SOURCE: PR News Wire

A building renaissance is under way, as architects and developers seek ways to make office space more environmentally friendly and cheaper to operate.

Progressive Investor, a monthly investment newsletter, identified six forces that are contributing to the acceleration of the demand for greener designs. Developers and office building owners are seeking to reduce their energy expenditures. Building green no longer costs more. Tenants have a preference for green buildings which make for happier employees and reduced operating costs. Major corporations are developing greener policies and building highly visible green headquarters. Legislative mandates to build green are growing, and leading realtors don't want to be holding obsolete portfolios of inefficient office buildings.

Rona Fried, Progressive Investor CEO said "Industry leaders are creating criteria for certification and integrating green building into the appraisal process and into broker databases." It's a good step in the right direction, as a recent United Nations study concluded that green buildings can do more to fight global warming than all curbs on greenhouse gases agreed under the Kyoto Protocol.

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SOURCE: The Federal Reserve Board

The latest edition of the Federal Reserve's Beige Bookreleased last Wednesday (6/13/2007) repeatedly gave evidence of strength in the commercial real estate market; two excerpts from their summary report are cited below.

"There was continuing weakness in residential real estate and construction but increasing strength in the commercial real estate sector, including both office and industrial space. Half the District banks reported little or no change in overall loan demand, with strength in commercial lending and weakness in residential mortgages and consumer lending."

"There was widespread improvement in commercial real estate markets in recent months. More than half the Districts reported that leasing activity was picking up in most of their major markets and vacancy rates were falling. Boston, New York, Philadelphia, and San Francisco also mentioned increases in office rents. Four Districts (Philadelphia, Richmond, Minneapolis, and Dallas) reported strong demand for industrial space, especially warehouse space. Chicago, on the other hand, reported that industrial warehouse development was sluggish. All the Districts that mentioned commercial construction activity gave positive reports."

The Beige Book, also known as the "Summary of Commentary on Current Economic Conditions by Federal Reserve Districts" is a concise rundown of the national economy by sector for each of the twelve Federal Reserve Districts.

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SOURCE: MIT Center for Real Estate & Real Capital Analytics, Inc.

The Massachusetts Institute of Technology, long famous for science, math and engineering, stretched their research arm and analytical acumen into commercial real estate back in 1983 when they founded the "MIT Center for Real Estate".

One of their cornerstone pieces of analytical work has been their Commercial Property Index (Really 29 separate Indices) which they launched in February of last year, it's based on the Real Capital Analytics database which attempts to collect, on a timely basis, price information for every commercial property transaction in the U.S. over $2,500,000. The index uses no appraisal valuations, it's based purely on transaction price data.

The "RCA-Based Commercial Property Index " shows breakouts for the four major property types of Apartment, Industrial, Office and Retail by National, Regional & Metro views in Monthly, Quarterly & Annual frequencies.

The latest updates released yesterday show the Commercial Real Estate Bull still moving forward in nearly all of the 29 statistical reports.

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SOURCE: The National Association of Realtors®

According to the June CREO (Commercial Real Estate Outlook) from the National Association of Realtors® $157.8 billion was invested in US commercial real estate in the first four months of 2007; more than 60% ($95 Billion) of this total transaction volume was from the Office sector. The Retail, Multi-family & Industrial sectors combined didn't even come close. Transaction volume was the highest in the Manhattan, Chicago, Northern Virginia and San Francisco Markets.

The report also noted 53 percent of the office building purchases were by Equity funds and that nearly 78 million square feet of new space will be added to the nation’s office market by the end of 2007. These substantial commitments indicate Wall Street and commercial builders are still betting on sustained growth in the Office Buidling Financing sector.

The Commercial Real Estate Outlook (CREO) is NAR's flagship commercial research publication and is produced quarterly.

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SOURCE: UCLA Anderson Forecast

The "Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey" polled a panel of California real estate professionals in the office space and investment market; their conclusion was rental rates for office space in Los Angeles will continue to increase and vacancy rates will continue to decline. This healthy commercial real estate market is projected to exist for the next four years.

The survey was a major focus of the June 2007 Economic Outlook Conference held at UCLA on June 19th. The event was subtitled: "Tip of the Iceberg or No Need to Panic? What to Expect From Residential and Commercial Real Estate".

Future surveys by UCLA Anderson Forecast will focus on industrial and retail markets in California.

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