Orange County leaders agreed in principle Tuesday to cut growth impact fees by 25 percent because of a drop in construction costs during the recession.
Developers wanted deep cuts in the fees the government charges to offset costs that new businesses and homes have on municipal services. The local homebuilders’ lobbying group argued it was “the chief obstacle to economic recovery.”
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Don Mears spent two years and almost $1.5 million just getting approvals from the city of Edgewater and the state to do a large-scale development called Restoration.
And he almost had all of that pulled out from under him because of opposition from the former secretary of the Florida Department of Community Affairs.
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With unemployment stuck in nosebleed territory – 11.9 percent – it’s easy to overlook the fact that Florida’s labor market has been on the mend for more than a year now.
Honest.
The progress has been achingly slow and hobbled by setbacks. But the momentum is discernible – if a little squishy.
“There’s no question that hiring’s picking up,” said Wells Fargo Senior Economist Mark Vitner. “There’s been real, if modest, improvement.”
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Florida’s overall population increased by 2.8 million from 2000 to 2010. The decade was powered by rapid growth in the first half but it ended with tepid migration to the state, a result of a housing bust and the recession. The growth, however, was in the same ballpark as seen in the previous three decades, said Stan Smith, an economics professor at the University of Florida. “That might be surprising to people,” Smith said. “Because of the tremendous slowdown of the last couple of years, that causes them to forget the very high growth that we saw in the early and middle part of the decade. When you add that together, you get a decade that really isn’t too much different in terms of population growth.”
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These are the best of times for cash-rich borrowers and lenders, but they continue to be tough times for less well-funded borrowers and lenders. Just as the investment markets are bifurcated with top-notch properties in top-tier cities commanding escalating prices and lower tier properties and cities still fighting uphill climbs, so too does it appear that the capital markets are split between the haves and have-nots.
“There seems to be a dam that is keeping the flood of capital provided by the Federal Reserve from flowing to smaller real estate borrowers and properties,” said Chris Macke, senior real estate strategist for CoStar Group. “Expanding the recovery in commercial real estate hinges on breaking this dam.”
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As far as rummage sales go, the federal government’s proposal to set up a board to sell its vacant and underutilized commercial real estate may rank as one of the largest ever proposed. But like any white elephant sale, it could be a mammoth undertaking with uncertain results for the sellers and the buyers.
The U.S. General Accounting Office and the Office of Management and Budget are backing President Obama’s proposal to create a board to expedite the sale of U.S.-owned real estate. The proposal is part of his overall budget plan for 2011, which is still being hotly debated in the halls of Congress.
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More than two years before his firm’s five-year office lease was due to expire in 2013, Robert Finlayson told his landlord he was interested in renewing, but wanted some incentive to stay put.
Mr. Finlayson, a managing partner at Mozley Finlayson & Loggins LLP, a 40-person corporate-law firm in Atlanta, says on the advice of a broker he felt it was the right time to make a deal. After three months of negotiations, he secured a six-year extension at a 20% discount, plus one year of rent at half price, starting in January.
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If conditions in commercial real estate have indeed hit bottom, then an increased amount of distressed assets could hit the market this year — and values could also begin to tick up. That is the general consensus of industry professionals that CoStar Group interviewed for their outlooks on distressed investing in 2011.
Contributing to this expectation is a change seen in the dynamic among lenders. Up until very recently, banks have been reluctant to foreclose on distressed loans because they would be forced to take huge write downs – i.e. losses on those assets. So a policy regarding under-performing loans on commercial real estate that has come to be called “extend and pretend” has become prevalent in banking for the last three years.
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In 2007, Credit Suisse Group sold $163.5 million in mortgage-backed securities backed by a virtually empty former Superfund site in North Miami, Fla. Investors didn’t even blink at the $475 million appraisal of the property’s value.
Now, city officials are moving to seize control of the 188-acre development site. The commercial mortgage-backed securities sold to investors are on track to become the second-biggest flop ever among such securities. Holders of the bonds likely will see little or no principal returned from the deal.
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