Alterra BUZZ

The rebound in office-using jobs is spreading to smaller businesses, which dominated office leasing activity during the first quarter of 2012. The continued positive absorption, coupled with dwindling supply of available space, is setting the stage for resumed rent growth in U.S. markets over the next few years, CoStar Group reported this week in its First-Quarter 2012 Office Review & Outlook.

Though weaker than in recent quarters, office space absorption in the U.S. held steady at 11 million square feet in the first quarter while the national office vacancy rate fell 10 basis points to 12.7%, according to the report presented to CoStar clients by Walter Page, director of research for Property and Portfolio Research (PPR), CoStar’s analytics and forecasting division, and Jay Spivey, CoStar senior director of research and analytics.

While overall job growth has been less than expected, the economy is converting the number of temporary jobs to permanent fulltime jobs at a faster clip and employees are working a greater number of hours on average, trends that bode well for office demand and rent growth over the next three years, the CoStar economists reported. If job forecasts hold up, the unemployment rate will fall to its long term of average of below 6% by 2015.

For the first time in several years, none of the top 20 U.S. office markets reported job losses, with hiring especially strong in energy markets such as Houston and Dallas/Fort Worth, and technology markets such as San Francisco, San Jose and Denver.

Meanwhile, rising energy prices are causing a parallel increase in construction costs. This trend, combined with higher interest rates required to support new office construction, will likely curtail the level of new supply until rents begin to justify new supply, buying more time for vacancies to decline further, Page said.

The 11 million square feet in total absorption, while comparable with historical average, declined over the last couple of quarters and remains far below levels from the mid-2000s, when 30 million to 40 million square feet per quarter in office space absorption was routine. Despite solid job growth, office landlords and their tenants continue to hold a large amount of so-called shadow space, unused but not officially listed as vacant.

Gross leasing activity, the type of metric broker commissions are based on, is projected to be nearly 120 million square feet in the first quarter.

“Rents have come down, space is cheap relative to history, and companies are taking advantage of that to move, upgrade or expand into new space, and we’ve seen steep increases from the bottom of the market in 2009,” Spivey said. “These leasing levels rival what we saw in the 2000 dot-com period.”

Leasing is now dominated by smaller tenants, with over 50% of transactions involving blocks of space measuring 2,000 square feet or less in 2011. At the same time, large tenants are very rare in the market, with transactions over 50,000 square feet representing less than 1% of total activity, according to new data generated by PPR and CoStar.

“Roughly half of the tenants in the CoStar database occupy between 2,000 square feet and 20,000 square feet, and that’s the sweet spot of liquidity within the office sector,” Page said.

Tenants are also becoming more efficient in their real estate usage, with footprints on new leases down 6% over the last 10 years. While Class A tenants have seen a modest 3% increase in square footage, the amount of Class B space taken is down by 5% and Class C space down 13%.

CoStar and PPR project the national vacancy to decline to 10.5% by the end of 2015, with the corresponding increase in occupancy leading to boosts in NOI, rent growth and other factors that tend to boost property values. Meanwhile, the supply pipeline will remain at low ebb until 2015, and occupancies should continue to rise ever in the event of a spike in energy prices or a meltdown in the European economy.

Tenants, finding a scarce supply of Class A property, are starting to gravitate to Class B buildings, and smaller tenants are back in the market — both indications of a broadening of the recovery that’s helping more employers hire more workers.

It’s not a big hook to hang a hat on, but the small increase in some commercial real estate loan balances on bank books at the end of the year serves as yet another indication of thawing lending markets for property investors.

Overall loan balances on bank books posted their largest real growth in four years, according to year-end numbers released this past week by the Federal Deposit Insurance Corp. (FDIC).

As far as CRE lending goes, it was a 50/50 split between good and bad news. Total loans outstanding for owner-occupied CRE and multifamily properties saw a modest increase year over year — from $452.6 billion to $457.2 billion for owner-occupied and from $212.7 billion to $218.5 billion for multifamily.

However, those small increases were offset by a minor dip in multi-tenant CRE property loan balances from $550 billion to $543.8 billion, and another huge drop-off in construction and development lending — from $321.5 billion to $240.2 billion.

Take out the 25% year-over-year decrease in construction and development loan balances and CRE loan balances increased $4.2 billion. This isn’t much but it was the first such increase since 2009.

