Colliers recently published it's 4th Quarter 2010 Office Highlights report for the US and Canada.

Summary:

• Office Markets Look and Feel a Lot Better - But Higher Rents Still Some Way Off.
• U.S. office vacancy rate down sharply - U.S. office market has unquestionably turned the corner.
• Office occupancies up for a third consecutive quarter.
• Rent picture again mixed.
• Office construction slows to a trickle.

Some other interesting results:

• Highest US Downtown Office Vacancy Rate - San Jose/Silicon Valley at 27.9% (down from 35% the previous quarter)
• Highest US Suburban Office vacancy Rate - Las Vegas at 38.6%
• Most Absorption for 2010 - Washington DC metro area at over 4.1 million square feet (Midtown Manhattan a close second at nearly 3.6 million square feet)
  
• Lowest US Downtown Vacancy Rate - Raleigh/Durham at 5.3% (with a 33.8% suburban vacancy rate)
• Averages -  Downtown Vacancy Rate 16% - Suburban Vacancy Rate 18.3%
  

More on Office Vacancy Rate

It appears that Google may be ready to expand into New York / Mnahattan office space ownership in a big way. According to the New York Post they are looking to purchase the office building at  111 Eighth Ave. building, one of the largest office buildings in Manhattan.  The 18 story office building takes up an entire block between Eighth and Ninth avenues from 15th and 16th streets and has 2.9 million square feet of office space. The rumored price is $2 Billion dollars, which at $690 per square foot is a good deal compared with the $1,500 per square foot prices of 2007.

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If you happen to live in a condo, then you'll easily understand why a small business considering purchasing a commercial office condo needs to know about how and when to interface with the Board of Directors of the condo association. However, if you own a small business but have never dealt with a condo board, then you should be aware of the rights and obligations involved before purchasing an office condo.

Just as with any type of building there the common spaces that are mutually and equally shared, a commercial office condo is operated based on the Bylaws developed and adopted by that condo board. One of the requirements outlined in those Bylaws is how often the Board of Directors must meet, what repairs or changes require board approval and what repairs or maintenance can be done by the management team of the commercial condo.

Of course, you want to understand the other portions of the Bylaws as well because these binding agreements control how you can or cannot use the building. For example, you would expect to see in a set of Bylaws that any damages done to common areas by visitors to your office condo are your responsibility. You might also expect to find clauses which prevent owners from drastically changing the exit doors to their condos and other similar restrictions on use or changes.

The Board of Directors of a commercial condo association is made up of elected officers that are owners or designated representatives of owners of units in the building. When a commercial condo is first completed and the building opened for purchase of units, the board may be made up of the developer and other designates that have direct interest in the development. However, after a period of a year or once there are sufficient owners to build a sound, responsible board from, officers are elected from the owners.

You may think, at first glance, that control of everything is given to the selected owners that are elected to the board of directors. This really isn't true at all. The board can, without bringing a motion before the condo owners association members, take care of some expenditures and other business as outlined in the Bylaws. But all major changes are brought up as business during a Condo Association Board of Directors’ meeting, which must be announced formally in plenty of time for owners to notice and attend. In other words, you get a vote in any actions which might impact your business significantly.

In mixed use properties there may be more than one Association involved. Master associations and sub-associations should be used when the users of the units in a single condominium are restricted to significantly different uses. An example would be a condo that has a combination of residential, retail and office uses. In those situations there could be more opportunities for deadlock votes. For that reason dispute resolution to include mediation should be include in the Bylaws.

The best way to interface with the board of a commercial condo association is to attend, or have a designated representative attend, each meeting of the Board of Directors. This way, if any unexpected business is brought up, or if you need to bring up an issue, you'll have your ownership represented.

If you know you need to bring up a topic before the board, it should be sent in writing well before the meeting to the President of the Board of Directors so that it can be placed on the agenda. Taking an issue up on the fly can backfire and fail to get your issue noticed.

An even better way to keep up with what's going on with the board and to interface your business with them is to agree to hold a position on the board of directors. Most condo association board meetings are not lengthy and are critical to the maintenance of the lovely commercial condo office you purchased into.

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Delinquencies for commercial-mortgage-backed securities have topped 9 percent for the first time.

The Trepp National CMBS Delinquency Report shows that 9.05 percent of about $694 billion in commercial loans that back outstanding CMBS were 30 days or more delinquent as of Sept. 28 versus 6.49 percent at the beginning of 2010 and just 0.38 percent three years ago.

Source : Wall Street Journal (09/29/10)

I attended the Associated Realty of the Americas conference this week in Seattle. They have a very dynamic group of top producers involved in their network of agents in the US, Canada and Mexico.

One of the people I met there introduced me to a new form of financing I was unfamiliar with, securities based loans. These are loans that are collateralized by publically traded US or foreign securities. They can be used for any purpose, including real estate.

• Fixed rate interest rates of between 2.5% and 4.5%
• Up to 80% Loan to Value Ratio of the portfolio
• Low origination fees and no other closing costs
• Loans are non-recourse
• Loan terms of between 3 and 10 years
• Minimum loan amount is $100,000
• Maximum loan amount is unlimited
• Can be funded in as little as 10 days
• All loans are SEC and FRB compliant

With the credit market at tight as it is, this can be an alternative to be able to obtain favorable financing terms.

For more information