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Continued Economic Growth for The US?
Chairman's Report:
sstroud@naicarolantic.com
 As
many of you will remember, Dr. Peter Linneman, Professor of Real Estate,
Finance and Public Policy at the Wharton School of Business and the NAI
Global national economist was the keynote speaker this past January at NAI
Carolantic's 22nd Annual Triangle Commercial Real Estate Conference. Recently,
as a special benefit to NAI Global affiliated firms, Dr. Linneman shared
his perspective on the current credit crisis. I wanted to share some of his
key points as summarized by NAI Global:
Dr. Linneman states that he sees two main issues at play in
the current crisis: 1. Investors have matched short-term capital against
long-term assets and 2. Although markets always face the battle of greed
vs. fear, at the moment, in contrast to the norm, fear is winning. Other
contributing factors are poor underwriting and rating performances as well
as margin calls that have forced an exaggerated impact in the market. Dr.
Linneman points out that only 30% of homeowners have not locked in long and
that the losers are actually the lenders/investors and not the homebuyers.
He reminds us that from an historical perspective, this
has happened four other times in the past 20 years. 1987's tax law
change put the brakes on a strong economy, and in 1991, the savings and
loan crisis brought about a recession that took up to 18 months for a
general recovery and even longer for many real estate markets. The 1998
devaluation of the Russian ruble affected the global economy for up to two
years. Then in 2001, 9/11 resulted in another slowdown that lasted from
18-24 months.
Dr. Linneman states that he anticipates continued economic
growth but with wider debt spreads and tighter credit standards for the
next 18-24 months. Investors should expect London and NYC to be negatively
impacted by rental demand as hedge funds and other financial services
companies tighten. As for the Fed's role, it's Dr. Linneman's opinion that
by keeping interest rates too low for too long in 2003-2004, the Fed added
artificial fuel to the economy. He thinks that now rates have been kept too
high for too long and that with inflation at 2.0% - 2.25%, rates should be
4.0% - 4.5%.
As for real estate, he projects it will take 12-18 months
for the current housing surplus of 400,000-500,000 to be digested. He
further notes that: the REIT market has re-priced whereas the private
market has not; cap rates are about 50 basis points too low and with new
credit spreads, cap rates will need to move up approximately 80 basis
points; lenders will require higher coverage and lower loan-to-value rates
(70-75%); and that credit will be overpriced for the next 12-18 months but
then should normalize.
NAI Carolantic's Winning Team:
President Named to Newly Formed Advisory Board
 NAI
Carolantic's President, Jimmy
Barnes, who received his undergraduate degree in Business
Administration from Appalachian State University, was recently selected to
be a member of Appalachian State University's newly formed Board of
Visitors. According to Appalachian's University News, the new 15-member
Board's primary purpose will be "to advise and assist trustees and
Chancellor Kenneth E. Peacock on public policy matters that impact the
university".
Linda Davenport Earns the BOMI RPA Designation
 One
of NAI Carolantic Realty's property managers, Linda Davenport, was
recently notified that she has been approved to receive the Real Property
Administrator (RPA) designation from the Building Owners and Managers
Institute (BOMI). Established in 1970, BOMI is the leading international,
non-profit education institute whose programs provide learning
opportunities for the dedicated professional. The RPA title is recognized
internationally as the industry standard professional designation for
commercial property managers.
Eric Stroud Chosen for Leadership Raleigh Program
 The
Greater Raleigh Chamber of Commerce has accepted NAI Carolantic broker, Eric Stephen Stroud, Jr., into
its 2007-2008 Leadership Raleigh Program. Participants are chosen based on
proven leadership qualities and a strong interest in the community and its
advancement. Leadership Raleigh involves its chosen candidates in a
nine-month study and development program. Acknowledged as an outstanding
leadership incubator in the Triangle area, it is an honor for applicants to
be identified by the Raleigh program as potential community leaders.