Total assets of insured institutions increased by $76.1 billion (0.6%) at year-end 2011, as loan balances rose by $130.1 billion (1.8%). This was the third consecutive quarter in which total loan balances increased.

Residential mortgage loans also increased by $26 billion (1.4%), following a $23.6 billion increase in the third quarter.

Investment securities portfolios increased by $61.6 billion (2.2%), with mortgage-backed securities rising by $45 billion (2.8%).

One other bright side to the loan numbers for the CRE industry was that overall loan growth was led by commercial & industrial (C&I) business loans, which rose by $62.8 billion (4.9%), accounting for almost half of the total increase in loans and leases during the quarter. C&I loans have increased in each of the last six quarters.

C&I loans to small businesses (C&I loans in original amounts of $1 million or less) increased by $2.8 billion (1%). This is the first time in the seven quarters for which data on quarterly changes in these loans are available that small C&I loan balances have increased.

The latest Federal Reserve survey of senior bank loan officers, known as the Beige Book, sheds a little more color on the sentiment and markets behind the CRE and business loan increases.

Lending Conditions Still Weak in the Southeast

Reports on banking conditions were generally positive across the Federal Reserve’s 12 banking districts. Lending increased to varying degree in the New York, Philadelphia, Richmond, Chicago, Dallas, and San Francisco districts. Lending was little changed in St. Louis and Kansas City; while loan demand was described as weak in Richmond and soft at regional banks in Atlanta.

Demand for business credit was flat to slightly higher in Cleveland and increased slightly in Richmond, San Francisco, and at some large banks in Atlanta. Dallas reported strength in middle-market and large corporate lending, and Chicago noted that business loan growth continued at a moderate pace.

Demand for residential mortgage loans increased in New York, Richmond, and Kansas City; mortgage demand was flat to moderately stronger in St. Louis and softened in Kansas City. Cleveland noted increases in requests for commercial real estate lending, while contacts in Chicago and San Francisco noted improvement in the availability of credit for this sector. Meanwhile Philadelphia and Kansas City reported flat or steady commercial real estate lending.

Demand for commercial real estate loans was flat to moderately stronger in St. Louis.

Overall lending standards remained restrictive in San Francisco and Richmond and were largely unchanged in St. Louis and Kansas City. Lending standards tightened further for commercial borrowers in New York. Credit conditions in Chicago improved slightly, while quality improved in Philadelphia and Kansas City. Delinquencies were steady or declined in Cleveland. Mortgage delinquencies were steady in the New York District but delinquencies decreased in other loan categories.

Health Care, Energy, Multifamily Spurring Demand

In the Cleveland district, demand for business credit was described as either stable or slightly higher. Requests were being driven by commercial real estate, including spec building, and health care. Any drop-off was attributed to seasonal factors.

In the Richmond district, while most construction loans other than for multifamily buildings remained limited, several bankers reported an increase in loans for owner-occupied facilities and their furnishings (mostly to medical professionals). Credit standards remained tight, but most bankers reported that their lending targets were increasing this year, even though competition for quality loans was intense.

In the Atlanta district, several large banks noted some growth in outstanding C&I loans; in part, a result of loan acquisitions from other institutions and continued growth in areas such as energy and health care.

In the Chicago district, improvements in the availability of credit were noted for commercial real estate, particularly for large apartment buildings. Banking contacts indicated that loan growth continued at a moderate pace with demand from larger businesses being stronger than that from small to mid-sized companies. Even though contacts thought the economic outlook was more positive, they indicated that borrowers and investors remain cautious, citing uncertainty about future tax code changes and risks abroad, in particular those emanating from Europe.

In the Kansas City district, the majority of bankers reported improved loan quality compared with a year ago, and many bankers expected loan quality to improve further during the next six months.

In Dallas, financial firms reported a modest uptick in loan demand. National banks reported strength in middle-market and large corporate lending activity, and several regional banks noted energy-related activity was robust. Loan pricing remained moderately aggressive, loan quality continued to improve and problem loans were declining. Respondents noted they were willing to make loans, and borrowers’ financial positions were reportedly better than last year.

Reports from the San Francisco district suggested that businesses generally remained very cautious in regard to capital spending decisions, but many continued to invest in information technology equipment aimed at enhancing productivity. Moreover, many businesses expect to modestly increase their capital spending in the first half of the year compared with the second half of last year, suggesting that growth in business loan demand may continue. The reports also noted continued stiff competition among lenders to extend credit to well-qualified small and medium-sized businesses, placing further downward pressure on loan rates and fees. Strong recent financial performance by technology companies backed by venture capital reportedly has spurred further investments of late.

