November 13th

In This Issue

Economic Notes:

This Weeks Leads:



New Report: Occupancy Growth Hits a Wall

Landlords are savoring some well-deserved occupancy gains. They may need to enjoy them while they last. An Oct. 27 research report from Property & Portfolio Research (PPR) predicts that vacancies in all classes of real estate (except office) will register above current levels by 2011. This shouldn’t be misread as dire news, however. Tight occupancy will allow most landlords to hike rents, and the tightest markets can absorb plenty of new development.

Boston-based PPR doubts that vacancy will continue dropping at the pace that it has been during the past few quarters. Between mid year and the end of September, for example, office vacancy dropped by 0.2% to 16% in the steepest decline of any property type. But PPR expects office vacancies to fall by just 0.1% between the end of September 2006 and the end of September 2007. That’s a meager drop, too: The previous twelve-month period saw office vacancies decline by 0.9%.

“The office market has done pretty well with what most economists are calling mediocre job growth in recent months,” says Bob Bach, director of national research at Oak Brook, Ill.-based Grubb & Ellis. Bach doesn’t expect office vacancy to drop quite as dramatically next year as it has in 2006.

The apartment market will also be challenged to bring vacancy down over the next 11 months. Apartment vacancies are only expected to drop by 0.2% to 5.5% by the end of September 2007. Like the office market, apartment vacancies fell sharply between September 2005 and 2006 (try 0.7%).

“We’ve really seen a shift over the past 12 months as more people have gravitated towards renting an apartment versus owning a home,” says Mark Obrinsky, chief economist at Washington, D.C.- based apartment trade association National Multi- Housing Council. His bullish outlook hinges on solid economic growth in 2007, plus declines in single- family home values.

While apartment and office are following similar paths over the next year, the office sector is poised to thin vacancy further within the next five years. PPR projects that the office market recovery will resume after next year, pushing vacancies down by 1.3% between early 2007 and the 2011.

For the near term, PPR expects some markets to outshine the herd. Sixteen markets should see a vacancy decline of roughly one percentage point between now and the end of September 2007. The leaders, in order, will be New Orleans office, Raleigh retail followed by San Jose office, in third place.

Some of these markets are in bad shape now, however. The New Orleans’ office market was 26.5% vacant at the end of September. San Jose, where the technology bust is still being felt, is grappling with 20% vacancy. And Raleigh’s retail market is coping with the after-effects of a construction boom that’s thankfully come to an end.

“While the occupancy recovery is largely over in many markets, rent growth projections are still healthy,” reads the report. “Upcoming rent growth in the apartment and office markets will outpace that of the past year. The picture is not so rosy for retail and warehouse markets, where rent growth is slowing, but still-decent growth is projected in the near term.”

Source: The National Real Estate Investor

How Do We Fare? - Utah Metro Commercial Office Vacancy Area - Q2 2006 Vacancy
  1. SLC CBD Class C - 25.99%
  2. SLCo Periphery Class C - 20.04%
  3. Weber County Class B - 19.91%
  4. Weber County Class C - 19.05%
  5. SLCo Suburban Class C - 16.14%
  6. Davis County Class C - 15.93%
  7. SLCo Suburban Northwest - 15.00%
  8. Provo Class A - 13.57%
  9. Orem Class B - 12.39%
  10. SLCo Periphery Overall 12.13%
  11. Davis County Class B 12.13%
  12. SLCo Periphery Class B - 12.05%
  13. Provo Class B - 11.47%
  14. Provo Overall - 11.45%
  15. SLCo Suburban Southeast - 11.23%
  16. SLCo Suburban Overall - 11.08%
  17. SLCo Totals - 10.92%
  18. SLCo Suburban Northeast - 10.82%
  19. Orem Class A - 10.66%
  20. SLCo Suburban Central East - 10.06%
  21. SLC CBD Overall - 9.88%
  22. Utah County Class A - 9.72%
  23. SLCo Suburban Class B - 9.42%
  24. Utah County Class B - 9.23%
  25. SLCo Suburban Class - 9.03%
  26. Utah County Totals - 8.78%
  27. SLC CBD Class B - 7.79%
  28. Orem Condo - 5.83%
  29. SLCo Suburban Southwest - 5.35%
  30. Utah County North Condo - 5.29%
  31. Utah County Condo - 5.01%
  32. Weber County Class A - 4.92%
  33. SLCo Suburban Central West - 4.60%
  34. SLCo Periphery Class A - 4.08%
  35. Davis County Class A - 4.06%
  36. Provo Condo - 3.89%
  37. Utah County North Overall - 3.04%
  38. Utah County North Class B - 3.03%
  39. Utah County South Condo - 2.97%
  40. Utah County North Class A - 2.73%
  41. Utah County South Overall - 2.20%
  42. Utah County South Class B - 1.98%
  43. SLC CBD Class A - 1.90%

Source: Commerce DRG Mid-Year 2006


Research Ways to Reduce Sexual Violence!