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Recent Transactions:
- Steve
Stroud, SIOR recently represented Waterford, LLC in the purchase of approximately
78 acres of land located on Hinton Road in Wake Forest. The property
will become part of the Hasentree Golf Community which is located
adjacent to Falls Lake Park and will feature a Tom Fazio-designed
championship golf course, a 30,000 square foot clubhouse, a water and
swim pavilion and a neighborhood concierge service.
- Jimmy
Barnes, SIOR has recently negotiated new leases at Crossroads
Corporate Park in Cary for Capitol Broadband, Rolf Jensen &
Associates and EPIC Games. Between new tenants and lease renewals,
Crossroads Corporate Park has less than 15,000 square feet available
out of the more than 400,000 square feet in its four buildings.
- Ed Brown,
SIOR, CCIM recently acted in the role of tenant representative in
negotiating for a new 24,240 square-foot home for Intechra, Inc. in
Regent Place on Emperor Boulevard in the Imperial Center Business Park
in Durham.
- Eric Stroud
represented Nuestro Banco in facilitating a 15-year lease for 6,400
square feet at 1408 Garner Station Boulevard in Garner, NC. According
to Stroud, "the location is excellent for the start-up
institution which is the first bank chartered in the state to focus
solely on the Hispanic market."
- Dee Creech
Osborne, SIOR and John Webster have worked together over the past 60
days to place various tenants into almost 42,000 square feet of space
in Southport Business Park in Morrisville.
 Broker
Profile:
Gray Creech, Broker
gcreech@naicarolantic.com
Mr. Creech is in his 24th year as a commercial leasing
broker with NAI Carolantic Realty, Inc. During this time, he has negotiated
hundreds of transactions, including leasing and brokerage ranging from
commercial and industrial users to Class "A" office tenants. He
currently represents over 300,000 square feet of commercial property for
various investors. A broker since 1978, Mr. Creech is a member of the
Triangle Commercial Association of Realtors (TCAR) and various civic
organizations. He is a graduate of North Carolina State University.
New Associates Join NAI Carolantic:
NAI Carolantic welcomes Al Tadych and Jake Plotkin as the
newest members of our brokerage team.
Mr. Tadych recently joined NAI Carolantic Realty after
moving to NC from Ohio where he had been actively involved in real estate
since 1967. As a broker with NAI Carolantic, his concentration is in
commercial investment and industrial brokerage. Throughout his career, he
has specialized in various aspects of both residential and commercial real
estate, from property management for shopping centers, regional malls and
office buildings to ownership of an ERA franchise. Since 1971, Mr. Tadych
has owned an investment company which purchases, rehabilitates, renovates,
rents and resells properties in the suburban Cleveland Market. Mr. Tadych
is President-elect of the Rotary Club of Wake Forest. He received a BA in
Economics from the University of Dayton in Ohio.
Mr. Plotkin joined NAI Carolantic this year after previously
being associated with the Company as an intern while he was a student at NC
State University. Working directly with Richard Hibbits, Mr. Plotkin now
specializes in industrial, flex and office leasing. A recent graduate of
North Carolina State University in Raleigh, Mr. Plotkin's education also
included several extended stays in Lima, Peru where he acquired fluency in
Spanish.
Company Profile:
NAI Carolantic is the Raleigh/Research Triangle area's
leading commercial real estate firm.
- Sixteen
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.
Search our
property database
Learn more about NAI
Carolantic Realty
NAI Global:
NAI Global is pleased to announce that we are #5 on National
Real Estate Investor magazine's ranking of the Top 25 Brokerage Firms. The ranking
is based on the total aggregate dollar value of leasing transactions and
investment sales globally during 2006.
With over 5,000 real estate professionals in over 350
markets in 45 countries worldwide, NAI Global serves corporate,
institutional and government clients through its strategically located
offices in major, secondary and tertiary markets.
Learn more
about NAI Global
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