By Mark Heschmeyer 

CRE sale prices stalled a bit in December as heavy year-end trading kept pricing stable in the fourth quarter, a trend CoStar has observed in each of the past two years, according to this month’s release of the CCRSI, which tracks sale pair transaction data through Dec. 31. The National Composite Index ended 2011 up a flat 0.2% from year-ago levels, but 5.5% above its low point in March 2011, thanks to a mid-year surge.

The Investment Grade and the General Commercial indices of the CCRSI both followed a similar trajectory in 2011, with prices declining in the first quarter, rallying at midyear and coasting during the flat final quarter. Highlighting the investor flight to safety to major markets and core assets, the Investment Grade Index finished December up a cumulative 14.6% from its March 2011 trough, while the recovering General Commercial Index ended the year up 3.5% from March.

The impact of distressed property transaction on pricing levels was blunted by a surge in non-distressed property trading in the fourth quarter, although the volume of distressed trades remains high.

CoStar this month also introduced new quarterly pricing indices for hospitality properties and commercial land in addition to office, industrial, multifamily and retail, the four major CRE properties types. Both hotels and land ended 2011 near cyclical lows.

Reflecting a disproportionate level of distress, the Hospitality Index remained 47.6% below its third-quarter 2007 peak — the widest gap among the six property types — despite improving occupancies and revenue per available room (RevPAR). As a percentage of the total sales pairs, the level of distressed hotel property transactions ranks at the top among all commercial property types and has not yet begun to decrease significantly, tamping down average hotel sale prices.

Likewise, the Land Index finished 2011 down a cumulative 41% from the peak of the last cycle, and has not shown any tangible recovery to date following three years of quarterly declines, although losses appear to be easing.

The multifamily index has now grown by a cumulative 21.6% since the bottom of the cycle, outperforming the second-ranked office sector by more than 400 basis points. Renter demand has eclipsed supply, causing vacancies to contract by 170 basis points over the past two years, prompting rental rate gains. Strong property level income growth expectations by investors appear to be baked into the heightened pricing of current transactions.

Investor interest in office property also rebounded in 2011, with the office property index increasing by 17.3% since the end of March 2011. Like the recovery of the broader economy, the office rally has proved to be volatile and uneven despite the significant firming up of prices.

“Pricing gains have proven to be more explosive in tech-centric markets than in the overall market,” according to the CoStar CCRSI report. “The office index will likely continue to vacillate between gains and losses until office demand growth becomes more evenly dispersed across markets.”

Industrial property pricing increased by just 4.4% since March 2011, and was down slightly in the fourth quarter compared to year-ago levels.

Retail is the notable exception to the recovery story to date. Shopping center fundamentals remain soft despite an improving economy and a burst of pent-up consumer spending that has pushed retail sales above the peak of the last cycle. Bucking the trend, power centers and super regional malls have seen gains in tenancy gains over the past year, which could signal a coming turnaround in retail pricing, according to the CoStar report.

Larger and higher-quality properties generally outperformed the market in timing and magnitude of prices improvement, mirroring the growth in CRE fundamentals over the past year. Prices for investment grade properties stabilized at the end of 2009, more than a year ahead of price stability in the general commercial properties. The Investment Grade Index gained 3.4% in 2011, compared with 0.2% for the General Commercial segment.

While the volume of distressed transactions in December remained well above the monthly average for the year, the percentage of distressed trades fell from 35.4% in March 2011 to 24.8% in December, helping push up the National Composite Index.

Hampering the market recovery is the continued softness in levels of real estate lending. Mortgage originations fell by 7% in the fourth quarter from the previous quarter, according to the quarterly survey by the Mortgage Bankers Association (MBA).

The Northeast Composite Index, powered by the exceptional rebound in multifamily and office pricing, gained 12.3% from the market bottom, ending 2011 only 14.3% below the peak of the last boom cycle, reflecting an investor preference for the best assets and densely populated coastal markets. Pricing in the South, Midwest, and West regions is recovering at a more moderate pace, with the indices for each region finishing December 2011 down between 34% and 39% from the market peak.

