CarterBlog

Carter's Michael Seton Offers Insight into Current Capital Markets Climate

By Michael Seton, executive vice president, Carter

Real estate transaction interest is extremely high right now, especially in the major “football” cities. However, there is a clear delineation in the market between major and secondary markets. Even so, in light of reduced transaction volume levels, we are seeing investors pushing into the secondary cities and tertiary markets with the expectation they will obtain a higher return level. 

The hottest property types for purchase seem to be multifamily and hotel, which has clearly been a theme over the past year. Office and other property type trades are happening, but with fewer bona fide bidders. It is widely reported that multifamily trades in major markets are typically taking place at 4 percent to 5 percent cap rates, or “height of the market” levels. This is primarily due to the availability of government-sponsored enterprise (GSE) financing and the perception multi-family is a good inflation hedge.

Hotels, on the other hand, were so “beaten down” on values that opportunity investors thought they were purchasing these assets at significant discounts with respect to replacement costs, especially with the rise in commodity prices and assumption business travel will resume prior to leisure as the economy recovers. 

Debt is readily available for most deals. However, either full or partial recourse is required for less stable, value-add properties. Even though many debt funds had been raised over the past 24 months to fill the “liquidity void,” many of these funds have not been fully deployed due to high costs, which discourage bidders from being competitive on property sale. In addition, bid/ask spreads have tightened dramatically to allow for recent activity and life companies and banks are starting to stretch a bit more to put out money.

The CMBS market is slowly coming back, having recorded about $11.8 billion in volume in 2010, up from virtually zero in 2009. This is still way down from $230 billion in 2007, but this market is making its way back by mainly sticking to the major food groups and more traditional “conduit sized” loans versus large loans. By doing so, these smaller loans are clearly not allowing large assets to trade.

Interestingly, I think a lot of the volume in 2011 will come from bank note sales for a number of reasons.

1) Bank sales tend to be executed quickly. Many of these sales are completed within 8 weeks compared to property sales that drag on with all cash purchases.

2) Bank note sales are easily executed. Note assignments do not have reps, warranties by lender or a servicer.

3) They get good results. First, bank sales receive good bids because bidders think they are getting a deal since they are buying a note. Secondly, trades are occurring at 100 percent of underlying real estate value, making the execution good for the seller and buyers don’t seem to pricing in foreclosure, cost or time.

Mr. Seton is executive vice president of Carter and head of the company’s Manhattan-based capital markets group. He is involved in all aspects of equity raising and debt financing for Carter. 

Carter Completes Materials Research Facility for University of South Florida

By Mitsu Parker, assistant project manager, Carter

ATLANTA (April 26, 2011) The University of South Florida, a leading public research university, now has its very own Materials Research Facility. Last month, Carter completed the second floor buildout of the facility located within the existing Interdisciplinary Research building at the USF Research Park of Tampa Bay. This new space fosters collaboration between the Chemistry, Physics, Engineering and Computational Theory programs in the new 26,000-square-foot building. With 17 labs and additional workspace, this state-of-the-art facility is designed for interdisciplinary partnership on scientific experiments.

The project, which began in March 2010, is the first space of its kind for the university. In addition to the various labs, the floor provides workspaces for further collaboration with various workstations located throughout the space. This project reflects the continuing partnership between Carter and USF that began in 2004. Carter has worked with the university on developing two buildings in the Research Park in addition to a medical office building development. We look forward to continuing our relationship with USF.

Mayor Kasim Reed Announces Finalists for President and Chief Executive Officer of the Atlanta Development Authority

By Malloy Peterson, vice president of marketing, Carter

ATLANTA (April 22, 2011) - Mayor Kasim Reed announced today the three finalists for president and chief executive officer of the Atlanta Development Authority. As chairman of the selection committee, Carter President, Scott Taylor, commented on the high quality of the candidates.

