Posts Tagged ‘Los Angeles’

Gridlocked Chicago: There’s Some Disagreement

Tuesday, February 1st, 2011

Gridlocked Chicago:  There’s Some DisagreementChicago is # 1!  Unfortunately, this is not good news because the Windy City has been ranked by one study as having the worst traffic congestion in the nation.   The news was one finding of the Urban Mobility Report (UMR),  conducted by the Texas Transportation Institute, the United States’ largest university-affiliated transportation research agency.  Earlier TTI studies had ranked Chicago in second or third place.  Washington, D.C., and its suburbs currently occupy second place.

The study of 2009 driving conditions found that Chicago’s roadways have increasing gridlock, at virtually any hour of the day.  In addition to the normal time it takes to get from Point A to Point B by car, commuters in metropolitan Chicago and northwest Indiana spent 70 extra hours behind the wheel in 2009, according to the study.  Chicago’s earlier record was 64 hours of extra driving reported in 2008; 55 hours in 1999; and 18 hours in 1982.  The national average of time wasted stuck in traffic was a more manageable 34 hours.  The fact that Chicago is a nationwide shipping hub and has some of the nation’s heaviest truck traffic – plus two of the top bottleneck areas – also impacts congestion.  Additionally, Illinois has approximately 10.4 million registered vehicles, and a population of around 12.9 million, according to 2009 Census Bureau statistics

“In terms of the delay for each auto commuter, Chicago now tips the scales at No. 1, where in the last report, Los Angeles was locked in that spot,” said David Schrank, one of the report’s authors.  The average cost to each commuter is $1,738.  Nationally, traffic congestion cost $115 billion in 2009; additionally, consumers drove 4.8 billion additional hours and had to purchase an extra 3.9 billion gallons of gas.

Alter NOW finds that the report has its detractors:  Smart Growth America takes issue with some of the UMR’s findings.  “It assumes, for example, that everyone should be able to speed as rapidly down the highway during rush hour as they could in the middle of the night.  American taxpayers will never stand for being asked to turn over their wallets and their neighborhoods in order to build that kind of highway capacity“.

A June 30, 2010 study by IBM actually disputes the rankings, placing Los Angeles, New York and Houston as the U.S. cities with the worst traffic.  Topping the international list of cities notorious for congestion are Beijing, Mexico City, Johannesburg, Moscow and New Delhi.  Chicago doesn’t appear on IBM’s 20-city list.

Another mid-year 2010 study by Seattle-based INRIX, places Chicago in third place nationally.  “Between 5 and 6 p.m. Thursday is now the most-congested travel hour of the week in the Chicago area,” according to the INRIX National Traffic Scorecard.  “Last year, it was the 5-6 p.m. hour on Fridays.  The reason for the change?  It could be that more people are working part-time or ‘flex-time’, and Friday is a frequent day for flex-timers to take off or work from home,” said Chicago traffic expert Joe Schwieterman of DePaul University.  “Chicago doesn’t have a long-term plan to do much about congestion, we’re adding some lanes to the Tri-State, some work on I-80, but there’s not the construction in the works to relieve some of the worst bottlenecks“.

Investors Are Choosing London

Thursday, January 28th, 2010

London beats Washington, D.C., as preferred destination for commercial real estate investment.London has overtaken Washington, D.C., as the preferred city for commercial real estate investment,  primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).

“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO.  “The re-pricing began sooner than it did in other cities.”  London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City.  A year ago, London occupied second place, ranking four points behind Washington.  The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate.  Of that, $304 billion is invested in the United States.

London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009.  Property values rose 2.4 percent in November, the largest monthly increase in 15 years.  Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.

Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents.  This is the first time the United States ranked below 50 percent in the survey.  It ranked 53 percent in 2008 and 57 percent in 2007.  Germany occupies second place with 21 percent.  In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.

The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.

House Sales, Prices on the Upswing

Wednesday, December 9th, 2009

Home prices nationally are on the rise again, according to a new report issued by the Standard &Poor’s/Case-Shiller Home Price Index. The average sale price rose 3.1 percent during the third quarter of 2009, the same percent increase reported during the second quarter.  On the downside, that statistic is still nine percent lower than the number reported one year ago.

In Chicago, prices rose 1.1 percent from August on a seasonally adjusted basis.  Local prices were still 10.6 percent below the level reported for September of 2008, the fifth consecutive month to report an increase.  At the same time, Chicago-area home sales jumped by one-third in October, compared to a year ago, according to the Illinois Association of Realtors.   The group cited lower home prices, affordable mortgage rates and the federal tax credit for first-time buyers as reasons for the rise.

According to David Blitzer, chairman of the Index Committee at Standard & Poor’s, “We have seen broad improvement in home prices for most of the past six months.”  Case-Shiller’s 20-City Composite index rose 0.3 percent compared with the August numbers.  The city with the worst-performing market is Las Vegas, where prices have fallen for 37 months in a row and now are 55.4 percent off their highs.  Chicago home prices rose 1.2 percent during the third quarter.

In another snapshot of the housing market, a report from First American CoreLogic revealed that nearly 25 percent of all mortgage borrowers are underwater.  This condition, as well as the high number of foreclosures, raise doubts about the staying power of the recent upward price trend.