However, the West won as the most improved region of the country, with the composite index advancing by 5.8% in 2011, compared with a 4% gain in the Northeast, a 2.2% gain in the Midwest, and a 6.9% loss in the South.

“Barriers to supply in the West have improved the marketability of CRE assets in this region as investors branch out to seek opportunities beyond the core coastal Northeastern markets,” CoStar said in the report.

In other CCRSI regional results among specific property types:

• Apartments were the only index to record positive gains in 2011 across all regions, while office recorded the second-best growth rate in 2011, with regional gains ranging from 8% in the West to 11% in the Midwest and Northeast.
• The South, the only region to record a loss on the overall composite index in 2011, recorded a 4% pricing loss in office.
• Retail, universally the worst performer, experienced losses ranging from 1.2% in the West to 10.3% in the South in 2011 prices.
• Fourth-quarter results in the Top 10 Largest Metro indices reflected the investor preferences for the best properties in the top markets. The Office Top 10 Largest Metro Index gained 23.8% since the trough of the last cycle as of the fourth quarter, significantly outperforming the 17.3% of the National Office index.
• The Multifamily Top 10 Index recovered 25.6% from its trough, compared with 21.6% in the overall multifamily index.
• The industrial and retail Top 10 Largest Metro Indices, however, underperformed their national counterparts. The Industrial Top 10 index declined by 11% compared with a 2.9% decline in the national index, while the retail top 10 metros also proved to be drag on the National Retail Index, with quarterly and annual losses nearly double the national average.

By:  Randyl Drummer – reprinted from CoStar Group Newsletter

Office sales increased steadily through 2011 over the previous year as investors sought to get ahead of the curve, with investor interest spreading beyond the safer well-leased investment-grade buildings in top-tier markets and into smaller properties and second-tier markets such as Seattle, Atlanta and Northern New Jersey. Total fourth-quarter 2011 office sales are likely to match or exceed fourth-quarter 2010’s impressive $25 billion once all sales are tallied.

Total CRE sales, which evened out in 2011 across all property types, is estimated at nearly $300 billion, the highest since the peak of the real estate boom in 2007, and well above the historical average of around $220 billion since 2000.

Although office tenants continue to hold the cards in many markets, (see related topic:“Renew or Relocate? Incumbent Landlords Willing To Sweeten the Pot”) CoStar reports the outlook appears to increasingly favor building owners in coming years as the cycle continues.

Economy Shows Positive Signs For CRE

CoStar Group founder and CEO Andrew Florance noted that, although overall employment growth has been anemic, the U.S. posted a solid 1.7% gain in office-using jobs, led by technology and energy markets such as Seattle, Boston, San Francisco and Dallas.

Other positive signs abound, including a leveling off in the loss of manufacturing jobs and a bottoming of the housing market, which should be less of a drag on the economy going forward, and likely to be the source for new jobs as replacement demand for single-family and apartment housing fuels expected construction demand.

Meanwhile, corporate profits are off the charts, from $800 billion in 2000 to $2 trillion in 2011.

“Coupled with low interest rates, companies are in a position to invest aggressively in new facilities and equipment. From a CRE perspective, Corporate America is well positioned to invest in their businesses, plant facilities and equipment,” Florance added.

Challenges remain, including relatively weak consumer confidence, continued high unemployment, a record federal budget deficit and economic upheaval in Europe. Occupancy recovery varies widely between metros, with “have” markets such as supply-constrained New York City showing 7.4% vacancy and housing bust “have-nots” like Phoenix lingering at a stubbornly high 20.7%.

However, CRE values have recovered to roughly 2000-year levels, and vacancies declined across the country last year. In a strong indicator of an impending office rebound, vacancy rates declined in 63% of the 2,400 office submarkets tracked by CoStar. That’s the strongest number since 2004-05, which roughly marked the beginning of the last CRE up cycle.

In the fourth quarter, CoStar recorded 18 million feet of net absorption, which drives occupancy rates and other leasing fundamentals, and a total of 49 million square feet for the year, doubling 2010’s absorption.

Despite rising concerns about the darkening economic picture that started last spring and continued through the year, absorption rose sharply in the second half of 2011, said Page, noting that companies are leasing space “and smaller tenants, the lifeblood of the office sector, are back.”

