CoStar News Spotlights Trends, New Projects and Construction Entering (Or Leaving) the Commercial Real Estate Development Pipeline
In this week's issue, declines in construction costs
may finally be slowing down in the third quarter,according to an index released by Turner Construction. Equinix Inc. unveils plans
to build large data centers in San Jose, CA and the Washington, D.C. area; TrinityCare announces funding
for construction of a senior community in Tennessee; Clark Construction
wraps up work on a $54 million residence hall at George Washington University in Washington, D.C.; a developer
delivers 122,000 square feet of medical office space north of Indianapolis, IN, and Commonwealth Hotels
opens a Hyatt Place hotel near Salt Lake City Airport; CoStar Group
rounds up other recent land sales, building deliveries and development news from around the U.S.
CoStar Group's
In The Pipeline is a column on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project --
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Rate of Decline in Construction Costs Seen Slowing
Reflecting the near standstill in commercial real estate development, non-residential construction cost have fallen 10.77% since the beginning of the year, according to Turner Construction Co.'s Third Quarter 2009 Turner Building Cost Index. The good new is, the rate of decline seems to be slowing, with the index expected to fall about 2% in the current quarter from the previous quarter.
The Turner index is determined by nationwide factors such as labor rates, productivity, materials prices and market competition. In the first quarter the index fell 5.77% to 866, followed by a 3.35% drop in the second quarter to 837. The index is expected to stand at 820 at the end of the third quarter, down from 919 at the beginning of the year.
"With construction starts down in most sectors, market competition continues to drive declines in construction costs," noted Turner Vice President Karl F. Almstead, who is responsible for the Turner Building Cost Index, a forecast compiled by Turner Construction for more than 80 years. "However, global and domestic economies appear to be stabilizing. Countering the cost decline, material and commodity prices have generally remained level, with the exception of non-ferrous metals that have been driven up by global demand."
The index has increased each of the last 12 years since 1997, peaking at a 10.6% increase in 2006.
Turner also reported that mechanical and electrical equipment orders were also expected to be down 4.5% since the beginning of the year through the end of the third quarter, a trend expected to continue for the rest of the year. While a few products have remained at 2008 pricing levels, most have declined, with some manufacturers pricing equipment at or below cost, according to subsidiary Turner Logistics.
"We are also seeing lead times for equipment manufacturing to have improved by about two to four weeks," said Ben Kaplan, vice president and general manager of Turner Logistics. "As the economy stabilizes and new equipment orders are placed, we expect to see an increase in lead time production due to reduced plant capacities," Kaplan added.
Equinix to Build Data Centers in D.C., Silicon Valley
Equinix Inc. announced plans to build a 170,000-square-foot data center in San Jose, CA and a 152,000-square-foot facility in the Washington, D.C. area, two of the nation's most networked regions.
Foster City, CA-based Equinix will build its $145 million Silicon Valley data center on land it owns next to its flagship Silicon Valley-1 center in San Jose. Construction will proceed in two phases with a $100 million initial phase slated to open at the end of third-quarter 2010. The second phase will be built out as demand warrants.
The $100 million data center at Equinix's Ashburn, VA data center campus, where the company operates five other data centers, is scheduled for delivery next summer.
Equinix
recently delivered its fourth data center project in the Los Angeles region, a 177,000-square-foot center in El Segundo, CA aimed at meeting bandwidth needs of the city's entertainment and digital media companies. The projects are part of the company's three-year $1.4 billion plan ending running through 2010 to expand in 15 of the 18 markets in which it operates.
The company's D.C. campus, located in the Dulles Corridor, is experiencing strong demand from a customer base of expanding telecommunications, government and government contracting firms. The campus is also home to many of the region’s technology companies. Equinix’s existing five data centers in the Washington, D.C. market currently feature more than 470,000 square feet of data center space and access to more than 131 networks.
The new Silicon Valley center will provide much-needed capacity to a market where demand for bandwidth and connectivity has been rising significantly among Internet content and media, software and e-commerce firms. More than 74 networks currently operate across about 500,000 square feet of data center space in Equinix’s existing four centers in the Silicon Valley.
TrinityCare to Open Senior Center Near Knoxville, TN
Friendswood, TX-based TrinityCare Senior Living, Inc. has announced a funding agreement for development of an 82-unit, $10 million senior community in Seymour, TN.
The developer, manager and owner of faith-based senior living communities announced the execution of a funding agreement with Deutsche Bank Berkshire Mortgage, Inc. to develop Trinity Valley, the company's seventh senior living community, expected to open next year.
TrinityCare communities provide independent living, assisted living, memory care and adult day care services. The company, partnering with local churches and developers, has developed three communities in Texas and Tennessee and has funding commitments for four additional communities in the Southeast to be completed in 2010.
The company specializes in working with lenders providing federally guaranteed mortgage capital through Department of Housing and Urban Development (HUD).
"We expect funding agreements for additional new communities to be announced in the next several weeks," said Donald W. Sapaugh, chairman and chief executive officer of TrinityCare.
Clark Construction Completes $54M Student Dorm
Clark Construction LLC recently completed construction of a $54 million residence hall for students at George Washington University in Washington, D.C.