"The City of Atlanta is very fortunate to have three highly qualified finalists to head the Atlanta Development Authority. The level of national interest in the position and caliber of the applicants interviewed are a testament to the momentum and excitement created by Mayor Reed's vision to take economic development in Atlanta to the next level. Mayor Reed has made economic development a top priority, and each one of the finalists has the proven ability to continue to move Atlanta forward."

The final decision will be announced in the next few weeks. See below for the City of Atlanta’s press release, which includes bios of finalists.

MAYOR KASIM REED NAMES THREE FINALISTS FOR PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE ATLANTA DEVELOPMENT AUTHORITY

Mayor Kasim Reed on Friday named the three finalists for President and Chief Executive Officer of the Atlanta Development Authority. This slate of finalists is the result of a national search conducted on the City’s behalf by the Royster Group and an independent selection committee appointed by Mayor Reed.

After receiving the search committee’s recommendations, Mayor Reed narrowed the list of candidates to three finalists: Ernestine Garey, Interim President of the Atlanta Development Authority; Daniel Gundersen, Senior Advisor with Econsult Corporation, and Principal of Development Change & Growth (DCG Group); and Brian P. McGowan, U.S. Deputy Assistant Secretary of Commerce for Economic Development.

“The Atlanta Development Authority has played a vital role in helping the City of Atlanta move toward economic recovery,” said Mayor Reed. “The ongoing revitalization of the Historic Westside District with corporate partners such as Wal-Mart, the redevelopment of Fort McPherson, and the relocation of Novelis to the city are all key examples of the ADA’s important work. I believe the three finalists under consideration to lead the ADA will continue that momentum and generate even more economic investment and development opportunities.”

Ken Taunton of Royster Group said the search firm cast a wide net across the country targeting urban metropolitan cities and economic development professionals for the Atlanta Development Authority. 

“Royster Group and the search committee delivered a slate of qualified candidates we feel will have an immediate impact recruiting new investments, retaining existing businesses, and developing a strategic vision for job creation,” Taunton said.  “The three finalists are highly experienced and seasoned economic development candidates with track records of working on the state, federal and international platform.  We feel these candidates can work with diverse stakeholders to cultivate the City of Atlanta current corporate partners as well. Each candidate brings significant leadership to take on the opportunities and challenges of running one of the city’s important divisions, the Atlanta Development Authority.”

The Atlanta Development Authority Selection Committee was chaired by was chaired by Scott Taylor, president of Carter. Other members of the committee were:  Atlanta City Councilwoman Joyce Sheperd, Anna Foote and Julian Bene. The committee worked with the Royster Group to interview and recommend candidates to lead the City of Atlanta’s financial team.

"The City of Atlanta is very fortunate to have three highly qualified finalists to head the Atlanta Development Authority,” said Taylor, chairman of the selection committee. “The level of national interest in the position and caliber of the applicants interviewed are a testament to the momentum and excitement created by Mayor Reed's vision to take economic development in Atlanta to the next level. Mayor Reed has made economic development a top priority, and each one of the finalists has the proven ability to continue to move Atlanta forward."

Ernestine W. Garey, Interim President of the Atlanta Development Authority (ADA)

Ernestine W. Garey has served as the Interim President of the Atlanta Development Authority, the economic development agency for the City of Atlanta since January 2010. Previously, she served ADA as managing director of Housing Finance for more than ten years. In this capacity, she was responsible for crafting, implementing and executing the vision of the agency in the development and implementation of multifamily and single-family tax-exempt bond initiatives.

She has been instrumental in the issuance of more than $1 billion in housing revenue bonds since 1986, creating over 15,000 units of affordable workforce housing for both rental and homeownership in the city of Atlanta. Before assuming her position as managing director, she served as compliance administrator and deputy director of the Urban Residential Finance Authority for more than 12 years prior to its consolidation with the Atlanta Development Authority.

Garey is also responsible for the implementation of the Housing Opportunity Bond program and the Beltline Affordable Housing Trust Fund, which together provide more than $40 million to spur the creation of new affordable housing opportunities for the city of Atlanta’s workforce. 

