Economy
From NAI Global: Commercial Real Estate Markets Continue Long, Slow Recovery
Jan 11th
Vacancy, Rental Rates Show Signs of Improvement in 2012 as Demand Increases
NAI Global Issues 2012 Global Market Report; 26th Annual Volume Provides Review/Forecast for 217 Commercial Property Markets Worldwide
The commercial real estate industry demonstrated positive signs of growth of in the first half of 2011, but by year’s end many markets worldwide were coping with the impact of financial uncertainty in Europe and the United States, according to the 26th annual Global Market Report released today by NAI Global.
Activity was strong in the first half of 2011, as corporate space users took advantage of a global tenant’s market to reduce overall occupancy costs through consolidation and locking in low effective rental rates. However, commercial real estate markets across the globe were weighed down by the global financial crisis in the second half of the year. Most markets are continuing to show signs of improvement, but at a slower pace. However, with limited new construction, markets could tighten quickly should the pace of the economic recovery pick up.
“While the level of optimism varies from market to market, commercial real estate market fundamentals are generally improving,” said Jeffrey M. Finn, President and CEO of NAI Global. “Corporations once again are moving forward on plans, taking advantage of a tenants’ market worldwide to reduce their overall occupancy costs. Investors are beginning to chase yield as they move beyond core trophy assets to the quality opportunistic plays in strong secondary markets. With a tremendous amount of capital amassed on the sidelines, we expect more assets to transact as pricing continues to hold steady.”
Capital markets showed clear signs of improvement as historically low interest rates and high investor demand resulted in significant increases in global investment sales volumes. Cap rates compressed in most primary and secondary markets, as well-capitalized REITs, private equity and institutional investors aggressively pursue yield. With a relative shortage of quality assets on the market, this trend is likely to continue into 2012. Investors are also acquiring large portfolios of loans and REO as financial institutions are placing more product on the market.
While the level of real estate recovery varies from market to market, many markets across the U.S. are showing signs of recovery, as are parts of Asia, Europe and Latin America. However, the continuing uncertainty in the euro zone and the United States is creating a highly volatile global market that is impacting economic recovery in markets worldwide.
“The US economy is well over two years into the most anemic recovery in post-WWII history,” added Dr. Peter Linneman, NAI Global Chief Economist and Principal at Linneman Associates. “With the exception of home prices, all of the key economic indicators are on the ascent from their respective low points, but are at multiple standard deviations from historical norms. Job growth will be crucial for recovery in real estate markets, as jobs are needed to fill vacant space.”
Now in its 26th year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in over 200 property markets worldwide. To obtain a copy of the full report, click here.
Safeway opens new supermarket in Bozeman, maybe be first LEED certified in Montana
Dec 5th
Jobs, energy savings and more. That’s what’s happening on the corner of 19th and Main Street in Bozeman.
Safeway closes old store, opens new store
Safeway’s new store opening today could be the first supermarket in Montana to be Leadership in Energy and Environmental Design-certified.
Located at the northeast corner of 19th Avenue and Main Street, the $12 million, 58,000-square-foot store opens at noon.
“It’s designed to use at least 17 percent less energy than an ASHRAE-baseline building,” Safeway spokeswoman Sara Osborne said, referring to a LEED standard set by the American Society of Heating, Refrigerating and Air Conditioning Engineers.
Amanda Ricker, Chronicle Staff Writer | Friday December 2nd, 2011 – click to read full article
Proposed Student Housing, Upgrades & Amenities at MSU Bozeman
Sep 26th
Do you hear that buzz? It’s at Montana State University and the talk is about the proposed student housing, upgrades and amenities. Here are a few stories for you to read while the developers await MSU’s approval.
Developers file preliminary application for student housing community south of MSU
“Developers have filed an informal application to build a modern student housing community and commercial district on 127 acres of farmland south of Montana State University.
RTR Holdings II is proposing to build the South University District south of Kagy Boulevard between South 19th and 11th avenues.
By filing an informal application, the developers are seeking direction and advice from Bozeman city officials prior to submitting a formal plan for final decision.
Phase one of the project – which makes up about one-fifth of the proposed development – calls for the construction of six three-story student apartment buildings and a community clubhouse west of MSU’s Bobcat Stadium.” Click here for full article by Amanda Ricker with the Bozeman Daily Chronicle.
MSU aims to build $7 million suite-style dorm to house more students
“Montana State University is proposing to build a new $7 million suite-style residence hall and spend another $8 million to fix up existing dormitories.
If approved by the state Board of Regents at its meeting this week in Billings, the new building would add about 70 more student beds to MSU’s housing stock, which already houses about 4,000 students.
A three-story, co-ed dorm, similar to the two North Hedges Suites near the SOB Barn, would be built west of the Hedges high-rise dorms.
To pay off the cost of building one new dorm and upgrading old ones, students’ room-and-board rates would be raised about 1 percent, or $40 per semester, starting in the fall of 2012.” Click here for full article by Gail Schontzler with the Bozeman Daily Chronicle.
Wells Fargo & Co., JPMorgan Chase & Co. and Lone Star Funds acquire $9.65 Billion in U.S. Real Estate Loans
Aug 31st
“JPMorgan Chase & Co., Wells Fargo & Co. and Lone Star Funds won the bidding for Anglo Irish Bank Corp.’s $9.65 billion portfolio of U.S. real estate loans, according to three people briefed on the auction’s results.” Bloomberg Businessweek reports.