The 10-story, 195,000-square-foot building at 2135 F Street, NW, has living space for 474 students. In addition to 116 student living units, the building features a four-story underground parking garage with 180 spaces and landscaped courtyards.
Most of the units have four single bedrooms, two bathrooms, kitchen and a common area.
The project architect was a joint venture between DMJM of Washington, D.C., and Cox Graae + Spack Architects of Washington, D.C. DMJM also served as the project’s MEP engineer.
Jackson Commercial Delivers Medical Offices Near Indianapolis, IN
Community Health Network (CHN) and its developer, Jackson Commercial Real Estate, will hold a ribbon-cutting ceremony Oct. 8 for a new 122,000-square-foot medical office facility in Noblesville, IN, north of Indianapolis.
CHN will occupy 40,000 square feet of the three-story Hamilton Healthcare Campus, on the southwest corner of 146th Street and Cumberland Road. The newly-settled medical facility will include primary care services, provided by Community Physicians of Indiana; physician specialists; a MedChek; imaging services; rehab and sports medicine; a Community Conference Center for patient education and use by community groups.
Carmel, IN, based Jackson Commercial Real Estate also has offices in Phoenix, AZ. The firm's principals have developed about 10 million square feet of a range of property types, including industrial, office, residential, retail, medical facilities and general contracting.
Commonwealth Opens SLC Hotel
Commonwealth Hotels, Inc. today announced the opening of the 123-room Hyatt Place near Salt Lake City Airport.
Located at 52 North Tommy Thompson Drive, the Hyatt Place Salt Lake City Airport was developed and is owned by a subsidy of Corporex Companies, Inc., a master developer based in Covington, KY. The hotel is operated by Commonwealth Hotels, LLC.
Commonwealth Hotels currently manages over 2,100 rooms with 8 more hotels under development or construction.
More Land Sales and Developments
Bavar Properties Group LLC, based in Timonium, MD, acquired two parcels of land totaling 8.23 acres at 8420-8440 Upper Sky Way in Laurel, MD, from General Growth Properties Inc. The purchase price was nearly $3.13 million, or approximately $379,700 per acre. The property has about 500 feet of frontage on Upper Sky Way. Bavar plans to construct 129 apartment units and 35 town home rentals. Mark Thompson of Real Insite LLC represented the buyer, while Gabriel Chung represented the seller in-house. (By Melannie Skinner, CoStar COMPS #1737188)
BPG Properties has sold 5.53 acres of land off of Manor Drive in Chalfont, PA, to Orthopaedicare, formerly Orthopedic Specialty Center, for $3.2 million, or about $578,800 per acre. The land is in the New Britain Corporate Center, part of BPG Properties 62-acre master-planned office campus. Orthopaedicare plans to build a 33,000-square-foot office building on the land. Construction is slated to commence in October with an estimated delivery of May 2010. John Shelly of Cushman & Wakefield represented the seller, along with BPG's Robert Cook. Matthew Shanahan of Colliers Lanard & Axilbund represented OrthipaediCare in the transaction. (By Tanika Belfield-Martin, CoStar COMPS #1765886)
Corner Shops LLC sold one acre on Canada Road and Highway 64 in Arlington, TN, to private buyers for $2 million. The parcel is in the Northeast submarket and has a long-term ground lease to Regions Bank, as well as all utilities to site. Regions Bank plans to construct and occupy a bank building on the land. Construction has not yet begun. Dede Malmo, President of Malmo Memphis Real Estate Inc., represented Corner Shops LLC, while Bailey Wiener of Bailey Wiener Jr. Realty Co. represented the buyers. (By Michelle Waiters, CoStar COMPS # 1758562)
Frenzy Partners LLC purchased 2.3 acres of industrial land at 1300-1322 N. Lakeview Ave. in Anaheim, CA, from a private trust for $2.5 million. The land had been used as a contractors yard and included two separate office buildings totaling 6,000 square feet. It is currently zoned for light industrial. The buyer plans to hold the property for investment. Jeff Chiate, Rick Ellison and Randy Ellison of Cushman & Wakefield represented the buyer and the seller. (By Amber Jagers, CoStar COMPS #1737645)
Lakeland Farms LLC, an investment group led by Henkle Schueler & Associates, purchased a 130-acre industrial park in northern Kentucky from Al Neyer Inc. for $1.5 million, or about $11,538 per acre. The site is located off Lakeland Park Drive in Burlington in the Cincinnati International Airport submarket. Henkle Schueler plans to develop and sell about 20 industrial lots for manufacturing clients. Jeff Eichorn of Henkle Schueler represented the company in-house, while the seller was Jeffrey Bender of Colliers Turley Martin Tucker represented the seller. (By King Awonusi, COMPS #1761913)
Turley LP sold 50 acres of land to Edward Rose Development Co. LLC in Memphis, TN, for $4 million, or $80,000 per acre. The vacant land fronts Bill Morris Parkway, Forest Hill-Irene Road and East Shelby Drive. The buyer reported the land would be used for a planned unit development and multifamily senior housing. Richard Maxwell of Maxwell Co. represented Turley LP, while Kenneth Beal of Sutton Properties LLC represented Edward Rose Development. (By Michelle Waiters, CoStar COMPS #1750276)
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