Garey holds a master’s degree from Clark Atlanta University. She is the incoming Vice President to the Board of Directors for the National Association of Local Housing Finance Agencies, the premier advocacy group of affordable housing professionals.

Daniel Gundersen, Senior Advisor with Econsult Corporation, and Principal of Development Change & Growth (DCG Group.)

Daniel Gundersen provides advice on sustainable development, organizational change, and growth strategies to businesses and governments. Recent work includes assisting a White House Task Force with disaster recovery efforts related to BP Oil Spill in the Gulf. His work involved assessment of short and long term economic growth strategies as an expert for IEDC and the National Incident Command team.

He is a former Commissioner of the New York State Department of Economic Development, Co-Chairman for the Empire State Development Corporation, and served as New York’s first and only Upstate Chairman. In 2007, New York rose to #1 from #14 in North America for the number of completed corporate attraction and expansion deals (IBM Global, Brussels, Belgium).

Prior to New York, Gunderson was the Executive Deputy Secretary for the Pennsylvania Department of Community and Economic Development. As the department’s COO, he was responsible for directing operations approaching $1 billion annually and implementing a $2.8 billion economic stimulus program. Pennsylvania rose to #1 in North America in 2005 for the number of completed corporate attraction and expansion deals (IBM Global.)

Previously, Gunderson worked for the State of Maryland as Assistant Secretary for Business Development as the state's chief marketing official. He launched a global strategic plan focused on key competitive industry sectors.

Gunderson's career began in Philadelphia where he worked with corporate and public leaders to develop nationally acclaimed public/private partnerships. He was co-author and director of development for the Philadelphia/Camden Federal Empowerment Zone, which improved economic conditions in impoverished communities.

Gunderson received his B.A. in Political Science from Hope College in Holland, Michigan and a Master of Governmental Administration from the University of Pennsylvania.  He currently serves on the board of the International Economic Development Council.

Brian P. McGowan, U.S. Deputy Assistant Secretary of Commerce for Economic Development

Brian McGowan was appointed U.S. Deputy Assistant Secretary of Commerce for Economic Development and Chief Operating Officer for the U.S. Department of Commerce’s Economic Development Administration (EDA) in September 2009. Before joining the Obama Administration, he was appointed by Governor Schwarzenegger and served as California’s Deputy Secretary for Economic Development and Commerce.

McGowan has over 15 years of economic development experience at all levels of government. He was appointed as the Economic Development Agency Administrator for the County of San Bernardino, California where he was responsible for overseeing four departments. He also worked in the economic development departments for the California cities of Ontario and Palm Springs in California. In addition, McGowan consulted on a U.S. Agency for International Development funded program where he developed economic growth programs for cities in Bulgaria and Serbia.

McGowan's broad experience in the field of economic development has allowed him to create and implement comprehensive and award winning marketing/public relations campaigns, workforce development initiatives, business retention/expansion programs and support networks for businesses and entrepreneurs. McGowan also created the Palm Springs Foreign Trade Zone and led a series of trade missions to China for both the City of Ontario and County of San Bernardino – and created a permanent Office of International Trade. He also chaired the California International Trade Advisory Council and spearheaded several trade programs with Mexico and Germany.

In California, McGowan also served as the Chairman of the Infrastructure and Economic Development Bank and on the boards of the Employment Training Panel, the California Workforce Investment Board, the California Association for Local Economic Development and Team California.

Brian received a Bachelor’s degree in Political Science from the University of California, Riverside and a Master’s degree in Politics, Economics and Business from the Claremont Graduate University. He is also the Michael and Mary Johnston Fellow at the Claremont Graduate University where he is completing a PhD in American Politics and Policy.

ABOUT ATLANTA DEVELOPMENT AUTHORITY

The Atlanta Development Authority is the official economic development agency for the city of Atlanta. ADA is a research-based economic development organization, focused on residential, business and investment growth in the city. ADA manages the city’s ten tax allocation districts. Visit www.atlantada.com.  