Jay Spivey, CoStar senior director of research and analytics, said that the office recovery, while not feeling very strong so far for many landlords and investors, is actually much stronger than the recovery in the office market following the collapse of Internet companies and real estate downturn 10 years.

“We have seven quarters of positive growth, and at that same point 10 years ago, we were still seeing negative absorption,” Spivey said.

Concessions Starting to Disappear

With improving occupancy and little new supply, concessions like free rent and tenant improvements are burning off in some markets and overall, the long downward slide in average office rents has likely bottomed.

CoStar sees significant upside in office rents, which are currently 11% below their long-term trend, Page said. With office construction at an all-time low, rents will rise and are expected to reach their long-term average between 2015 and 2017.

The analysts singled out “premier” suburban areas located near the urban core in markets such as Bethesda, MD, and West Los Angeles are seeing net absorption recover much more quickly on a rolling annual average compared with CBDs or outer suburban areas. Likewise, a survey of four- and five-star buildings in CoStar’s new Building Rating System, the equivalent of the top Class A properties, shows that the best buildings are absorbing most of the space. One- and two-star buildings, typically Class C, were hammered during the recession and are recovering more slowly.

While national vacancy and availability rates are both trending down, there are vast differences within metros and within the CBD and suburban properties in those markets. In Miami, for example, the CBD vacancy rate is about 22%, while suburban and premier suburban rates are lower. By contrast, Atlanta’s Buckhead premier office suburb, where much new construction came on line as the recession hit, has the highest vacancy at over 20%, more than 6 percentage point higher than the Atlanta CBD.

Investors Explore Secondary, Suburban Markets for Deals

The return of portfolio sales outside the largest markets in 2011 shows that investors, who largely retreated to the safety of well-leased properties in safe core markets like Washington and New York over the last couple of years, are ready to assume risk in certain transactions, with the help of a slowly returning flow of debt financing.

Distressed sales volume as a percentage of total office sale transactions fell during 2011. As distress has abated, prices have begun to rise over the last couple of quarters, spreading from investment-grade properties to smaller general commercial sales, according to the CoStar Commercial Repeat Sale Index (CCRSI).

Pricing has risen in most markets and is approaching replacement cost for some buildings, Spivey noted. Higher occupancy buildings are fetching a higher price premium currently than in 2007, possibly opening a window for investors on opportunities in select vacancy challenged properties.

	Address	Sale Price	PSF	Size	Date	Seller	Buyer
	1933-2027 W. Henderson Rd Columbus, Ohio (Greentree Center – Kroger)	Part of $9 billion portfolio sale	N/A	130,102	6/28/2011	Centro	Blackstone
	2640-2736 Brice Road Reynoldsburg, Ohio (Brice Park – Old Navy, Ashley’s Furniture, Michael’s)	Part of $9 billion portfolio sale	N/A	158,565	6/28/2011	Centro	Blackstone
	2002-2090 Bethel Rd Columbus, Ohio(Kroger, Skyline)	Part of $9 billion portfolio sale	N/A	147,275	6/28/2011	Centro	Blackstone
	1620-1700 E. Dublin Granville Rd (Karl Plaza – Staples)	Part of $9 billion portfolio sale	N/A	100,396	6/28/2011	Centro	Blackstone
	2209 Richland Mall Mansfield, Ohio (JC Penney, Macys, Sears, Victoria’s Secret)	Part of $9 billion portfolio sale	N/A	502,422	6/28/2011	Centro	Blackstone
	Polaris Towne Center Columbus, Ohio (Best Buy, Kroger, Starbucks)	$80,000,000	$178.89	447,203	12/6/2011	Glimcher Realty Trust	DDR Corp.
	3773-3841 S. Hamilton Road Columbus, Ohio (Giant Eagle)	$21,732,509	$184.07	118,066	2/18/2011	Echo Real Estate	H&R Real Estate Investment Trust
	8929 Columbus Pike Lewis Center, Ohio (Giant Eagle)	$19,510,000	$167.83	116,248	10/05/2011	Worthington I, LLC	Cole Real Estate Investments
	650 N State Street Westerville, Ohio (Giant Eagle)	$15,828300	$204.35	77,456	4/26/2011	JDS Westerville LLC	ECHO Real Estate
	4600 – 4780 W. Broad Street Columbus, Ohio (Giant Eagle)	$13,500,000	$60.36	223,662	6/1/2011	Echo Real Estate	Lincoln Village Value Center LLC
	3630 Soldano Blvd Columbus, Ohio(Kroger / Target)	$13,300,000	$37.31	356,515	7/29/2011	DDR Corp	Bon Aviv Investments
	8351-8497 Sancus Blvd Columbus, Ohio	$5,500,000	$160.28	34,316	8/8/2011	Polaris Sancus Retail LLC	MFC Polaris I Venture LLC
	1101 E. Johnstown Road Gahanna, Ohio (Primrose Daycare)	$3,800,000	$348.11	10,916	7/21/2011	RL&A Real Estate LLC	J&K Futures LLC
	1531-1545 Rome Hilliard Rd  Hilliard, Ohio  (Panera, Five Guys, AT&T)	$3,562,200	$329.13	10,823	6/27/2011	George’s Corner TKT LLC	SJSS Corp LLC
	1281 Hill Rd N Pickerington, Ohio (Max & Erma’s)	$3,080,000	$514.62	5,985	11/09/2011	Cornerstone Max Pickerington LLC	NRG Holdings, LLC
	4305-4335 W. Dublin Granville Road (Shoppes at River Ridge)	$6,125,000	$61.59	99,449	12/23/2011	Fifth Third Bank	MR/TSARR Owner LLC

