Jones Lang LaSalle
PLOTS & PLOYS
Yachts and Models
June 21, 2006; Page B4
The search goes on for new lures to sell slow-moving luxury condos. In Florida, Miami-based Fortune International and Shefaor Development are throwing in a 60-foot yacht for condo buyers to lounge in while their unit is being built. To qualify, buyers must buy one of the units priced over $1 million. For an additional $300,000, they can have use of the yacht for 60 days a year every year they own the condo. "We're not only selling real estate, we're selling a whole lifestyle," Shefaor co-principal Gilbert Benhamou says of the 232-unit ArTech development midway between Miami and Fort Lauderdale in Aventura.
To give buyers a feel of their new condo, the interior of the yachts will be outfitted like their landlocked new home, including a similar kitchen. Those paying for continued use of the boat will share it with five other condo buyers and receive fractional ownership. Developers hope the $1.8 million yachts will help them sell out a project they say is 80% sold.
Meanwhile, in New York, fashion models are moving from the catwalk to the condo sales office in a bid to stimulate sales. In the two months since founding ID Model Management, Paolo Zampolli says six models have earned their brokers' licenses and seven others have signed up for licensing courses. Models have sold two apartments in the Cipriani Club Residences at 55 Wall Street to two Italian financiers, says Mr. Zampolli, expressing confidence his models' looks and ambition will help him best Manhattan's more seasoned brokers.
Warning Sign?
Will the robust commercial construction market follow home building down the path of slower growth? So far, construction of hotels, malls and hospitals is picking up the slack for the dropoff in growth among single-family homes.
But there may be a blip on the horizon. A novel indicator of construction activity six to nine months in the future is showing softness for the first time in 20 months. The Architecture Billings Index, published by the American Institute of Architects, measures revenue at 300 architecture firms around the country; most do commercial rather than residential work. The index is meant to be a rough leading indicator of future construction spending. The idea is that hiring an architect is the first step to actual construction. The index was 49.6 in May, down from 54.2 in April. A score above 50 indicates revenue growth. A figure below 50 indicates contraction.
Possible causes for the slowdown include high material prices, rising interest rates and most importantly, an overall slowdown in the economy, says Kermit Baker, chief economist for the American Institute of Architects and author of the survey. Another possible explanation: Most of the revenue drops were among smaller firms in the survey, who tend to focus on residential projects. Some economists argue the Architecture Billings Index takes too small a look at the construction market to be a meaningful predictor.
Pricey Property
Office-building and apartment values jumped in the first quarter as strong leasing activity helped rents climb and vacancies fall. But investors are still paying a steep premium for properties in both sectors.
The average value of an office building in the U.S. was up 4.3% in the first quarter to $162.51 a square foot from the fourth quarter, according to the survey of the top 50 U.S. office markets by Reis Inc., a New York-based commercial real-estate research firm. Buildings that sold in the first quarter went for an average $210.94 a square foot, a 29.8% premium over the average value.
Some of the discrepancy between underlying values of properties and the prices being paid for them is because higher-quality buildings are trading more often, but much of the disparity is due to the flood of money looking for returns in the commercial real-estate market, says Reis Chief Executive Lloyd Lynford.
Apartments' average value posted a 3.2% gain to $84,940 per unit. Those sold in the first quarter went for $104,677 per unit, a 23.2% premium over the value. The reasons for the disparity are similar to those in the office sector.
---- Kemba J. Dunham, Christine Haughney, Alex Frangos and Ryan Chittum
PLOTS & PLOYS
Yachts and Models
June 21, 2006; Page B4
The search goes on for new lures to sell slow-moving luxury condos. In Florida, Miami-based Fortune International and Shefaor Development are throwing in a 60-foot yacht for condo buyers to lounge in while their unit is being built. To qualify, buyers must buy one of the units priced over $1 million. For an additional $300,000, they can have use of the yacht for 60 days a year every year they own the condo. "We're not only selling real estate, we're selling a whole lifestyle," Shefaor co-principal Gilbert Benhamou says of the 232-unit ArTech development midway between Miami and Fort Lauderdale in Aventura.
To give buyers a feel of their new condo, the interior of the yachts will be outfitted like their landlocked new home, including a similar kitchen. Those paying for continued use of the boat will share it with five other condo buyers and receive fractional ownership. Developers hope the $1.8 million yachts will help them sell out a project they say is 80% sold.
Meanwhile, in New York, fashion models are moving from the catwalk to the condo sales office in a bid to stimulate sales. In the two months since founding ID Model Management, Paolo Zampolli says six models have earned their brokers' licenses and seven others have signed up for licensing courses. Models have sold two apartments in the Cipriani Club Residences at 55 Wall Street to two Italian financiers, says Mr. Zampolli, expressing confidence his models' looks and ambition will help him best Manhattan's more seasoned brokers.
Warning Sign?
Will the robust commercial construction market follow home building down the path of slower growth? So far, construction of hotels, malls and hospitals is picking up the slack for the dropoff in growth among single-family homes.
But there may be a blip on the horizon. A novel indicator of construction activity six to nine months in the future is showing softness for the first time in 20 months. The Architecture Billings Index, published by the American Institute of Architects, measures revenue at 300 architecture firms around the country; most do commercial rather than residential work. The index is meant to be a rough leading indicator of future construction spending. The idea is that hiring an architect is the first step to actual construction. The index was 49.6 in May, down from 54.2 in April. A score above 50 indicates revenue growth. A figure below 50 indicates contraction.
Possible causes for the slowdown include high material prices, rising interest rates and most importantly, an overall slowdown in the economy, says Kermit Baker, chief economist for the American Institute of Architects and author of the survey. Another possible explanation: Most of the revenue drops were among smaller firms in the survey, who tend to focus on residential projects. Some economists argue the Architecture Billings Index takes too small a look at the construction market to be a meaningful predictor.
Pricey Property
Office-building and apartment values jumped in the first quarter as strong leasing activity helped rents climb and vacancies fall. But investors are still paying a steep premium for properties in both sectors.
The average value of an office building in the U.S. was up 4.3% in the first quarter to $162.51 a square foot from the fourth quarter, according to the survey of the top 50 U.S. office markets by Reis Inc., a New York-based commercial real-estate research firm. Buildings that sold in the first quarter went for an average $210.94 a square foot, a 29.8% premium over the average value.
Some of the discrepancy between underlying values of properties and the prices being paid for them is because higher-quality buildings are trading more often, but much of the disparity is due to the flood of money looking for returns in the commercial real-estate market, says Reis Chief Executive Lloyd Lynford.
Apartments' average value posted a 3.2% gain to $84,940 per unit. Those sold in the first quarter went for $104,677 per unit, a 23.2% premium over the value. The reasons for the disparity are similar to those in the office sector.
---- Kemba J. Dunham, Christine Haughney, Alex Frangos and Ryan Chittum
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