Don't Bet Against the US Economy

According to Dr. Peter Linneman, Chief Economist for NAI Global, we are in the midst of the second-worst recessionary period of the last 40 years. But, he says, do not bet against the US economy. We agree with Dr. Linneman. There are still entrepreneurs and companies out there looking for a place they can expand, relocate and thrive during challenging times. Linneman also goes on to say we must resist the urge to save everyone. Losers must lose if winners are to prosper. "The idea that a reasonably safe real estate cash stream bought at a 4-5% cap rate could generate a 20% return is absurd unless premised on carry trades and loads of every available debt. But just as tenants do not always renew their leases, lenders do not always roll their loans. Debt is wonderful on the upside, but remorseless on the downside. This lesson will hopefully be remembered for a new generation," said Linneman.

At NAI Carolantic Realty we are positioned to help our clients evaluate their current real estate position. We recently formed a Special Assets Division with our affiliate NAI firms in North Carolina. The firms, located in Asheville, Charlotte, Greensboro and Raleigh have over 200 years of combined experience, each with a history of working with clients to maximize the value of performing and underperforming assets. The Special Assets Division, coupled with the launch of NAI Global's new program called the Commercial Property PowerSale", can help clients utilize this Accelerated Marketing Program (AMP) to achieve maximum value for their commercial real estate assets. This program is one of the most reliable ways to sell commercial real estate properties in today's challenging market.

Please give us a call and let us know how we can be of service to you. Our bet is on the US Economy.

Local Market Update:
Jimmy Barnes, SIOR
jbarnes@naicarolantic.com

Looking back is always helpful to gain perspective on where we are headed. Certainly a lot has happened in our market over the last 30 years. Remember the early 80's? We were very successful early on, but then we entered the S&L crisis. Savings and loans were lending money to anyone who asked for it. The buyers had more money than the lending institutions and the market became overbuilt resulting in 30% vacancy in some submarkets. However, our region's overall economic health was still strong.

Then we entered the 90's. Great success again in our industry until the dot.com bust in late 1999, 2000 and 2001. Many of the start-up companies were failing&many led by young entrepreneurs or wealthy investors in their companies  essentially gamblers. But again, we recovered nicely with record job growth in mid-2000 and 37,000 new jobs in 2007 alone.

So what about today's real estate market? Our overall economy, locally, nationally and globally is failing and every sector in the real estate industry is being affected. The national housing sector, with prices down 20%, has 18.5 million vacant homes and foreclosures still on the rise. The retail sector is changing weekly with announcements of store closings, and just locally the office sector has 1.5 million square feet of sublease space on the market. The industrial market, formerly the bright spot, now has space becoming available at a record pace.

As Peter Linneman, NAI's Global economist states about the economy, "you cannot pump blood into a dead person and expect that person to get up and dance". Our government essentially tried to do that this past September. The combination of our national government panic and irresponsibility from Wall Street have sent us into a recession not unlike what people saw in the early 70's. Until we get true direction, our economic troubles will continue. Accordingly 2009 will be a challenging year.

The positive side for us in North Carolina and specifically the Research Triangle Region is that we live here and just like years past where our market has struggled, we will recover and be one of the first to do so. Locally our Chambers of Commerce and Economic Development officials are working harder than ever. In Wake County alone, the Economic Development Department has 18 active projects and a few that have been re-activated after being on inactive status for six months. Our region continues to be a place people want to be. Just check out the Glenwood South area one week night. Again, we will recover, just not as quickly as in the past. Its business leaders like all of you that will see to our recovery. You are optimistic and dedicated to the cause----- and you don't panic. From a real estate perspective, we have learned a lot from the past. Our region continues to be a positive option for companies considering expanding or relocating.

NAI Carolantic Welcomes New Broker:
James D. Adams, Jr.
jadams@naicarolantic.com

NAI Carolantic Realty is pleased to welcome James D. Adams, Jr. as a commercial real estate broker with the firm. Having most recently operated his own mortgage company, Mr. Adams brings years of experience in the origination of permanent, non-recourse commercial loans for all property types. "We are excited to have Jim join our team and lend his expertise to our new Special Assets Division. His mortgage experience combined with his real estate background will be invaluable to our clients," said Steve Stroud, Chairman of NAI Carolantic Realty.