All of this information has been compiled from sources deemed reliable, but no representation is made as to the accuracy thereof and is presented subject to errors and omissions.

This list represents the top retail commercial real estate sales in the Central Ohio area in 2011.

Bradford Kitchen, SIOR

President

Alterra Real Estate Advisors

614-545-2155

www.AlterraRE.com

93,547 SF Class A office building sells for $19.77 PSF

2400 Corporate Exchange Drive in north Columbus, Ohio sold 12/22/11 for $1,850,000 ($19.77 PSF).  This is an extremely low price for a Class A office building.  The building was built in 1986 and because of its age it was not a solid class A building; but it was one of the nicer buildings in its submarket.  The building was 60% occupied according to commercial real estate property databases and had lost tenants over the years to newer buildings in Polaris and Easton.

Brad Kitchen

Alterra Real Estate Advisors

614-545-2155

www.AlterraRE.com

	Address	Sale Price	PSF	Size (SF)	Date	Seller	Buyer
	5235-5231 West Pointe Dr Columbus, OH	$40,950,000	$35.12	1,166,015	4/28/2011	Kirko	Exeter Property Group
	1580-1590 Williams Rd Columbus , OH	$19,400,000	$25.51	760,480	6/14/2011	Hillwood Investment Properties	Trident Capital Group
	3051 Creekside Pky Lockbourne, OH	$18,500,000	$25.09	737,471	11/20/2011	Allianz	KTR Capital Partners
	6766 Pontius Rd Groveport, OH	$17,000,000	$22.55	754,000	11/20/2011	Allianz	KTR Capital Partners
	6100 – 6290 Opus Dr Groveport, OH	$13,787,101	$20.39	676,155	8/12/2011	RT Rickenbacker III, LLC	Exeter Property Group
	6500 Adelaide Ct. Groveport, OH	$13,565,249	$38.25	354,676	6/24/2011	Pinchal & Company	Exeter Property Group
	2919-2999 Lewis Centre Way Grove City, OH	$12,362,600	$32.68	378,283	8/9/2011	Prologis	CLPF-Kyrene 3, LP
	400 N Case St (Owens-Corning) Newark, OH	$11,900,000	$24.84	479,000	7/8/2011	CRI Newark, LLC	Cole Real Estate Investments
	5820 Opus Dr. Groveport, OH	$10,300,000	$25.33	406,694	11/20/2011	Allianz	KTR Capital Partners
	5765 N. Green Pointe Dr. Groveport, OH	$8,900,000	$24.81	358,760	11/20/2011	Allianz	KTR Capital Partners
	6360-6440 Port Rd Columbus, OH	$8,851,899	$20.39	434,120	8/12/2011	RT Rickenbacker III, LLC	Exeter Property Group
	2225 Spiegel Dr (Foreign Trade Centre VI) Groveport, OH	$7,800,000	$47.24	165,133	5/9/2011	Prologis	Frank Brunckhorst Co, LLC
	1120 Morrison Rd Columbus, OH	$7,800,000	$20.21	386,000	10/17/2011	Hollingsworth	STAG Industrial Management, LLC
	5650 N. Green Pointe Dr. Groveport, OH	$7,300,000	$27.04	270,000	11/20/2011	Allianz	KTR Capital Partners
	2550 John Glenn Ave (Rickenbacker Spec 2) Columbus, OH	$4,550,000	$22.18	205,109	2/23/2011	Dexus Property Group	Cabot Properties, Inc.

