May 11th - May 24th, 2013

Large Lease Rollovers Pose Loan Risks in Era of the Shrinking Office
5/15/2013, CoStar Group, Mark Heschmeyer The trend in less square footage requirement per employee has serious implications for landlords with near-term lease rollover risk, according to new analysis from Wells Fargo Securities. Older existing office leases initially written in the era using the higher square footage requirement per employee are likely to renew under a more efficient standard. The trend toward space efficiency has the potential to limit office demand over the next several years as tenants right-size into less square footage as leases roll the next several years. Landlords have a desire to take advantage of low financing rates to refinance upcoming building loans, but need to show their building is stabilized, which pressures them to focus on tenant retention. Landlords unable to retain tenants or successfully accommodate current tenant needs may have a difficult time refinancing their building loans, the firm said. Click here for more...

Why Obama Should Design Green Building Certifications

5/16/2013, HuffPost, Avi Yashchin In order to move sustainable building design and operations to the mainstream, green certifications systems should learn an important lesson from President Obama -- competition can be the foundation for social good. It's not that crazy, 40 of 50 states have bought into the Race to the Top initiative for education improvement, and the administration's 2014 budget even proposes a Race to the Top Initiative for utility grid modernization. By far the most popular green building certification, the LEED Rating System, has had enormous success since its inception in 1998. LEED stands for Leadership in Energy and Environmental Design; and it certainly is a leader -- 1.5 million square feet of real estate become LEED certified daily and more than $100 billion worth of commercial and residential buildings now hosts a LEED plaque. Throughout the program's history, critics in the construction industry have argued (with merit) that certification is too expensive, too complicated, and requires too much paperwork. In response, the United States Green Building Council (USGBC) has released updated versions that streamline the process, a focus evident in the newest iteration, LEED V4, set to release later this year. Click here for more...

Knocking Down Walls: Transforming Office Space

5/16/2013, Finance & Commerce, Liz Wolf

How

Gen

is

Gen Y or "millennials" are broadly defined as people born in the 1980s to early 2000s. They're the children of baby boomers. Gen Y employees are expected to make up more than 40 percent of the U.S. workforce by 2020, according to a 2012 estimate from the U.S. Bureau of Labor Statistics. This means Gen Y will significantly outnumber any other generation, which is a drastic shift. Gen Y workers are technologically savvy, collaborative and very connected socially. Most don't desire to land a corner office. What's more important to them is open, flexible workspace that encourages teamwork. In fact, many don't even want assigned desks. Experts say this view - where employees are encouraged to move around and collaborate - is a new way of thinking, but more companies are moving in that direction and it may be out of necessity.Click here for more...

Workplace Advocates Fighting for Flex

5/17/2013, The Gazette, Kevin James Shay Yahoo CEO Marissa Mayer's recent decision to ban telecommuting at the Internet company starting in June continues to make waves among advocates of the work-from-home practice. At the Alliance for Workplace Excellence's annual awards luncheon in North Bethesda on Wednesday, keynote speaker Carol Evans cited that decision as an "attack on flex." The alliance is a nonprofit organization founded by Montgomery County and Silver Spring media giant Discovery Communications. Those problems include not just traffic congestion during rush hour, but how employees can care for children and elderly parents, work on a degree and perform daily errands like pick up kids from school when both parents work, she said. About 29,000 employees in Montgomery County work from home, according to U.S. Census Bureau figures. That is about 6 percent of the workforce, more than the national telecommuting average of 4 percent. Click here for more...

Desire for Better Office Space Increase in Construction in Region

5/20/2013, The Washington Post, D.J. O'Brien

is

Behind

For the past three years, the Washington region has steadily added to the amount of new office space under construction, from 4 million square feet in 2010 to 7.3 million square feet currently under construction. At the end of the first quarter, only New York City and Houston had more office space under construction. Why all the new office construction? The answer lies mostly in quality space available at affordable prices. In the current soft leasing market, few tenants are expanding or moving into the area. Rather most of the leasing activity involves tenants playing "musical chairs" among buildings. Competition for tenants is getting fierce, with landlords poaching from one another. As tenants continue to flock to high-quality, high-amenity buildings, landlords feel compelled to offer space with all the bells and whistles to make sure they aren't the ones holding an empty building. However, this strategy can't continue indefinitely. Click here for more...

Commercial Challenges

Real

Estate

Recovery

Facing

5/20/2013, Realty Biz News, Mike Wheatley Lawrence Yun, chief economist of the National Association of Realtors, has warned that even as the economy picks up and more employment opportunities are created, the commercial real estate market

faces a number of challenges as it makes its first tentative steps towards a recovery. Speaking at the Commercial Economic Issues & Trends Forum at the 2013 Midyear Legislative Meetings & Trade Expo in Washington, D.C., last Thursday, Yun described how commercial real estate markets had suffered huge collateral damage as a result of last decade's housing crisis. He warned that the current economic upsurge was still largely uneven, alluding to the fact that many low-income Americans are yet to see much difference in their lives. Indeed, many people in this demographic who're still unemployed and lack investments - believe that the economy is getting worse, not better, reports Realtor Mag. Click here for more...

Jobless Claims Get Better, but Remain at High Level

5/23/2013, Reuters via CNBC Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 340,000, the Labor Department said on Thursday, pushing back below the 350,000 mark that economists normally associate with a firming job market. The drop last week unwound most of the prior week's jump, suggesting employers were not laying off workers in response to tighter fiscal policy, especially the $85 billion in across-the-board government spending cuts that have dampened factory activity. A Labor Department analyst said no states had been estimated and there was nothing unusual in the state-level data. Click here for more...

US Manufacturing Growth Slips to SevenMonth Low

5/23/2013, Reuters via CNBC U.S. manufacturing slowed for a second straight month in May as weak overseas demand and government belt-tightening at home led to the sector's most sluggish rate of growth since October, a survey showed on Thursday. Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index fell to a seven-month low of 51.9 in May from 52.1 the previous month. A reading above 50 indicates expansion. Federal Reserve Chairman Ben Bernanke, in remarks to Congress on Wednesday, gave no sign that the central bank was ready to retreat from the aggressive stimulus it designed to keep long-term interest rates low and boost growth. Click here for more... Click here to download a printable version

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This newsletter is a summary of articles related to commercial real estate finance news in the Baltimore/Washington market, collected from local publications as noted above. Should you require specific information, please refer to the publication source or call one of our professionals at 410.821.8585. All information furnished regarding property for sale, rent, exchange or financing is from sources deemed reliable. No representation is made as to the accuracy thereof and all such information is submitted subject to errors, omissions, or changes in conditions, prior sale, lease or withdrawal without notice. All information should be verified to the satisfaction of the person relying thereon.