 

 

 

 

Gov. Deal: Creating New Jobs Critical to Georgia's Success, Real Estate Market

ATLANTA (April 20, 2011) - New job creation is critical to Georgia's economy, and Gov. Nathan Deal said Wednesday he is working on several programs to ensure the state is in a position to compete with - and beat - other states and countries when attracting new business.

In the current economic development environment, Georgia "is in competition with every other state," the governor said during a speech at the Atlanta Press Club. "Sometimes that competition is very, very vicious."

Deal, who visited Carter during his successful gubernatorial campaign, outlined several actions to keep Georgia competitive. They included the creation of the state's Competition Initiative and beefing up of the pool of money for Regional Economic Business Assistance (REBA) grants. 

The Competition Initiative, which will meet for the first time next week, will help answer the question,"What other things can the state of Georgia do to be more competitive," Deal said. The initiative will be a cooperative effort among the governor's office, Georgia Department of Economic Development, Georgia Chamber of Commerce and others.

"With all of these various entities working together, we think we'll produce some very good results," the governor said.

That's would be good news for developers. Job creation fuels demand for all types of commercial properties, especially office and retail.

Deal said the state also is allotting more money to fund REBA grants, which are designed to spur job creation. Since 2000, REBA grants have helped create 8,300 new jobs in Georgia, Deal said. Moreover, REBA grants played a role in attracting the new Kia plant in West Point and winning two major headquarters relocations - NCR to Gwinnett County from Dayton, Ohio, and Newell Rubbermaid to Sandy Springs from the Midwest. 

Creating new jobs also will help Georgia's housing market, which he told AJC reporter Rachel Tobin "is truly one of the most troubling parts of our economy."  Tobin asked the governor what his office could do to help the residential real estate market rebound, and while Deal said the issue impacts local municipalities more than the state, it's still something he's very concerned about.

"What we have to do is create greater job opportunities," he said. That in turn will help the residential market by creating new demand for homes and giving residents the income they need to purchase homes.

 

 

Carter in the Community

By Malloy Peterson, vice president of marketing, Carter 

This past weekend was action packed for the Carter team. Over 60 Carter volunteers, many accompanied by their families, staffed two area events: Sweep the Hooch and Walk for Wishes.

Ten volunteers worked the first annual Sweep the Hooch event, an 18-site river cleanup within the Chattahoochee River National Recreational Area (CRNRA). The effort not only improves water quality, but also helps foster a strong “river community.” Carter sponsored the Powers Island Park; one of the 18-sites in the 48-mile CRNRA, where Carter associates picked up trash and performed trail maintenance. Jennie Rusciano and Tom Morgan were co-chairs for the event.

“Tom and I are both members of Carter’s Green Team,” said Jennie. “This was a great event for our associates to get more immersed in Atlanta’s sustainability community and enjoy the beautiful day!”

The event was a kick-off to National Park Week, April 16-24. All 392 national parks across the country (including the CRNRA) have free admission during National Park Week. Sweep the Hooch was made possible by the support of Upper Chattahoochee Riverkeeper, National Park Service and Trout Unlimited. More information on the event’s success can be viewed on the Upper Chattahoochee Riverkeeper website.

While some Carter associates were doing a little spring-cleaning on the Chattahoochee, 52 Carter employees and family members were gathered at Atlantic Station for the Annual Walk for Wishes Campaign, a two-mile walk to raise funds and awareness for the Make-A-Wish Foundation. The Carter team raised over $6,000 towards its annual goal. All the proceeds go directly to granting wishes. We would like to recognize Alyssa Sargon, daughter of Carter employee Shari Sargon, who raised over $1,000 for Carter’s Walk for Wishes team. As a result of the money raised from the walk, 31 children will be granted wishes.

This is the fourth year Carter has participated in the event. Before the walk, associates and their families enjoyed the morning’s entertainment which featured fun events like face painting, a bounce house and salsa lessons. Matt Wirth and Sonia Winfield were co-chairs for this event.