All of this information has been compiled from sources deemed reliable, but no representation is made as to the accuracy thereof and is presented subject to errors and omissions.

This is a list of the top commercial real estate sales in Columbus, Ohio Industrial Buildings

Brad Kitchen, SIOR

President

Alterra Real Estate Advisors

614-545-2155

www.AlterraRE.com

	Address	Sale Price	PSF	Size (SF)	Date	Seller	Buyer
	5525 Parkcenter Circle Dublin, Ohio	Part of $343 Million portfolio sale	N/A	315,102	3/24/2011	Duke Realty	CBRE Investors/Duke Realty
	One Columbus   10 W. Broad Street   Columbus, Ohio	$27,000,000	$66.26	407,472	10/6/2011	VV USA City LLP	TNHYIF REIV Echo LLC
	6000 Perimeter Drive Dublin Ohio	$24,000,000	$171.43	140,000	4/1/2011	Realty Income (Portfolio Purchase)	Equity Capital Management
	Easton Commons 4343 Easton Commons Columbus, Ohio	$16,700,000	$164.51	101,510	4/1/2011	Duke Realty	Ventura Ohio LLC (Related to tenant, Morgan Stanley)
	5900 Parkwood Place Dublin, Ohio	Part of $1 billion portfolio sale	N/A	164,900	12/9/2011	Duke Realty	Blackstone
	4650 Lakehurst Ct. Dublin, Ohio	Part of $1 billion portfolio sale	N/A	164,639	12/9/2011	Duke Realty	Blackstone
	2 Easton Oval Columbus, Ohio	Part of $343 million portfolio sale	N/A	128,674	3/24/2011	Duke Realty	CBRE Investors/Duke Realty
	6000 Parkwood Place Dublin, Ohio	Part of $1 billion portfolio sale	N/A	156,000	12/9/2011	Duke Realty	Blackstone
	1 Easton Oval Columbus, Ohio	Part of $343 million portfolio sale	N/A	125,031	3/24/2011	Duke Realty	CBRE Investors/Duke Realty
	5475 Rings Road Dublin Ohio	Part of $1 billion portfolio sale	N/A	147,853	12/9/2011	Duke Realty	Blackstone
	5455 Rings Road Dublin, Ohio	Part of $1 billion portfolio sale	N/A	145,064	12/9/2011	Duke Realty	Blackstone
	5555 Glendon Ct. Dublin, Ohio	Part of $1 billion portfolio sale	N/A	132,854	12/9/2011	Duke Realty	Blackstone
	4249 Easton Way Columbus, Ohio	Part of $1 billion portfolio sale	N/A	129,156	12/9/2011	Duke Realty	Blackstone
	255 E. Main Street Columbus, Ohio	$8,500,000	$77.27	110,000	5/18/2011	255 Main Anchor, LLC	Nationwide Children’s Hospital
	4349 Easton Way Columbus, Ohio	Part of $1 billion portfolio sale	N/A	115,000	12/9/2011	Duke Realty	Blackstone
	4449 Easton Way Columbus, Ohio	Part of $1 billion portfolio sale	N/A	107,084	12/9/2011	Duke Realty	Blackstone
	5500 Glendon Ct. Dublin, Ohio	Part of $1 billion portfolio sale	N/A	101,008	12/9/2011	Duke Realty	Blackstone
	4400 Easton Commons Columbus, Ohio	Part of $1 billion portfolio sale	N/A	101,510	12/9/2011	Duke Realty	Blackstone
	5500 Frantz Road Dublin, Ohio	Part of $1 billion portfolio sale	N/A	57,242	12/9/2011	Duke Realty	Blackstone
	5550 Blazer Memorial Pky Dublin, Ohio	Part of $1 billion portfolio sale	N/A	85,357	12/9/2011	Duke Realty	Blackstone
	5555 Parkcenter Cir Dublin, Ohio	Part of $1 billion portfolio sale	N/A	84,167	12/9/2011	Duke Realty	Blackstone
	2221 Schrock Road Columbus, Ohio	$6,137,337	$145.13	42,290	7/5/2011	MS Consultants	Lexington Realty Trust
	1600 Dublin Road Columbus, Ohio	$6,000,000	$24.00	250,000	2/24/11	Riverside 10 LLC	NiSource
	4700 Lakehurst Ct. Dublin, Ohio	Part of $1 billion portfolio sale	N/A	49,819	12/9/2011	Duke Realty	Blackstone
	5600 Blazer Memorial Pky Dublin, Ohio	Part of $1 billion portfolio sale	N/A	71,491	12/9/2011	Duke Realty	Blackstone
	6377 Emerald Pky Dublin, Ohio	Part of $1 billion portfolio sale	N/A	68,700	12/9/2011	Duke Realty	Blackstone
	6525 W. Campus Oval New Albany, Ohio	Part of $1 billion portfolio sale	N/A	66,575	12/9/2011	Duke Realty	Blackstone
	LeVeque Tower   50 W. Broad Street Columbus, Ohio	$4,000,000	$11.42	353,768	3/11/2011	LeVeque Holdings LLC	Tower 10 LLC
	Emerald II  6397 Emerald Parkway Dublin, Ohio	$3,400,000	$74.37	45,716	5/11/2011	Duke Realty	Trinity Holdings Group LLC

