Shops provide positive externalities to each other. Both stores and restaurants like to be where there is good foot traffic from other restaurants and stores, and some stores like to cluster together (jewelers, and automobile dealers) to draw comparison shoppers who might not make the journey to a destination that had only a single shop. Part of the problem that towns face in nurturing thriving Main Street/downtown shopping districts is that it is hard to get the right mix when each commercial tenant negotiates separately with each landlord.
Malls--privately owned shopping centers--attempt to internalize this externality, and provide that right mix. (So, not all tenants of a mall have to pay the same rent per square foot; some tenants may provide traffic that raises the profitability of other tenants.) The marketplace designer is the mall owner, sometimes in negotiation with the tenants. (This is what led in Massachusetts to the Solomonaic judicial ruling that a burrito is not a sandwich, when Panera bread sued a mall claiming that the clause in its lease guaranteeing that it would be the mall's only sandwich shop was violated when the mall leased space to a burrito chain.
In the current recession, in which commercial real estate is hard to fill, malls are struggling to keep a mix of tenants who will draw traffic for each other: Malls Test Experimental Waters to Fill Vacancies . While some malls will fail, others may manage to bring new kinds of tenants (the article suggests wave machines and community colleges).
The stakes are high, since many malls are designed as easy-to-park-at destinations that must draw shoppers to them. If some shops go dark, malls will face the same kind of struggle as do less planned retail commercial neighborhoods.
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Friday, April 10, 2009
Saturday, February 28, 2009
Real estate auctions for price discovery
Sales by auction are coming to the new condo market in New York City: And Do I Hear $2 Million? No? $1 Million? Sold!
"Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked"
...
"In the auctions run by Accelerated, only a portion of a building’s unsold units are sold in one swoop, to avoid depressing values more than necessary. The remainder are marketed the traditional way, at the new, lower auction prices. "
...
"Auctions have succeeded in loosening other battered markets, like South Florida. In two held there last fall by Accelerated, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction. "
The real estate auction firm mentioned in the article is Accelerated Marketing Partners, of Boston.
"Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked"
...
"In the auctions run by Accelerated, only a portion of a building’s unsold units are sold in one swoop, to avoid depressing values more than necessary. The remainder are marketed the traditional way, at the new, lower auction prices. "
...
"Auctions have succeeded in loosening other battered markets, like South Florida. In two held there last fall by Accelerated, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction. "
The real estate auction firm mentioned in the article is Accelerated Marketing Partners, of Boston.
Sunday, February 22, 2009
Real estate auctions
Sales of property by auction seem to rise in bad times: Commercial Auctions Expected to Rise . The attraction of an auction is that it can aid in price discovery, and move quickly.
One such property "is the John Hancock Tower in Boston, which is set to go on the auction block next month. The dire turn of events came after Broadway Partners, based in New York, which bought the tower in 2006 for $1.3 billion, defaulted in January on some loans, prompting a group of mezzanine lenders to hire Green Loan Services, a unit of SL Green, to pursue an auction. (Mezzanine loans are secured by a stake in ownership rather than the actual property; they have become increasingly popular over the last several years of high-leverage deal making.)"
...
"Auction houses are poised for a growing role in commercial real estate. The strengths of the auction model — a faster sales cycle, lower costs, and the ability to quickly determine a fair market value — play into current market conditions.
“It’s tough to put your finger on a price right now,” said Randy Wells, the president of the National Auctioneers Association. He said that comparable sales and listings could be consulted “but it’s guesswork right now,” and that auctions “are really good at finding a current market value in a short amount of time.” "
One such property "is the John Hancock Tower in Boston, which is set to go on the auction block next month. The dire turn of events came after Broadway Partners, based in New York, which bought the tower in 2006 for $1.3 billion, defaulted in January on some loans, prompting a group of mezzanine lenders to hire Green Loan Services, a unit of SL Green, to pursue an auction. (Mezzanine loans are secured by a stake in ownership rather than the actual property; they have become increasingly popular over the last several years of high-leverage deal making.)"
...
"Auction houses are poised for a growing role in commercial real estate. The strengths of the auction model — a faster sales cycle, lower costs, and the ability to quickly determine a fair market value — play into current market conditions.
“It’s tough to put your finger on a price right now,” said Randy Wells, the president of the National Auctioneers Association. He said that comparable sales and listings could be consulted “but it’s guesswork right now,” and that auctions “are really good at finding a current market value in a short amount of time.” "
Sunday, December 28, 2008
Eminent domain
A story in the NY Times has a striking photo of a private home in Seattle located in a niche in a large commercial building. The large building had to be built around the small one after developers were unable to convince the owner to sell them the last piece of land they needed to build a conventional, rectangular building.