“I am always impressed by the event turnout,” said Matt. “It is especially great to see Carter’s wish kids at the event enjoying the festivities with their families.”

Donations for the event are still coming in. If you would like to contribute or if you are interested in getting involved with the Make a Wish Foundation, please contact Matt Wirth at mwirth@carterusa.com.

 

Carter’s John Brien is appointed to BOMA-Atlanta’s Board of Directors

By Maya Chandiramani

The Building Owners and Managers of Atlanta (BOMA-Atlanta) appointed Carter property manager, John Brien, to its 2011 Board of Directors.

John will work closely with other officers and directors to help shape BOMA-Atlanta’s strategic vision. He has held other leadership positions with BOMA-Atlanta including Editorial Board Chair, Professional Development Chair and Strategic Planning Committee member. In 2005, John was the recipient of BOMA’s Young Professional Award.

John has been in the facility and property management sector for the past 12 years. He currently serves as General Manager of four class “A” buildings at Satellite Place in Duluth, Ga. These multi-tenant buildings make up 600,000-square-feet of space and have been Carter managed since June 2007.

Congratulations, John!

About BOMA-Atlanta

BOMA-Atlanta's strategic purpose is to enhance the value and success of individuals and companies in commercial real estate. The organization achieves this purpose through the mission of providing education, government advocacy and networking events for individuals and companies in commercial real estate. 

 

Carter’s Dale Lewis Represents Windham Brannon, P.C. in Long-Term Lease

By Malloy Peterson, vice president of marketing, Carter

Dale Lewis of Carter just completed a deal on behalf of Windham Brannon, P.C. at 3630 Peachtree in Buckhead. After a recent merger with Tarpley & Underwood LLC, the accounting firm is consolidating two offices into the 35,000 square-foot space, which brings the office tower to more than 40 percent leased. The 12 year, six-month lease will begin on Aug. 1 and be the new home to 150 employees.

Windham Brannon, P.C. previously leased approximately 45,000 square feet at 1355 Peachtree Street and Three Ravina Drive. By consolidating the offices, the company is bringing 30 new jobs, previously located outside the Perimeter, into the city.

“This is great news for Windham Brannon, P.C. and the city of Atlanta,” said Dale Lewis. “It is a testament to the strength of the firm and Mayor Kasim Reed’s citywide initiative to bring jobs into the city with his new Hire One Atlanta program.”

Windham Brannon, P.C. was attracted to the 3630 space due to its Buckhead location in the Atlanta financial district, proximity to MARTA, daycare facilities, conference center and fitness facility.

Dale was the tenant representative for Windham Brannon, P.C. Jackie Gauthreaux and Jennifer Koontz of Pope & Land Enterprises along with Kerry Armstrong of Duke Realty represented 3630 Peachtree.  

 

Carter Continues to Grow Its Presence in Enid, Okla.

By Danny Jardine, senior vice president, Carter

ENID, Okla. (April 13, 2011) - Last week, the Enid board of commissioners voted 7-0 to approve a contract with Carter for project management services for the Enid Renaissance project which includes a new event center and renovations to the existing convention hall.

This is a big step for Enid after citizens voted down a 40 million dollar bond referendum for the Gateway Enid project last August. In an effort to revitalize Enid’s downtown, the Gateway Enid project plan included a new event center, renovation of the convention hall, expansion of Cherokee Strip conference center and a large public green area. The vote late last summer has forced the project to be scaled back, but Carter is excited to get started with the now $20 million project. This project will still include the event center construction, which contains an exhibit, concert and multipurpose hall. The new center will be an ideal location for conventions and athletic events. Carter will also complete renovations to the existing convention hall as funding allows. Convergence Design is the architecture firm and Flintco is the construction manager at risk for the project.

When the bond referendum needed for Gateway Enid failed by 132 citizen votes last August, the project was never pronounced dead. Back in February of this year, Carter was asked by the city to help in the negotiations with Flintco. By taking the lead in this process and staying engaged, Carter now serves as the owner’s representative and will provide onsite project management for the city. Carter is expecting construction to begin in early May and the project to be completed by Oct. 1, 2012.

