The grant was approved by the California Strategic Growth Council, created in 2008 by Senate Bill 732. The cabinet-level committee coordinates state agencies whose responsibilities include improving air and water quality; protecting natural resource and agriculture lands; increasing the availability of affordable housing; improving infrastructure systems; promoting public health; and assisting state and local entities in the planning of sustainable communities.

The grant will allow Yolo County to update its zoning code and development standards and create ordinances to “promote sustainable land use decisions and support the reduction of greenhouse gas emissions” as mandated by the county general plan. Yolo County (Sacramento Business Journal)

The state of California is standing pat with its real estate consultants.

The Department of General Services announced it intends to award contracts for commercial real estate services to Cornish & Carey Commercial for the Sacramento region and two contracts to CB Richard Ellis, one for Southern California and the other for the San Francisco Bay Area and out-of-state contracts. Those firms previously have served as the state’s consultants prior to the latest search.

The department often relies on its own real estate division for services, but can hire consultants when necessary.  The contracts are awarded on a three-year basis and can be renewed for an additional three years.  (Sacramento Business Journal)

Office sales are expected to gain momentum in the coming year as investors move further afield to acquire quality properties in an increasingly competitive arena.

Investors made one point crystal clear in 2010. They have a voracious appetite for low-risk office properties in top markets, and they’re willing to pay a premium to get them. “I think we have all been surprised at how strong the demand has been for fully leased buildings,” says Charles Baughn, an Executive Vice President at Houston-based Hines.

That demand is evident in a sharp compression in cap rates. Cap rates for central business district office properties dropped about 100 basis points over the past six months to average 6.5% at the close of the third quarter. At the same time, cap rates for Class-A properties in “super core” markets of Washington, D.C. and New York have plunged below 4% in some cases, according to New York-based Real Capital Analytics.

“At this point in time, it is a tale of two different markets – the quality institutional assets located in New York and Washington, D.C., and then the rest of the country. But that is a trend that is going to change as we move into 2011,” says Dennis Friedrich, President and CEO of U.S. commercial operations for New York-based Brookfield Office Properties. Intense competition coupled with stabilizing market fundamentals is expected to give investors more confidence to expand their geographic scope.

Investors searching for distressed big-box deals are facing competition from an unlikely source — retailers. Large tenants including Wal-Mart, Target, Kohls Department Stores and others have become aggressive bidders in the market for vacant big boxes. The retailers are buying distressed space from owners or banks, often at prices that are 20 percent to 30 percent higher than real estate investors are willing to pay.

As a result, retailers have become large players in the single-tenant market. For example, Matthew Sullivan, managing director with Los Angeles-based investment brokerage firm Lee & Associates Investment Services Group, says about 50 percent of the vacant boxes in California are being acquired by retailers.

For tenants, the incentive is that they can acquire an empty site today at a steep discount to what the asset would have traded for three or four years ago. In the process, they can lock in lower occupancy costs than if they were to lease that same space from a developer. What’s more, they have greater control over their real estate.  Full Story   (Retail Traffic Magazine)

The research represents a promising opportunity for helping the state reach its ambitious greenhouse gas and energy efficiency targets. The goal of the project at UC Davis is to increase the energy efficiency of existing multi-tenant light commercial buildings – such as strip malls, office parks and mixed-use developments – while decreasing greenhouse gas emissions.

The project aims to identify the best technologies to use, market barriers to avoid and to make recommendations for retrofitting buildings. Three principal investigators will join faculty and staff from the California Lighting Technology Center, the Energy Efficiency Center, the Graduate School of Management and the Western Cooling Efficiency Center on the project.  Funding was approved for other projects in Irvine and El Cerrito, and for a U.S. Geological Survey project. (Sacramento Business Journal)

Opponents of a planned $2.3 billion sale of state office buildings won a temporary victory Monday when a state appellate court halted the deal for the 11 state-owned properties after an appeal was filed earlier in the day. The sale had been scheduled to be completed Wednesday.

The Sixth District Court of Appeals in San Jose issued the stay, saying it would put a hold on the sale “to permit further consideration of the issues raised by the petition.” Regardless of the outcome of that case, the sale now seems unlikely to be completed before the end of the year. That’s because the Department of General Services or others defending the sale will be allowed to file in opposition to the motion Dec. 27 and opponents can then respond to that motion Dec. 29.
The case had been filed with an appellate court in San Francisco, but the case was moved because the building that houses that court is one of the properties to be sold.

