CPN - January 2009 - (Page 24) DEVELOPMENT Continued from page 21 ATTITUDE ADJUSTMENT rapport with the lender and we’ve put our own capital into the project,” Orrico said. Plus, Wal-Mart Stores Inc. purchased its portion of the property, so the construction loan covered the balance of the center. “The fact that this is a Wal-Mart-shadow-anchored center was important,” he stated. And those pursuing growth sectors are, of course, keeping busy. Lillibridge, which focuses on medical-facility development, had a busy 2008, and senior vice president John Montgomery expects such activity to extend into 2009. Among other specialties, the firm develops outpatient facilities for hospitals, which are garnering increasing interest from hospital systems. “Rather than spending a week in the hospital, some patients can get treatment by making trips to an outpatient center,” Montgomery said. “It’s the most cost-effective way to deliver health care.” But even developers that are not pursuing such niches can prepare to take advantage of good news when it comes along. Gibson Development, which develops medical-office condominiums, industrial properties and mixed-use projects in South Florida, switched from speculative building to fee development as rising land and construction costs made profits harder to come by, reported president Ford Gibson. But the tide may be turning. “We’re seeing some sharp reductions in construction costs: Some are 15 percent lower than six months ago,” Gibson said. Quartararo forecast that construction costs could fall 8 to 10 percent in 2009, owing to falling commodity prices. And unions may be willing to show some wage flexibility in order to get their members back on the job, he said, wondering,“Will that mean that developers will feel this is the time to get going on projects again and get back into the market?” —Reach senior editor Eugene Gilligan at eugene.gilligan@nielsen.com. MULTI-FAMILY Continued from page 7 SHADOWBOXING Still, the nation’s economic woes may yield at least some benefit for Phoenix, according to Goff.“It’s the No. 1 start-over market in the U.S.,” he said.A worker who lost his job in a Michigan automobile assembly plant, for example, may well be attracted to the Southwest’s weather and Phoenix’s employment prospects and cost of living, which is lower than, say, Southern California. LAS VEGAS ROLLS DICE ON LATE 2009 Apartment investors build in risk premiums when making bets on Las Vegas properties, Goff noted of another housing-challenged desert metropolis.An apartment that would sell for a 6 percent cap rate in Phoenix would likely sell for a 7 percent cap rate in Vegas, a market that depends heavily on the hospitality industry. The Las Vegas apartment market is, however, showing positive signs. Occupancy increased for each of the first three quarters of 2008, hitting 93.7 percent at the end of September, the most recent data available. That is up from the 92.3 percent recorded for the fourth quarter of 2007, according to Applied Analysis. Many renters are opting for the relative safety of professionally managed apartments over single-family homes, which could be in danger of foreclosure, said Applied Analysis principal Brian Gordon. Some apartment owners are targeting casino employees who might otherwise be tempted to rent single-family homes, distributing flyers, which sometimes offer discounts, to large casino hotels’ human resources departments, Goff said. Las Vegas’ apartment sector should also gain strength in the second half of 2009 if the U.S.economy stabilizes and the mammoth City Center mixed-use project on the Strip opens as scheduled. Gordon noted that the MGM MIRAGE project will be a huge job generator. —Reach multi-family editor Eugene Gilligan at eugene.gilligan@nielsen.com. Free, Is the Sky Falling on Commercial & On-Demand Multi-Housing Property Developers? Webcast Get an In-Depth Look at the Federal Bailout Plan & How It Impacts Your Business The U.S. financial market is enduring one of the worst crises in its history. The investment banking model as we know it is effectively gone, and many commercial banks are spiraling downward, as well. Join Commercial Property News, Multi-Housing News and Contract for this on-demand Web seminar and hear from leading economists how the current financial bailout strategy will impact your business. Attend this online-only event, and learn how to protect your investments and navigate through this challenging environment. Presented by Presenting Economists: Sponsored by Sam Chandan Ph.D. Chief Economist, Reis Inc. Jon Southard Richard Green Director of the USC Lusk Principal Director of Forecasting, CBRE Torto Wheaton Research Center for Real Estate To register for this FREE Webcast, go to www.cpnonline.com/economicwebcast 24 Commercial Property News • January 2009 • www.cpnonline.com http://www.cpnonline.com/economicwebcast http://www.cpnonline.com/economicwebcast http://www.cpnonline.com
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