Due to our successful project with the Enid public schools, we have a proven track record in this community. We are excited about bringing jobs to Enid for the project’s construction and stimulating Enid’s current businesses.

 

 

Atlanta's Office Overall Vacancy Rate Hits 20%, But Class A Segment Shows Signs of Hope

By Jonathan Gerrard, research and marketing associate, Carter

ATLANTA (April 11, 2011) - Metro Atlanta's overall office vacancy rate hit 20 percent in the first quarter, dragged down by more than 1 million square feet of negative net absorption of Class B space.

The Atlanta office market's vacancy stood at 19.8 percent at year end 2010 and inched up to 20 percent last quarter, according to just-released information included in CoStar's Atlanta Office Market report. At 20 percent, the market's office vacancy rate is twice what most insiders consider equilibrium (10 percent).

That means some 41.2 million square feet of office space was vacant as of March 31, and Atlanta remains a tenant's market - for now.

During the first quarter, Atlanta's overall office market saw negative net absorption of 413,722 square feet, with 1.1 million of this in Class B space, according to CoStar. These factors, coupled with still-strong concessions from landlords, helped push down overall quoted rental rates to $19.39 a square foot, down from $19.64 at year end 2010.

Class C office properties recorded 144,342 square feet of negative absorption during the first quarter, CoStar said.

But, some positive signs did emerge for Atlanta's office market during the first quarter.

The vacancy rate of Class A space dropped to 21 percent, down from 21.8 percent. And, the Class A segment has positive absorption of 838,054 square feet, according to CoStar. As a result, quoted rental rates for Class A space increased to $21.68 in the first quarter. While this represents an increase of only 9 cents per square foot, it is psychologically significant because it shows that the Class A sector likely has bottomed out.

 

 

 

 

The Banks Meet Up/Tweet Up and Tours Draw More Than 100 People

By Wilbert News Strategies

CINCINNATI (April 4, 2011) - The inaugural Meet Up Tweet Up at The Banks proved to be a great success. (Check out photo album on top left of blog)

Scores of people showed up March 30 at the Holy Grail's new location at The Banks to see the development for themselves, and of course, to tweet about it. A couple of downtown bloggers dedicated posts to the event. Attendees included Carter Chairman and CEO Bob Peterson, Carter Vice Chairman Jim Shelton, USAA Real Estate Chairman and CEO Pat Duncan, Brasfield & Gorrie executive Roddy McCrory and Chris Kemper of the Cincinnati USA Regional Chamber.

National commercial real estate reporter Ben Johnson, who wrote a biography on icon Sam Zell, flew in from Dallas for the event and to gather information for an article he will write about The Banks for National Real Estate Investor magazine. Johnson tweeted on his iPad during the event.

The Banks is an 18-acre riverfront mixed-use development in the heart of Downtown Cincinnati between Great American Ballpark and Paul Brown Stadium. The project will comprise 300 multifamily apartments, 300,000 square feet of office, a 200-key boutique hotel and a new 45-acre park. 

The Banks Meet Up Tweet Up attracted several downtown Cincinnati residents happy to see The Banks open and check out the first commercial tenant at the development. Mark Vaughn and Jill Zadik walked about four blocks from their condo and said they liked what they saw. 

The Meet Up Tweet Up started with three tours of the Banks that included a sneak peak of the model unit in Current @ The Banks, the development's first apartment community that opens layer this month. During the tours, Trent Germano, who has spearheaded Carter's role since its initial involvement four years ago, provided incredible detail about and insight into the development. 

Local TV crews joined the tour and interviewed Carter's Laura Griffin for their newscasts.

The Cincinnati Chamber also hosted a tour of The Banks the same night, and that tour ended its evening at the Meet Up Tweet Up at Holy Grail.

The event helped stir up interest in The Banks and Current @ The Banks. More than 30 people started following The Banks Twitter account the night of the event, and @TheBanksCincy now has topped 400 followers.