CoStar News Spotlights Trends, New Projects and Construction Entering (Or Leaving) the Commercial Real Estate Development Pipeline
In this week's In The Pipeline, the Architecture Billings Index, a leading indicator of future nonresidential construction spending, rises for a second straight month
in March. In lower Manhattan, four developers are said to be interested in a minority stake in the 104-story glass tower formerly known as Freedom Tower
at Ground Zero; Capital City Partners plans to build a 15-story office tower
in Austin, TX; and a joint venture has closed the purchase of the former Ireland’s Inn beachfront
in Fort Lauderdale, FL.
In multifamily news, the first units of a 315-unit apartment project near Salt Lake City are set to deliver this summer;
the U.S. General Services Administration will be the first to take space at the Parc 114 Near Dallas Fort Worth Airport
, and in retail, a shopping center will rise in the Hunting Park West section of Philadelphia
at the site of the former headquarters of Tasty Baking Co.
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 -- and sign up to be added to our distribution list
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Rise in Architect Billings Could Show Turn in Development Market
In evidence that the demand for architects and other design services by developers may be starting to recover, a leading indicator of future nonresidential construction spending rose for a second straight month in March. However, the Architecture Billings Index shows that demand for architect services remains in contraction overall, despite the 1.3-point rise in March to 46.1.
After dropping for two months, an index of inquiries for new projects released along with the billings index by the American Institute of Architects (AIA) rose six points in March to 58.5. A number above 50 indicates expansion in demand, while an index below 50 point shows declining demand. The billings index reflects a lag time of about nine to 12 months between architecture billings and actual construction spending. The March billings index, up from 44.8 in February, is the highest since August 2008.
AIA Chief Economist Kermit Baker called the March reading "an encouraging sign that we could be moving closer to a recovery phase," though he cautioned that conditions are volatile and signals remain mixed in different markets around the nation.
"Firms are still reporting an unusual amount of variation in the level of demand for design services, from improving to poor to virtually non-existent," Baker said. "This increasing volatility is often a sign that overall business conditions may begin to change in the coming months."
The index edged over 50 to 50.5 in the Midwest region. However, the index remained in negative territory in the Northeast (47.0), West (46.0) and South (44.4).
4 Developers Said to Be Interested in WTC Project Stake
With competing visions and opinions about its proposed scale and design, the 104-story glass tower formerly known as Freedom Tower in Manhattan hasn't always enjoyed the best press.
However, now that the tower is rapidly going vertical at Ground Zero, several major developers say they are interested in buying a minority stake in the development and taking over leasing of the $3.1 billion project. Four developers submitted offers last week to the Port Authority of New York and New Jersey for 1 World Trade Center, according to the New York Times.
In addition to Related Companies, those interested in the $100 million stake include the Durst Organization, Hines and Mort Zuckerman, CEO of Boston Properties, the newspaper reported.
The 1,776-foot, obelisk-shaped tower located in lower Manhattan at the northwest corner of the 16-acre World Trade Center site bounded by Vesey, West, Washington and Fulton streets is scheduled for completion in 2013, with topping out estimated at late next year.
The tower is expected to include 2.6 million square feet of office space, an observation deck, a world-class restaurant, parking, and broadcast and antenna facilities. The project includes below-ground tenant parking and storage, shopping and access to subway trains.
Capital City Plans 15-Story Office Tower in Austin
Capital City Partners LLC plans to build Park Plaza, a 15-story, 189,000-square-foot, predominately Class A office building at the northeast corner of West Cesar Chavez Street and Lamar Boulevard in Austin's central business district. Ground break is planned for as early as this October with an anticipated delivery date of April 2012.
The project would feature approximately 10,000 square feet of retail on the ground floor and 179,000 square feet of office. It will be built along Lady Bird Lake on the Sandy Beach tract. The site is described as development ready which means construction could commence immediately. It would be the first major office project built in the CBD since Frost Bank Tower broke ground nine years ago.
Susman Tisdale Gayle of Capital City Partners is currently working on design and architectural services. Construction Services of Texas will be the project manager. (By Samantha Mrozinski)
JV Closes Purchase of Ft. Lauderdale Redevelopment Site
A venture including Jorge Perez of The Related Group and a foreign investor has closed the purchase of the former Ireland’s Inn beachfront redevelopment site in Ft. Lauderdale, FL, acquired from the original partnership for $27.1 million.
Under an agreement with the existing lender, the new partnership bought the 4.6-acre site at 2220 North Atlantic Blvd. from the original developer, a partnership between Fortune International/the Ireland family/Fairwinds Group. The Miami office of HFF (Holliday Fenoglio Fowler, L.P.) closed the joint venture and sale.