  • The Criminal Justice Response to Sexual Violence: From Adolescence to Late Adulthood
  • POSTED: 10/25/2006
  • FUNDING SOURCE: Dept. of Justice
  • ELIGIBILITY: Nonprofits, public agencies, and IHEs
  • DEADLINE: 1/30/07
  • CONTACT INFORMATION: Catherine C. McNamee, 202-514-7936
  • DESCRIPTION: Grants to research ways to reduce sexual violence and increase women's safety by informing and improving policy and practice in the criminal justice system.

Understand Bullying and Sexual Violence!

  • Understanding Risk and Protective Factors for Sexual Violence
  • Perpetration and the Overlap with Bullying Behavior
  • POSTED: 11/7/2006
  • ELIGIBILITY: Nonprofit and public agencies
  • $ AVAILABLE: $600,000
  • DEADLINE: 1/9/07 (LOI); 2/21/07 (Final)
  • CONTACT INFORMATION: Rebecca Leeb, 770-488- 1156
  • DESCRIPTION: Funding to discover the underlying mechanisms that link bullying and sexual violence and research ways to treat and reduce both.

Improve Post-Secondary Education!

  • Bridges to the Baccalaureate Program for Underrepresented Students
  • POSTED: 11/8/2006
  • ELIGIBILITY: Community colleges and other IHEs
  • $ AVAILABLE: $14,000,000 GRANTS AVAILABLE: 9 MAX GRANT SIZE: $200,000
  • DEADLINE: 1/18/07
  • CONTACT INFORMATION: Adolphus Toliver, 301- 594-3900
  • DESCRIPTION: Grants to establish partnerships between community colleges or universities to develop programs that prepare associate degree students with academic potential for admission and successful completion of undergraduate degree program in biomedical and/or behavioral science related subjects.


Office Space Vacancy Rankings


Economic notes

This weeks leads

  • Economic Notes:
    • Global Survey of Business Confidence

    • Global business confidence is soft. While sentiment has been more stable this fall, after falling sharply this summer, it continues to edge lower, particularly among firms in residential real estate, transportation and, increasingly, throughout manufacturing. Vehicle manufacturers couldn't be more pessimistic. Firms continue to invest strongly in equipment and structures, but notably less so in recent weeks, and are liquidating inventories. The best news is on pricing, with price pressures back to where they were in early 2005. Hiring is down from its peak earlier this year, but it is holding firm. Confidence is strongest in South America, firming a bit in recent weeks, and weakest in Europe.
    • Consumer Credit (G19)

    • Consumer credit declined in September by $1.2 billion to $2.37 trillion. This marks the first month-to-month decline in consumer credit since March. The details of the report show that the latest decline in consumer credit was driven by a hefty reduction in nonrevolving credit, which fell 3.2% at an annual rate. On the other hand, revolving credit increased 4.1% at an annual rate.
    • International Trade (FT900)

    • The nominal U.S. trade deficit in goods and services narrowed by 6.8% in September. The U.S. trade deficit came in at $64.3 billion, $4.7 billion less than August's revised $69.0 billion, according to the Bureau of Economic Analysis. In September, exports increased and imports decreased. The goods deficit with China, however, widened 4.4% to $23.0 billion. Crude oil prices decreased in September, which in return decreased the nation's total import bill for energy-related petroleum products to $25.8 billion.
    • Import and Export Prices

    • The U.S. Import Price Index declined 2.0% for the second consecutive month in October. The decrease was again led by declining petroleum prices, which fell 8.3% in October following a decrease of 9.7% in September. Export prices fell 0.4% in October, after declining by the same amount the previous month.
    • Record China Trade Surplus

    • China's trade surplus increased in October to a record $23.8 billion.
    • Chain Store Sales

    • Chain store sales rose by 1% in the week ending November 4, the biggest weekly gain since June, according to the ICSC. Year-over-year growth held steady at 2.3%, the lowest since late July. Low gasoline prices and colder than normal weather remained supports to sales.
    • Wholesale Trade (MWTR)

    • Wholesale inventories were above consensus expectations, coming in up 0.8% for September. Wholesale sales were down 1.2%, and the I/S ratio rose to 1.18.
    • MBA Mortgage Applications Survey

    • Mortgage demand increased 8.8% in the week ending November 3. Purchase applications increased 7.1% and refinance applications increased 11.0%.
    • Oil and Gas Inventories

    • Crude oil inventories rose 0.4 million barrels for the week ending November 3, according to the Energy Information Administration, slightly below expectations of a 0.7 million barrel build. Distillate inventories fell by 2.7 million barrels, well above expectations of a 0.5 million barrel draw. Gasoline stocks fell 0.6 million barrels, slightly above the expectations of flat inventories. Refinery activity moderated some last week. This is a moderately bullish report, due mostly to the surprisingly large drop in distillate inventories.