Governments, unlike private developers, have the right of eminent domain, which allows them to compel landowners to sell their land for public purposes. The idea is that some public projects, like highways, would be difficult or impossible to complete if each plot of land on the proposed route would have to be acquired on the private market before a road could be built. Eminent domain is meant to solve the coordination problem involved in assembling a large landholding (since there are seldom large, road-shaped plots of land vacant where new roads would be useful in populated places). It is also meant in part to solve the "holdup problem" associated with the fact that, once a large tract of property has been assembled, the missing pieces have very high marginal value, so that the last properties needed for a large project would become especially difficult or costly to acquire.
Governments can use eminent domain for private projects that they take to be in the public interest, e.g. not just highways, but privately owned railroads also. Recently the State of New York agreed to use eminent domain to acquire the last plots of land for Columbia University to expand its campus north of its current Manhattan location, on land that Columbia had mostly assembled over years of private acquisition.
Harvard acquired land in the Allston neighborhood of Boston in the 1990's, without eminent domain, by buying lots secretly, through a third party, as they became available. The thought was that the last lots would have become very expensive if it became known that Harvard was purchasing land for a large project.
Update: Steve Leider urges me to include the recent expansion of eminent domain authority to include more strictly private projects. He writes:
"You probably ought to mention the Kelo decision (http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London ) which substantially expanded what counts as "for a public purpose" in terms of using eminent domain for a private project - basically increased tax revenue counts. The decision is very controversial, since it basically allows ED for just about anything, and many are worried that developers will try to wield influence with lawmakers to get ED invoked. There was lots of discussion at the time on law blogs like volokh.com (here are some of their recent posts on the subject http://volokh.com/posts/chain_1201469127.shtml )"
Governments, unlike private developers, have the right of eminent domain, which allows them to compel landowners to sell their land for public purposes. The idea is that some public projects, like highways, would be difficult or impossible to complete if each plot of land on the proposed route would have to be acquired on the private market before a road could be built. Eminent domain is meant to solve the coordination problem involved in assembling a large landholding (since there are seldom large, road-shaped plots of land vacant where new roads would be useful in populated places). It is also meant in part to solve the "holdup problem" associated with the fact that, once a large tract of property has been assembled, the missing pieces have very high marginal value, so that the last properties needed for a large project would become especially difficult or costly to acquire.
Governments can use eminent domain for private projects that they take to be in the public interest, e.g. not just highways, but privately owned railroads also. Recently the State of New York agreed to use eminent domain to acquire the last plots of land for Columbia University to expand its campus north of its current Manhattan location, on land that Columbia had mostly assembled over years of private acquisition.
Harvard acquired land in the Allston neighborhood of Boston in the 1990's, without eminent domain, by buying lots secretly, through a third party, as they became available. The thought was that the last lots would have become very expensive if it became known that Harvard was purchasing land for a large project.
Update: Steve Leider urges me to include the recent expansion of eminent domain authority to include more strictly private projects. He writes:
"You probably ought to mention the Kelo decision (http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London ) which substantially expanded what counts as "for a public purpose" in terms of using eminent domain for a private project - basically increased tax revenue counts. The decision is very controversial, since it basically allows ED for just about anything, and many are worried that developers will try to wield influence with lawmakers to get ED invoked. There was lots of discussion at the time on law blogs like volokh.com (here are some of their recent posts on the subject http://volokh.com/posts/chain_1201469127.shtml )"
Thursday, October 23, 2008
Housemate match
A matching service run by the Atlanta JCC: Housemate Match
"Housemate Match (HMM) is a unique, nationally recognized, home sharing program that matches mature adult homeowners who have extra room in their homes with adults (tenants) seeking a roommate in a beautiful and safe place to live in the Atlanta area.
HMM provides rooms to rent for those who prefer to share a home rather than living alone and for those who choose to remain in their home and age in place.
International friends are welcome. "
"Housemate Match (HMM) is a unique, nationally recognized, home sharing program that matches mature adult homeowners who have extra room in their homes with adults (tenants) seeking a roommate in a beautiful and safe place to live in the Atlanta area.
HMM provides rooms to rent for those who prefer to share a home rather than living alone and for those who choose to remain in their home and age in place.
International friends are welcome. "
Sunday, September 21, 2008
Vacancy chains in Manhattan real estate
The NY Times reports that the current credit crunch means that real estate buyers in Manhattan, especially those who have to be approved by a co-op board, are often having to sell their previous home before they meet the credit requirements to buy. For Buyers, Many Roadblocks
Subscribe to:
Posts (Atom)
Posts
