the past 40 years, examining duration, changes in GDP, consumer confidence, inflation, unemployment and 10 other economic benchmarks. The recession of the early 1970s is atop the list as the “Worst Ever” U.S. Recession, followed by today’s economic slowdown, and the 1981-1982 recession comes in third.

Capital Markets Update: Is this the Worst Ever Yet?,

NAI Global’s white paper, examines today’s recession against the six previous recessions, offering insight into the cause of our economic slowdown, warnings about saviors and misdirected stimulus, and explains Dr. Linneman’s theory on the best road to recovery.

“Don’t bet against the U.S. economy,” said Linneman. “Entrepreneurs are still out there, and with a modicum of political leadership and stable economic policy, we will get through this stronger than ever – it will just take more time than we thought.”

Pittsburgh's Third Renaissance: Building Permits Double 2006 level

The city logged nearly $991 million in building permits last year, which is double the 2006 level.

From Pittsburgh Post-Gazette Sunday March 1, 2009
Mayor sees city's construction levels as positive evidence of another renaissance
Sunday, March 01, 2009
By Rich Lord, Pittsburgh Post-Gazette


While other cities' leaders are using one r-word -- recession -- to explain canceled projects and construction slowdowns, Pittsburgh Mayor Luke Ravenstahl dares to use another one to describe what he sees: renaissance.

He invoked that hallowed term at a Pittsburgh Downtown Partnership meeting last month, and didn't hesitate to expound upon it last week, even as observers and political rivals voiced doubts.

"I firmly believe that despite the economic conditions in surrounding areas and cities, the numbers and the facts are that Pittsburgh is growing in a lot of areas, we are rebuilding the city, and we are on the brink of a third renaissance," he said.

For the rest of the article CLICK HERE