Mr. Adams commercial real estate career began in 1985 when he worked for Cameron-Brown Company in the Income Property Division. He later joined the Raleigh office of Shoptaw-James where he was responsible for commercial loan production until 1990. A year later, he formed Adams Commercial Properties where he successfully completed a 291-acre, 600 lot residential subdivision development that led Wake County sales for three consecutive years. Additionally, he served as an acquisition agent for the McDonalds Corporation providing market research and contract negotiations for the purchase of restaurant sites in Central North Carolina until 1996.

Formerly on the Board of Trustees of the Montessori School of Raleigh, Adams helped plan and develop the Raleigh Montessori Middle School. He has also served on the Board of Elders of Grace Community Church of Raleigh. Mr. Adams is a graduate of the University of North Carolina at Chapel Hill.

New Intern Joins NAI Carolantic
Andrew Moss Withers
mwithers@naicarolantic.com

We are pleased to welcome Andrew Moss Withers who will be interning at the firm while he pursues his MBA at North Carolina State University. "We are fortunate to have Moss join us to assist our brokers and clients over the coming months. He is highly motivated and very professional in his work," said Jimmy Barnes, SIOR, President of NAI Carolantic Realty. Mr. Withers has had two years of experience in retail, personnel and consumer based management. He obtained his real estate license in 2008.

Mr. Withers expects to graduate from NC State in 2010 with specialties in Business Renovation, Administration and Entrepreneurship. He completed his undergraduate work at Appalachian State University with a Bachelor of Science in Business Administration where he triple majored in Economics, Finance & Banking, and Risk Management & Insurance. An avid volunteer, Mr. Withers donates time to the Cary Family YMCA "We Build People" program as well as being a Buddy for the Miracle League of Raleigh. He is a member of Hope Community Church.

Company Profile:

NAI Carolantic is the Raleigh/Research Triangle area's leading commercial real estate firm

• Seventeen Brokers with an average of ten year's experience
  
• Full-service Property Management Division
  
• Experienced Marketing & Research Division

Established in 1972, NAI Carolantic is a member firm of NAI Global, the leading international provider of commercial real estate services and solutions.

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Featured Property:
Courtyard of Chapel Hill
Chapel Hill, North Carolina

NAI Carolantic Realty is pleased to have been awarded an exclusive listing to lease a unique retail/office property in downtown Chapel Hill, NC. The 30,000 square foot property called The Courtyard of Chapel Hill is located at 431 W. Franklin Street and is now under new ownership and management. There are a variety of spaces available from 2-story retail featuring glass and spiral staircase to small offices. The European-style mix of shops and offices surround a courtyard fountain. Current tenants include: Penang, Bliss, SandwHich, Bonne Soiree & Great Cuts.

Retail spaces available range from 651 square feet to 1,790 square feet with rates from $15 to $18.00/psf. Offices spaces available are from 300 square feet to 5,110 square feet with a lease rate of $17.50 psf/ full service.

For additional information, please contact John Webster at jwebster@naicarolantic.com.

NAI Carolantic Broker Speaks at CCIM Forecast
Ed Brown, SIOR, CCIM
ebrown@naicarolantic.com

The North Carolina Chapter of CCIM recently held its 2009 Annual Commercial Real Estate Market Forecast at the Embassy Suites Raleigh-Durham/Research Triangle. Ed Brown, SIOR, CCIM, who has been a broker with NAI Carolantic for 20 years, was one of the featured speakers at the March 19th luncheon.

Mr. Brown shared his expertise in industrial leasing and sales by giving a review and forecast of the industrial warehouse and flex market in the Triangle area. His review of the warehouse market spotlighted a fundamentally healthy market despite the economy. Brown admitted that demand had slowed resulting in higher vacancy, negative absorption and lower rental rates. However, in a market of 23 million square feet, the good news is that there is a diversified tenant base and limited new construction. The lack of construction is due to several reasons: there are few remaining sites with water and sewer; the market rental rates do not justify building at current land and construction costs; and limited financing availability. For the future, Mr. Brown anticipates demand will be from commodity distributors as consumers start to spend again and from third party logistics (3PL) companies winning contracts as businesses outsource various operations to save money.