The appeal was filed by prominent Bay Area attorney Joe Cotchett, who argued that the sale would be “have disastrous long-term effects on the taxpayers of California.” One of the three petitioners looking to block the sale is Donald Caspar, a former member of the San Francisco State Building Authority who questioned the wisdom of the sale. He was released as a member of that board shortly after he questioned the wisdom of the move. (Sacramento Business Journal)

“With commercial real estate yields now looking comparatively more attractive than other asset classes, employers are taking a hard-line approach to managing costs more efficiently while providing better service at the property level,” said Frank Simpson, CCIM, the 2011 President of the CCIM Institute and president of The Simpson Company in Gainesville, Georgia. “These job postings reflect the fact that managing and keeping tenants is obviously an essential part of maintaining the integrity and profitability of a portfolio.”

The CCIM Career Center Job Barometer is researched and published by Cornell University’s Program in Real Estate and the SelectLeaders Real Estate Job Network, of which CCIM is a partner.
“We are seeing activity on the recruiting front,” said Tony LoPinto, Founder of SelectLeaders. “Search activity is starting to happen across the board-real estate investors, funds, operators, and corporate users are all back in the hunt for talent. C-Suite and senior executive hiring historically portends hiring of teams and ultimately hiring throughout the corporation.” Property Management (CCIM)

After an unexpected rise the week prior in the unemployment rate to 9.8 percent, some economists were surprised when the Labor Department reported last week that new jobless claims fell by 17,000.

According to the New York Times, “job creation is expected to receive a lift from a compromise deal struck by the Obama administration and Republican lawmakers last week to maintain all Bush-era tax cuts through 2012, extend emergency unemployment benefits and cut employee payroll taxes by 2 percentage points.” These tax cuts include a wide array of credits and deductions that could help reduce the burden felt in nearly all households.

Jobs, however, are essential to our economic recovery. And Federal Reserve Chairman Ben Bernanke reports we may be years from having normal unemployment again. Normal unemployment ranges from 5 to 6 percent. The economy, he says, is growing at an annual pace of around 2.5 percent – too slow of rate to reduce unemployment.

Unfortunately, the National Association of Business Economics reports that GDP projections for 2011 remain sub-par. Concerns over the federal deficit and unemployment continue to chip away at consumer confidence. And while spending is up 2.5 percent over last year, this year’s holiday retail sales are still weak. (Realty Times)

The guidance clarifies the types of employers and contribution arrangements that will qualify for tax credits as well as methods of determining a business’s number of employees. Generally, small employers (fewer than 25 full-time employees or equivalent, including part-time employee hours) paying an average wage below $50,000 could be eligible for tax credits to offset up to 35% of employee health insurance premiums paid in 2010.
 
To qualify, an employer must pay an amount equal to at least 50% of the insurance premiums for employees at the single (employee-only) coverage rate. These tax credits will remain in effect through 2013 and will increase in 2014, when the maximum credit will be 50% of employer contributions to employee health coverage. Please call Marcia Salkin at NAR at (202) 383-1092 if you have any questions.

Market Size, Drivers and Demand
The overall amount of commercial space available in the U.S. is estimated at 78.8 billion square feet located in 5.3 million buildings. This is the latest data from the Energy Information Administration.  In addition, there are an estimated 15.3 million apartment units in buildings with 10 or more apartments.

Building sizes vary widely. There are an estimated 9,000 buildings that are larger than 500,000 square feet, and 3.8 million buildings with less than 10,000 square feet-of which 2.8 million are less than 5,000 square feet in size.

The major economic drivers for space demand are changes in employment and economic growth (GDP). Both drivers were negatively affected by the Great Recession, and recovery has been slow.
• The dollar sales volume for core commercial space (office, retail, apartments, and industrial) declined to $52 billion in 2009 after reaching a high of $428 billion in 2007. The good news is that in 2010 there has been a slight uptick in commercial demand, with an estimate approaching $70 billion in 2010.
• Commercial leasing demand has declined for most property types over the past two years. Multifamily has been the only resilient property type to weather the economic recession, with that segment of the commercial market registering positive net absorption. However, rents have declined across the board.
• Commercial real estate prices have also declined from their peak. Currently both rental and sales prices for Class A office building space are recovering, but the recovery of the rest of the market has been somewhat slower. Commercial Real Estate Overview.