Fortune International/Ireland family/Fairwinds Group retained a partnership interest in the new venture and will be involved in the development of the site about four miles from downtown Ft. Lauderdale, which is entitled for the development of up to 622,178 square feet of residential, hotel and/or retail uses.
The HFF Miami team was led by Executive Managing Director Manny de Zarraga and director Ike Ojala, who marketed the redevelopment site.
Apartment Units South of SLC to Deliver This Summer
Western National Properties expects the first units to be available this summer in the development of a 315-unit apartment project in the Daybreak community master developed by Kennecott Land in South Jordan, UT, in the greater Salt Lake City area.
The Crossing at Daybreak, Western National’s first project in Utah, represents the second investment by Western National Realty Fund II, L.P. (Fund II), the group’s second private equity fund, with approximately $230 million of equity commitments. Fund II, which includes high-net-worth and institutional investors, is focused on multifamily acquisition and development projects.
Western National Properties is a subsidiary of Western National Group, based in Irvine, CA. Since Kennecott Land began construction of the Daybreak community in 2004, developers have completed more than 745,000 square feet of commercial space and nearly 2,300 homes. Daybreak will eventually total about 20,000 homes plus retail, office and industrial properties.
Next year, a light-rail line will open near Crossing at Daybreak connecting residents to downtown Salt Lake City.
GSA Signs First Lease at Parc 114 Project in Irving
The U.S. General Services Administration (GSA) has signed a 15-year lease for about 30,000 square feet of flex space at Parc 114, a project in Irving, TX, which is slated for delivery in December.
Development and investment company Jackson-Shaw said Parc 114 is one of the only speculative projects currently under way in the Dallas-Fort Worth market. The GSA is the first tenant to sign a lease at Parc 114, a multi-phased, flex-warehouse development on land bordering DFW International Airport.
"For a sub-market that has historically delivered around 2.5 million square feet per year, this is big news," said Chris Jackson, a managing partner with Stream Realty Partners, which is marketing the property. "As demand continues to improve, tenants that prefer projects with the quality and image a corporate campus like Parc 114 offers will have fewer options."
The project, a joint-venture between Jackson-Shaw and Tokyo-based ORIX Real Estate Capital, Inc., will ultimately consist of nine buildings containing nearly 600,000 square feet of space.
Parc 114 was developed under the direction of Nunley and was built by MYCON General Contractors. GSR Andrade served as the project architect. The development is exclusively represented for leasing by Jackson, Bob Hagewood and Blake Kendrick of Stream Realty.
Groundbreaking Begins for Saft's $200M Battery Plant
Saft Group, a French-based battery manufacturer broke ground last month on a $200 million, 235,000-square-foot plant at the Cecil Commerce Center in Jacksonville, making it the 16th manufacturing plant site for the company.
The Jacksonville location is expected to produce $300 million worth of lithium-ion batteries on an annual basis. Saft anticipates marketing the lithium-ion batteries to the aviation, telecommunication and military industries
Jacksonville was agreed upon as a prime location for the company due to easy access to major highways and rail lines and its close proximity to the U.S. Navy-trained work force. Federal funding of $95.5 million was awarded in the construction of the battery plant, contingent upon Saft's promise to employ 280 workers over the next six years. The locally based Haskell Co. is set to conclude the building of the plant in 2012. (By Erin Rosenthal)
New Assisted Living Facility Coming to Greensboro
HHHunt Assisted Living Inc. purchased the 12.44-acre lot at 5125 Michaux Road in Greensboro, NC, from Granite/Battleground 6 LLC, for $1.88 million, or about $150,700 per acre.
The property, which is zoned CU-PDM, is located at the corner of Haynie Manor Lane and Michaux Road. According to buyer, the property will be the future site of an assisted living home.
Brokerage involvement could not be confirmed. (By Tina Asah, CoStar COMPS #1898806)
Grocery-Anchored Shopping Center Planned for Former Tasty Baking Site
Metro Development Co. proposed a new 145,000 - 170,000-square-foot retail project in the Hunting Park West section of Philadelphia. The development is planned for the site of the former headquarters of Tasty Baking Co.
The $30 million project would be delivered in two phases on the 20-acre site. The first phase features a grocery-anchored strip center with pad sites and the second phase includes big-box retail and smaller stores. Groundbreaking could commence in fall 2010, pending approvals, with tenants in building by fourth quarter 2011.
US Realty Associates is leasing the project. (By Joelle Dennard)