Rent or Own

Somewhat ironically, the Mortgage Banker's Assocation has made the decision to sell its D.C. headquarters building, which it acquired in 2007 for $79MM, to CoStar Group Inc. for the firesale price of $45MM. The MBA, which borrowed $75MM to purchase the property, has not yet confirmed whether it will make good the deficiency with its lenders. Read more in yesterday's WSJ.

The Journey Home - The 10-year plan to end homelessness in Baltimore

The Baltimore Ravens away game will be on and so will all of us…on a mission to help the less fortunate in our community. Join Downtown Partnership of Baltimore, The City of Baltimore, former Baltimore Raven MIKE McCRARY, and special guests, as we raise funds for “THE JOURNEY HOME”, the 10-year plan to end homelessness in Baltimore.

Details on this event can be found here.

Monday, November 16 at 6:30pm
Frank & Nic’s West End Grille
511 W. Pratt Street
$75 per person
A variety of food stations, hors d'oeuvres, and premium open bar included.
Space is limited.

MacKenzie 3rd Quarter Market Report

Thank you to Terri Harrington of MacKenzie Commercial Real Estate Services, LLC for sharing their 3rd Quarter Market Report, which can be found here.

In other MacKenzie news, CityBizList reported today that MacKenzie was named as exclusive broker for the 600 acre Maple Lawn project.

Downtown Baltimore May be Designated an Enterprise Zone

As reported by the Baltimore Sun earlier this week, Baltimore will apply to the State to designate the area bounded by Baltimore, Lombard, Paca and President streets an Enterprise Zone.

If so designated, businesses in the area will be eligible for:

(i) Property Tax Credit: A ten-year credit against local real property taxes for business improvements or new construction. The credit is based on new property taxes generated as a result of the expansion or new construction. In years 1-5, Baltimore City will waive 80% of the new property taxes generated. In years 6-10 the credit decreases 10% annually (70%, 60%, 50%, 40%, 30%).

(ii) Employment Tax Credit: A one-to-three year tax credit for wages paid to new hires in the Enterprise Zone. The standard credit is a one-time $1,000 credit per new hire. Each new hire must work at least 35 hours a week and paid at least 150% above the minimum wage. For "economically disadvantaged employees", the credit increases to a total of $6,000 per eligible new hire amortized over three years.

A public hearing on the City's application is scheduled for 6 p.m., Oct. 14 at the Shake and Bake Family Fun Center at 1601 Pennsylvania Ave, and the State is slated to decide on new Enterprise Zones Dec. 15.

Office Rents Dive, Vacancies Rise, Banks in Trouble: What's New?

Today's Wall Street Journal reports that the office rental market is in terrible shape, with effective office rents falling 8.5% in the third quarter compared with the same period last year, the largest year-over-year decline since 1995, according to Reis Inc., a New York real-estate research firm.

In a 'related' story today, the WSJ reports that the Fed is concerned that U.S. banks are slow to acknowledge their exposure to bad commercial real estate loans, and carry inadequate reserves against potential losses.

Is it just me, or is it really getting difficult to differentiate the symptoms from the disease....

In light of the gloom, I continue to be troubled by the resilience of asset prices and cap rates. The "rolling loans gather no loss" policy being practiced by many lenders (that is, extending maturing or otherwise non-performing loans so as to avoid booking the loss which would inevitably be incurred were the property securing the loan sold at foreclosure), also known as "extend and pretend", is likely masking the true extent of the disfunction in the commercial real estate market. However, the nose-diving vacancy and rental rates are unambigous, and one would expect to see a parallel drop in prices, and a rise in cap rates, which has not occurred as yet.

Baltimore City Sells Clark Fells Point Rec Pier for $50k???

From The Daily Record:

"Baltimore officials decided to pay $300,000 to relocate a tugboat company from Fells Point’s Recreation Pier because the moving costs were “extraordinary,” the city’s housing commissioner said Wednesday....The city will pay the relocation fees out of the $350,000 sale price of the pier."

Baltimore Finds $300k for Clark's Long Stalled Fells Point Rec Pier Project

From The Daily Record:

"The Board of Estimates is expected Wednesday to vote to approve an agreement under which the city and the developer will each pay $300,000 to [Moran Towing Corp.] to vacate its lease and relocate to a new location on South Clinton Street. ...The deal has been stalled for more then five years by financing issues and by relocation of Moran, which has 18 years remaining on its lease on the city-owned property."