Market Trends Online(1)

Photo credit: W Hotels; Elizabeth Fraiberg Photography

The tallest office skyscraper west of Chicago in 1929, Minneapolis’ Forshay Tower has lost its appeal over the years and was less than 50 percent occupied in 2005. But local real estate developer Ralph Burnet saw hospitality potential in this Twin Cities landmark he bought in 2006. Knowing W Hotels’ penchant for boutique properties, he contacted Starwood Hotels and persuaded them to manage the property, despite the fact that Starwood had not considered Minneapolis as a potential market. On the National Register of Historic Properties, the Forshay used federal tax credits to finance part of its conversion to a 230-room hotel.

Chicago Retail Halved

Chicago area retail development slid by more than 50 percent from a record high of 8.3 million square feet in 2007, according to the Mid-America 2008-09 Shopping Center report. The year saw 3.7 million sf of development, the lowest total leasing area since 1997. The report estimates that 2009 will see even less development, just slightly more than 3 million sf, with 2010 rebounding with 4.8 million sf.

Dr. Doom Offers a Solution

New York University economics professor Nouriel Roubini is credited with predicting the current economic crisis back in 2004. While policy makers ignored him five years ago, they perk up when he speaks today. Remaining true to his pessimistic outlook, he estimates credit crisis losses of $3.6 trillion, which will render the U.S. banking system “effectively insolvent because it starts with a capital of $1.4 trillion,” he said in a conference at Dubai, according to Bloomberg.com. However, Roubini also has suggested steps to stop the credit crisis, which include:

  • Freeze all foreclosures temporarily.
  • Create massive fiscal stimulus packages of at least $400 billion for public works, infrastructure spending, unemployment benefits, and tax rebates to lower-income households. Provide grants to state and local governments in dire need of funding.
  • Coordinate interest-rate cuts globally.
  • Insure all bank deposits temporarily. Allow insolvent banks to shut down and partially nationalize solvent but distressed banks.
  • Open credit lines to solvent financial institutions and companies.
  • Inject money into banks by buying equity.
  • Coordinate a global effort to gradually adjust trade imbalances.

Source: BNET.com

Strongest Markets 2008-2013

Rank Office Industrial Retail Multifamily
1 Washington, DC Los Angeles Los Angeles Los Angeles
2 Portland, OR Houston Washington, DC San Francisco
3 Los Angeles Atlanta Dallas-Fort Worth Orange County, CA
4 San Francisco Oakland-East Bay, CA Dallas-Fort Worth Oakland-East Bay, CA
5 Austin Seattle Atlanta Washington, DC

Source: Grubb & Ellis

Global Hotel Outlook

3Q07
Number of rooms (000)
3Q08
Number of rooms in (000)
Construction starts 234.4 113.9
Project cancellations 81.8 130.6
New project announcements 370.1 121.1

Source: Lodging Econometrics

Aldi Plans 2009 Expansion

Discount grocer Aldi plans to open 75 new locations in 2009, including its first New York City store, according to Progressive Grocer. These stores will open in the 29 states where Aldi already has a presence, including Florida. Aldi opened its first Sunshine State store last year and now has 25 locations. The privately held German grocer will repeat that rapid expansion in Texas, where it plans to open 25 stores in the Dallas-Fort Worth area in 2010. Projects include the conversion former Albertsons and Super 1 Foods stores as well as a 500,000-sf distribution center in Denton, Texas.

Aldi’s newer stores will devote more space to fresh foods such as produce.

Total Restaurant Growth Flat in 2008

The number of restaurants opening equaled the number of restaurants closing in 2008, resulting in a year of no growth, according to NPD Group, a retail research company.

Restaurant Unit Growth, 2008

Percentage change from 2007

Restaurant Type by Units Quick Service Family Dining Casual Ddining Fine Dining
Independents (1-2 units) -1 -3 0 -8
Small Chains (3-49 units) 0 -3 -1 1
Minor Chains (50-99 units) 0 -9 -6 7
Mid-Size Chains (100-499 units) 1 -5 3 11
Major Chains (more than 500 units) 1 0 3 NA

Source: NPD Group