As for the flex market, Mr. Brown indicated that the office/flex vacancy rate had increased for the first time in five years with no significant new construction. This is in part due to competition with Class B and mid-rise office buildings. According to Brown, warehouse/flex will also continue to see a vacancy increase due to the economy and construction/building industry slow down. It is expected that the flex market vacancy will increase over the next several months due to the national economy. Brown closed by saying, "If you are a Landlord, the name of the game now is keeping your existing tenants. If you are a Tenant, you want to leverage the market for favorable lease terms".

NAI Carolantic's Winning Team

NAI Global named Jimmy Barnes, SIOR, President of NAI Carolantic Realty in Raleigh, North Carolina, to the NAI Global Elite during their national convention in Las Vegas a few months ago. The Global Elite is a group comprised of the organization's top performers and top producers. Barnes qualified as a Top Performer based on production in 2008.

NAI Global is the world's premier network of commercial real estate firms and one of the largest real estate service providers worldwide. Based in Princeton, New Jersey, NAI Global manages a network of 5,000 professionals and 325 offices in 55 countries. NAI professionals complete over $45 billion in transactions annually.

At the 2009 Triangle Commercial Association of Realtor's Annual Frontier Awards, held in March, seven NAI Carolantic brokers were presented with awards including E. Stephen Stroud, SIOR, Chairman of the firm who was named the 2008 Realtor of the Year. The TCAR event, held at the Board of Realtor's offices in Cary, was established to recognize deal makers and community leaders. The keynote address was given by Fred Day on the Outcome of the ULI/Triangle Reality Check and the festivities were emceed by ABC news anchor Steve Daniels.

The following awards were presented to NAI Carolantic brokers:

Trailblazer Awards
A new category for the Frontier Awards, James M. Barnes, SIOR and Ed Brown, SIOR, CCIM were two of only five recipients from a large brokerage firm to win this award recognizing broad-based, multi-disciplined production activity for the year.

Million Dollar Sales Club
James M. Barnes, SIOR, Ed Brown, SIOR, CCIM and E. Stephen Stroud, SIOR, were recognized for membership into TCAR's 2008 Million Dollar Sales Club. Entrance into the Million Dollar Sales Club was determined by a broker having had total sales in excess of $8,000,000.

Million Dollar Land Sales Club
E. Stephen Stroud, SIOR, Chairman of NAI Carolantic Realty, and William Kyle Greer were recognized for membership into TCAR's 2008 Million Dollar Land Sales Club. Entrance into this club was determined by two of three factors: $5 million or more, 10 or more transactions, and/or 200+ acres.

Million Dollar Office Leasing Club
Robin Roseberry Anders, SIOR was recognized for membership into TCAR's 2008 Million Dollar Office Leasing Club. Entrance into this club was determined by two of three factors: total leasing volume of $6 million or more, 15 or more transactions for the year and/or leases totaling a minimum of 125,000 rentable square feet.

Million Dollar Industrial Leasing Club
Three of NAI Carolantic's brokers: Ed Brown, SIOR, CCIM, Aldene 'Dee' Creech Osborne, SIOR and John Webster were recognized for membership into TCAR's 2008 Million Dollar Industrial Leasing Club. Entrance into this club was determined by two of three factors: total leasing volume of $3 million or more, 10 or more transactions for the year, and/or leases totaling a minimum of 100,000 rentable square feet.

Broker Profile:

Jake Plotkin
jplotkin@naicarolantic.com

Mr. Plotkin joined NAI Carolantic in 2007 after previously being associated with the Company as an intern while he was a student at NC State University. Working directly with Richard Hibbits, Vice President for NAI Carolantic, Mr. Plotkin now specializes in industrial, flex and office leasing. A few of his clients have included: Munktell, ASAP Direct Mail, Avante Physical Therapy, Easy Accents, ImageSoft, MyComputerCareer.com, and Telepathic Graphics Network.

Mr. Plotkin received a BS in Business Management, a BS in Biological Sciences, and minored in Spanish at North Carolina State University in Raleigh, North Carolina. His education also included a summer in Lima, Peru where he acquired fluency in Spanish.

NAI Global:

With over 5,000 real estate professionals in over 325 offices in 55 countries worldwide, NAI Global serves corporate, institutional and government clients through its strategically located offices in major, secondary and tertiary markets.

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