Wells Fargo has decreased the amount of commercial property loans held by the next five largest commercial real estate lenders by $1.3 billion by paying about 80 cents on the dollar for the Anglo Irish Bank Corp.’s portfolio. It’s a risk but Wells Fargo has targeted portfolios that are performing loans and are not as likely to bring negative consequences compared to loans made during the peak of the fall.
The details have not yet been released to the public and this information comes from persons briefed on the auction results.
Sources:
JPMorgan, Well, Lone Star Said to Win Anglo Irish U.S. Loans by Bloomberg Businessweek http://news.businessweek.com/article.asp?documentKey=1376-LQJTLQ0UQVI901-2IJCNHKC5G9CPTP7CDPT7B1KFA
Wells Fargo Jumps on Commercial Deals by The Wall Street Journal | Commercial Real Estate http://online.wsj.com/article/SB10001424053111903352704576540793407207006.html
Aaron’s Furniture, Electronics & Appliance Store Opening in Bozeman, Montana
Aug 29th
Today, the Bozeman Daily Chronicle announced that Aaron’s furniture, electronics & appliance store is opening in Bozeman soon. This means incoming jobs and stimulus to the local economy along with creating a beautiful store front for the N. 7th Street vicinity.
Aaron’s, a nationwide furniture, electronics and appliance store under construction on North Seventh Avenue, is scheduled to open in October.
Hilliard Thornton of Three Forks and his business partner David Lyons of Ennis are building the 7,000-square-foot franchise store on two empty lots between Big O Tires and Ferraro’s Fine Italian Restaurant.
Read more here.
Living and working in Bozeman, Montana
Aug 12th
Another reason why living and working in Bozeman, Montana is beyond great. “Not only did Outside magazine name Bozeman one of America’s best ski towns last year, now it’s also given one of the city’s employers the distinction of being among the nation’s best companies to work for.
MercuryCSC, a downtown communications company, is listed 16th on a list of 50 best companies to work for in the magazine’s September issue, slated to be out Tuesday.
MercuryCSC employees enjoy a relaxed workplace atmosphere with group yoga, mountain biking and snow sports excursions, a company kickball team called “Who Shot the Serif?” and a company cruiser bike for running errands downtown, according to the company’s website.”
Stay updated with ERA Landmark & NAI Landmark
Aug 5th
With the new Gallatin Field Airport expansion, Kohl’s building completion off College Street and hiring boom along with the new Safeway grocery store going in at 19th and Main Street not to mention Right Now Technologies local expansion, the buzz around town is that Bozeman’s still growing. But the buck doesn’t stop there, there’s a lot going on in Bozeman.

Here’s a few of the stories that might interest you:
- Gallatin Field Airport expansion opens to praise, but a few miss flights
- Kohl’s bringing more than 100 jobs to Bozeman, holding job fair next week
- RightNow Technologies gets national attention, plans to expand locally
- RightNow announces quarterly earnings are higher than expected
- Bozeman to consider new Safeway grocery
- Safeway webcam tracks sntore under construction
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Bozeman, Montana: A foreign trade zone?
Jul 26th
“A foreign trade zone would allow businesses in town to become global, and could result in a boost in the local economy” – BOZEMAN, Mont. — Mystery Ranch is a global leader amongst local businesses in Bozeman. The backpack company says they send their product to over thirty countries around the world.”We are becoming an international business and this is world headquarters,” said Gary Gullickson, head of government affairs with Mystery Ranch, “as we grow we need every tool that we can use to foster that growth.”Companies like Mystery Ranch are why the Bozeman Economic Development group recently sent out a survey to gauge the interest of local businesses becoming part of a foreign trade zone.
Beginning of the End, or End of the Beginning?
Oct 28th
“Today is the day that Britain steps back from the brink” so said Britain’s Chancellor George Osborne yesterday as he presented the Coalition Governments plans to eliminate the £109 billion structural deficit during the lifetime of this Parliament.
Osborne inherited the biggest budget deficit of any leading economy. But the question is: will his plans involving £81 billion of public spending cuts and the loss of almost 500,000 public sector jobs save the country, or push it over the edge into a double dip recession?
The city, primed over recent weeks to expect the worst, received the Chancellor’s news relatively calmly. Certainly we did not see rioting on the streets at the announcement of the rise in the state pension age to 66 for men and women by 2020, saving £5 billion a year.
In total, around £18 billion of savings will come from cutting welfare costs. Local Government took the deepest of the cuts overall, The Department of Communities and Local Government faces a 51% reduction in its budget to £3.2 billion. The cut of 26% in the Local Government Grant to £24.2 billion will have shocked Local Authorities, but no doubt it’s we the public who will suffer with harsh cutbacks predicted in the level of serving provided to none essential services such as parks, leisure centres etc.
Despite the cuts, it’s not been all bad news; the Chancellor has sought to achieve a delicate balance between austerity v stimulus. As promised, Health and Schools spending were protected and the Chancellor found more cash for areas that could boost Britain’s future growth, including investment in science and confirmation that Crossrail, the £16 billion east-west new rail line in London, will proceed.
Certainly for property the effective removal of demand from the Government as a major new property occupier will be doing little to cheer the markets. However with an effective freeze on Government lease renewals for some weeks this has been anticipated and perhaps already built into market sentiment.
The issue remains: how will the rest of the world react to the austerity plans announced by the UK Government? Will the plans announced yesterday in the UK spur other Governments on to grasp the nettle? Only time will tell and in the meantime we must all take our medicine and hope that this is the end of the beginning and there will be brighter times ahead.
-Paul Danks
Based in London, Paul Danks is NAI Global’s Senior Vice President of Corporate Services working with clients across Europe, the Middle East and Africa.


