White Oak apartments, Henrico County, Virginia

On January 14, the Henrico County Planning Commission will hear the request of White Oak Crossing Acquisition, LLC to rezone approximately 30 acres comprising the northwest quadrant of I-64 and Laburnum Avenue. The maximum unit count is 350. According to the SCC, the registered agent (applicant) is John Grier who is located in Carytown.

2010: The Year Not to Sell Commercial Real Estate

PriceWaterhouseCoopers and the Urban Land Institute conduct interviews and surveys every year to guage market sentiment for the coming year. For 2010, over 900 market particpants responded. Here are summary highlights:

(1) 2010 will be the worst year in the report’s 30-year history for investors to sell. Conversely, buyers with cash will be presented with better opportunities that in 2009.

(2) Lending will continue to be extremely strict.

(3) Rents and occupancies will continue to fall, with recovery not expected until late 2011 or 2012.

(4) Retail and office will experience the greatest demise. Apartment properties will experience the quickest recovery.

(5) The housing market will stabilize despite persistent foreclosures. Residential lending will likely be strict.

(6) New construction will be infeasible due to “bargain-basement” existing inventory sinking below replacement cost. Developers are expected to “…close up shop, hit the links, convert operations to asset and property management, or become a workout specialist like everyone else.” This forecast for developers isn’t just for 2010, it’s for 2011 and 2012!

(7) Buy beachfront condos in overbuilt prime resort areas.

(8) Buy land, particularly infill sites in prime areas. Although respondents anticipate a 5- to 7-year hold, land prices are not expected be this cheap, ever again.

(9) Public REITs which avoided overleveraging will stabilize in 2010, recapitalize, and lead real estate recovery.

(10) National markets by geography: Washington DC, NOVA, and Norfolk/Virginia Beach, rank among the top areas NATIONALLY for commercial investment, commercial development, and residential homebuilding prospects in 2010 and the near term. Unfortunately, these and nearly all areas received marks below “fair”

(11) 2010 will usher in value losses of 40-50% for many property types from their 2007 highs

Needless to say, there was very little (if anything) positive about the coming 24 months.

Charlottesville PUD—->State Park?

As reported by the Daily Progress, the 1,231-acre master-planned community just south of the City of Charlottesville could become a State Park. According to the developer Hunter Craig, approximately 3,000 of the 3,100 permitted homes were planned, 2,200 of which would be attached units involving townhouses, condominiums, and apartments. An additional 150,000 square feet of commercial area are planned, mostly involving neighborhood ancillary uses. Proffers for the project included an up-front cash payment of $1.0 million to support a joint City-County transit authority, a revenue sharing plan, the aforementioned park system, $1.8 million for athletic fields, construction of a new school, $17,500 per single-family detached unit, $11,900 per townhome unit, and $12,500 per multi-family unit. The total value estimate of the proffers (both cash and non-cash) from the developer amounts to approximately $30,860,000.

Although City officials seem generally displeased, I imagine that the community in general is ecstatic.

Commercial real estate loans are coming!

As reported in the Times Dispatch, Xenith Bank (soon to be Xenith Bankshares) will soon become a lending reality in Richmond. These guys (Gaylon Layfield, Chris Cottrell, Dixon Wallace, etc.) are going to be bringing some money to Richmond’s commercial real estate market.

Richmond’s position in real estate cycles, Q3 2009

Dividend Capital Research’s quarterly cycle monitor was released yesterday. According to the report, all commercial property types in the Richmond area are mired in the “Recession” phase of the real estate cycle. No surprises for us I guess.

Commercial real estate loan work-outs, Richmond, Virginia

Andrew Little reports in today’s Richmond Times Dispatch that the FDIC has come out with a 33-page advisory document on how banks can assist commercial real estate owners with maturing loans. The document presents a variety of scenarios for several commercial property types, and instructs lenders how to handle each scenario. One of the dominant themes, although not explicitly stated, is that the FDIC wants lenders to have updated appraisals. In the one or two scenarios in which the financial institution made internal changes to an outdated appraisal, the FDIC slapped their hand.

FDIC opinion on prudent commercial loan work-outs

Booze, gambling, debauchery, Richmond, Virginia

Now that I’ve got your attention, please come down to the Science Museum of Virginia tonight at 6:30. For $25, you can partake in an open bar (wine and beer), food from Groovin’ Gourmets, charity casino games, plus plenty of door prizes (bring a business card). The event benefits Elderhomes. The majority of attendees are real estate participants in the Richmond MSA.

Charity casino night at the Science Museum of Virginia

Richmond Rapport and the Universe Society are hosting a party next Thursday in the main atrium of the Science Museum. Tickets are $25 and include open bar and heavy appetizers from the Groovin’ Gourmet. For information, visit www.richmondrapport.com.

Roll2Rebuild09

Federal Reserve on Richmond (area) commercial real estate

The Federal Reserve “Beige Book” is a summary of qualitative data, i.e., interviews, from each of the twelve districts regarding economic conditions. Below is the most recent Beige Book data for the Richmond District (Maryland, Washington DC, West Virginia, Virginia, North Carolina, and South Carolina), dated October 2009:

Real Estate (Commercial)

 

While commercial real estate activity in the District remained depressed, most real estate agents reported signs of improvement over the last month at least in terms of expressing interest in long-term expansion. One agent noted an increase in foot traffic from retailers interested in developing new sites next year. Few were willing to commit yet, but an increasing number were revisiting earlier expansion plans that had been put on hold over the last year. Industrial real estate activity in most areas of the District was often described as “dead,” and new construction of industrial or office buildings was further deterred by difficulty obtaining financing. Small business startups in Northern Virginia were also having trouble getting financing, often due to an inability to meet higher down-payment requirements.

American Family Fitness facilities proceeding, Chesterfield County, Virginia

Structural steel for the new American Family Fitness is going up at 13201 Midlothian Turnpike. Also, the proposed redevelopment of the old Kroger at Chalkley and Iron Bridge roads is reportedly still on. The developer expects to close on the property mid-November, and deliver an operational facility to AFF by April 2010.