  • This Weeks Leads:
    • Rave Motion Pictures Theater
    • Rave Review Cinemas trades as Rave Motion Pictures Theater at 27 locations throughout AL, AR, FL, IL, IN, LA, MA, PA, OH and TX. The movie theaters occupy spaces of 70,000 sq.ft. to 90,000 sq.ft. in freestanding locations, malls, entertainment, lifestyle, power and specialty centers. Growth opportunities are sought nationwide during the coming 18 months. A land area of 13 to 15 acres is required. For more information, contact:
        Peter Nelson Rave Review Cinemas 3333 Welborn Street, Suite 100 Dallas, TX 75219 972-692-1620 Fax 972-692-1708 Email: information@ravemotionpictures.com Website: www.ravemotionpictures.com.
    • Malco Theaters operates 35 locations throughout AR, KY, MO, MS and TN.
    • The movie theaters occupy spaces of 50,000 sq.ft. in freestanding locations and malls.
    • Growth opportunities are sought throughout the existing markets during the coming 18 months, with representation by Michael Lightman Realty Co.
    • For more information, contact:
      • Michael Lightman
      • Michael Lightman Realty Co.
      • 5100 Poplar Avenue
      • Memphis, TN 38137
      • 901-767-5240
      • Fax 901-767-5241
      • Web site: www.malco.com.
    • First Trading Corp. trades as Camille La Vie and Group USA at 32 locations in 17 states and in Puerto Rico.
    • The stores, selling women’s clothing, shoes and formal wear, occupy spaces of 10,000 sq.ft. to 20,000 sq.ft. in outlet centers.
    • Growth opportunities are sought nationwide during the coming 18 months. Typical leases run two to five years.
    • Preferred demographics include a population of 500,000 within five miles earning $35,000 as the average household income.
    • For more information, contact
      • Ali Amirniroumand, First Trading Corp., 25 Enterprise Avenue, Secaucus, NJ 07094; 201-867-6005; Web site: www.groupusa.com.
    • Game Stop
    • Game Stop, Inc. trades as Game Stop at 4,622 locations nationwide and in Canada, Puerto Rico and internationally.
    • The stores, selling home computer software and accessories, video hardware and software and games, occupy spaces of 1,500 sq.ft. in malls, power and strip centers.
    • Plans call for 400 openings nationwide and internationally during the coming 18 months.
    • For more information, contact
      • Cindy Boone, Game Stop, Inc., 625 Westport Parkway, Grapevine, TX 76051; 817-424-2000, 817-722-7360; Email: cindyboone@gamestop.com; Web site: www.gamestop.com.
    • RA Sushi
    • RA Sushi operates nine locations throughout AZ, CA, IL and NV.
    • The restaurants occupy spaces of 5,000 sq.ft. in entertainment centers and inline spaces.
    • Growth opportunities are sought throughout Los Angeles, Orange and San Bernardino counties in CA during the coming 18 months, with representation by CB Richard Ellis.
    • For more information, contact
      • Lynda Boyer, CB Richard Ellis, 1840 Century Park E., Suite 700, Los Angeles, CA 90067; 310-550-2579, Fax 310- 203-9624; Email: lynda.boyer@cbre.com; Web site: www.cbre.com, www.rasushi.com and www.benihana.com.
    • Wetzel’s Pretzels
    • Wetzel’s Pretzels operates 250 locations throughout AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, IN, KS, MD, MI, MN, MO, MS, NV, NJ, NY, OH, OR, TN, TX and WA.
    • The stores, which specialize in hot pretzels, hot dogs and lemonade, occupy spaces of 400 sq.ft. to 700 sq.ft. in malls.
    • Growth opportunities are sought throughout the northeast and northwest during the coming 18 months.
    • Typical leases run 10 years.
    • Specific improvements are required.
    • Auntie Anne’s is cited as competition. The company is franchising.
    • For more information,
      • Liz Dutchess, Wetzel’s Pretzels, 35 Hugus Alley, Suite 300, Pasadena, CA 91103; 626-432-6900 Ext. 18, Fax 626-432-6904; Email: liz@wetzels.com; Web site: www.wetzels.com.

  • "Problem-solving" is not planning, and "Planning" is not the same as "problem- solving"

    Effective planning can not be done without addressing the problems that are critical.

    Not all problems deserve attention.

    Some just go away.


    Bonneville Research is a Utah-based consulting firm providing economic, financial, market and policy research to public and private sector clients throughout the intermountain west.

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    Bonneville Research

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