All of this information has been compiled from sources deemed reliable, but no representation is made as to the accuracy thereof and is presented subject to errors and omissions.

Top commercial real estate sales Columbus, Ohio office buildings in 2011

Brad Kitchen, SIOR

President

Alterra Real Estate Advisors

614-545-2155

www.AlterraRE.com

The solid recovery of investment-grade property prices and the continued decline in distressed sales volume spurred the growth in commercial property pricing, lifting the index to an impressive 1.8% gain in October from the previous month and continuing its upward trend.

The year-over-year and monthly increases in October reflected long-awaited positive momentum in the composite index, which has now achieved a steady 1.3% average monthly growth rate over the six-month period between May and October 2011, according to this month’s CoStar Commercial Repeat Sale Index (CCRSI), based on 743 repeat sale transactions recorded in October and more than 100,000 repeat sale transactions since 1996.

Other highlights from this month’s CCRSI report include the following:

• The General Commercial Index continued its steady move upward, increasing by 1.4% in October, the sixth consecutive month of rising prices since reversing the 32-month downward trajectory in general commercial property pricing that began in September 2008.
• The Investment Grade Index gained a strong 3.4% in October from the previous month. After bottoming in late 2009, this index bumped along near the bottom around the same level for almost two years before beginning its recent climb in March 2011. Growth resumed in September following a brief pause in August, and CoStar analysts predicted sustained growth because it synchronizes with the price increase tracked by the General Commercial Index, an indication of an across-the-board recovery.
• Stable fundamentals across most commercial property markets and product types, including improving occupancy, and softening downward pressure from distress sales, supported the solid performance of both the investment grade and general indices. The level of distress sales as a percentage of general commercial repeat sales fell from 33% in March 2011 to 24% in October 2011. For investment-grade properties, this ratio dropped even more steeply, from 53% to 28% in the same period.

CoStar’s Investment Grade Repeat Sales Index increased by 3.4% in October and is now 6.9% above the same period last year, and 31.1% below its peak in August 2007. Despite the monthly and year-over-year increases, the Composite Commercial Repeat Sales Index remains 31.5% below the August 2007 peak.

October’s total of 743 sales pairs is on par with historical averages for transaction activity, according to the CCRSI December 2011 report. At the low point in the last downturn in January 2009, a total of 385 sale transactions were recorded.

Of the total sales pairs in October, 599 were general property sales and 144 were rated as investment grade. The sale-pair counts for both indices are likely to increase slightly in coming months as additional closings are recorded, CoStar analysts noted.

As the average transaction size increases, overall transaction volume continues to trend upward, increasing by 29.4% annually in October, while the average deal size increased by 23%.

Distress sales continued to decline from 35.4% of total repeat sales in March 2011 to 25.2% in October 2011. Although distress sales have gradually declined over the past seven months, the overall level is still high on an historical basis, suggesting that distress continues to be a significant factor of CRE pricing.

Also, by transaction count, General Grade sales pairs accounted for 80.6% of the total sales transactions, a ratio that has been stable over the past 12 months.