Inland Empire Poised for Industrial Comeback

Wednesday, July 22nd, 2009

Over the past decade, California’s Inland Empire has been transformed from a little-known region with affordable housing and lots of inexpensive land into an industrial hub – thanks to its proximity to the busy Ports of Los Angeles and Long Beach.  With the City of Ontario embarking on The Ontario Plan, sciearmalogo2city fathers are laying the groundwork for increased investment over the next 30 to 40 years.  The plan’s goal is to create an all-inclusive community where people and businesses will want to be.

According to Mary Jane Olhasso, economic development director for the City of Ontario, “Although firms are pulling back, they still realize that the region has competitive advantages over our coastal neighbors.  In Ontario, both industrial and office lease rates are lower than Los Angeles and Orange County.”

The Inland Empire’s industrial market is in a prime position to recover when the economy improves because the region is notable for its relatively low-cost housing, large workforce and vital location relative to international shipping.  With 40 percent of all containerized cargo entering the United States through Southern California ports, the Inland Empire is the logical location for gigantic distribution centers to handle the freight prior to shipping it throughout the United States.

FDIC Walking Away from Leases of Failed Banks

Friday, June 26th, 2009

Troubled Los Angeles-based office REIT Maguire Properties is facing default and currently is in discussions with a special servicer to resolve its financial woes.  The goal is to have the special servicer take over Maguire’s $106 million CMBS financing covering the Quintana office campus it owns in Orange County, CA.  fdic-moneyThe campus’s major tenant was Washington Mutual Bank, which failed last year.

As receiver for WaMu, the Federal Deposit Insurance Company (FDIC) gave up its majority of the Quintana lease effective in March and does not have to pay rent or other compensation connected to the lease termination.  A little-known provision  gives the Federal Deposit Insurance Corporation (FDIC) the authority to break leases between the bank and the landlord once a financial institution has been taken over.  One side effect of this provision could be that we’ll see fewer branch banks in the future as the FDIC breaks additional leases inked by failed banks.

As a result of the FDIC’s ending the lease, the Quintana campus’ occupancy was reduced approximately 250,000 SF to 40 percent.  According to Nelson C. Rising, Maguire’s president and CEO, the FDIC’s rejection of the leases was “a highly unusual and unfortunate event.”

No Port in the Global Fiscal Storm

Wednesday, April 22nd, 2009

Shipping activity has plunged as much as one-third at U.S. ports most heavily invested in the once red-hot but now declining Asia trade. 

Freight rates from South China to Europe have slid as much as 42 percent from some ports since November, leading shipping industry authority Drewry Container Freight Rate Insight Report to speculate that this once-robust market is in freefall.titanic-sinking-7790481

As freight rates fall to record lows shipping companies are playing hardball to remain competitive, even though relatively little product is being shipped these days.  According to Drewry, container lines could see a $68 billion plunge in global revenues this year, compared with 2008 revenues of $220 billion.  Drewry notes that global all-in freight rates fell to $1,681 per 40-foot box, down from $2,098 in November.  That’s a steep $400 drop per feu (forty-foot equivalent unit) or 20 percent in just two months.

The ports of Los Angeles and Long Beach are slashing cargo rates to retain old customers and attract whatever new business they can.  Spanning 10,000 acres, these vast ports typically handle $357 billion in goods every year.  The ripple effect of this year’s overall 18.1 percent downturn is evident in California’s vital Inland Empire logistics market, where higher vacancy rates – now approaching nine percent — are translating to cheaper rents.

Conditions are slightly better at the East Coast ports of New York and New Jersey, because their diverse mix of trading partners include Asia, Europe, Latin America and South America.

High Costs Could Impact Shipping Routes

Wednesday, September 24th, 2008

Two trends in international trade worth highlighting:

American exports are booming, thanks to the dollar’s current weakness.  This considerable increase in volume has made it virtually impossible for U.S. manufacturers to get space on container ships within a four-week window, especially for products shipping from the ports of Los Angeles or Long Beach to any Pacific Rim destination.  To illustrate the scope of the change, container space from these ports was available on demand just one year ago.  And, according to a recent Reuters article, waiting times for cargo space have jumped from two days to three weeks on the East Coast.

Fast-rising transportation costs that are a direct result of the cost of fuel is another important logistics trend – one that could negatively impact globalization.  According to an August 2 article in the International Herald Tribune by Larry Rohter, shipping a single loaded 40-foot container from Shanghai to the United States has soared to as much as $8,000 per unit, compared with just $3,000 earlier in the decade.  Additionally, there are cost add-ons, primarily in the form of fuel surcharges and government-mandated fees.  To save on fuel costs, container ships have shaved their top speeds by nearly 20 percent, which means it takes longer for products to reach their intended markets.

Shipping to and from Prince Rupert in British Columbia is slightly less costly, because the distance to Asian ports is shorter than from Los Angeles or Long Beach.  Still, space amounts to several thousand dollars per container.

“If prices stay at these levels, that could lead to some significant rearrangement of production, among sectors and countries,” said C. Fred Bergsten, author of The United States and the World Economy and a director of the Peter G. Peterson Institute for International Economics in Washington.  “You could have a very significant shock to traditional consumption patterns and also some important growth effects.”

A far better alternative could be to ship to and from Asia from the southern border regions, where the going rate is approximately $800 per loaded container.  That price differential could potentially lure companies to move production facilities to Mexico or the Southwestern United States – primarily Texas.  This would give them the opportunity to leverage the more attractive shipping rates through the growing Mexican ports of Lazaro Cardenas and Punto Colonet.