The secondary market for commercial real estate is just beginning to show new life, with the first successful sale of a commercial mortgage-backed securities (CMBS) package in over a year and several new issues in the wings spurred by the strong investor interest on that initial offering. But the positives of renewed activity are tempered by more bad news on the performance of those commercial bond deals made before the freeze.
According to a new report from commercial research provider Trepp, delinquent loans in commercial mortgage securities jumped 85 basis points to 5.65 percent at the end of November. That figure is up from just 4.8 percent a month earlier.
The delinquency rate was highest in the hotel sector, where defaults skyrocketed from 8.67 percent in October to 14.09 percent in November. According to Trepp, the upsurge came from a single Extended Stay Hotel loan. Without it in the mix, the hotel delinquency rate would have increased only 64 basis points, to a little over 9 percent.
Based on Trepp’s analysis, delinquencies on multifamily CMBS loans rose to 8.78 percent in November, up from 7.66 percent the previous month. All other sector’s showed slighter increases. Retail edged up from 4.53 percent to 4.78 percent. Industrial increased from 3.18 percent to 3.33 percent. Office loan delinquencies crept up from 3.08 percent to 3.14 percent.
Trepp says there were $65.2 billion in CMBS loans in special servicing at the end of November, an increase of $8.2 billion, or 14 percent, compared to October. There are very few CMBS related distressed properties in the Los Angeles area. from dsnews.com. image from wsj
Of $25.7 billion in distressed assets, the Western U.S. takes $10 billion. However, the good news is that of all commercial property types in the U.S., Industrial has the lowest distressed amount of $700 million out of $25.7 billion, compared the higher amounts of Office, Retail, Apartment (multi-family), Hotel, and Development. Industrial includes warehouse and manufacturing buildings. According to Real Capital Analytics Troubled Asset Radar.
Some of the owners of the distressed or potentially distressed properties are taking preventative measures and seeking bridge loans prior to their primary loans expire. Many bridge loan terms max out at 18 months and have interest rates from 10-18%.
When new lamps are installed in industrial warehouse and manufacturing buildings, 4 types of lighting technology are used.
The technology in high intensity discharge (HID) lighting is in some ways similar to fluorescent technology: an arc is established between two electrodes in a gas-filled tube which causes a metallic vapor to produce radiant energy. In this case, however, a combination of factors shifts the wavelength of much of this energy to within the visible range, so light is produced without any phosphors. In addition, the electrodes are only a few inches apart (at opposite ends of a sealed “arc tube”) and the gases in the tube are highly pressurized. This allows the arc to generate extremely high temperatures, causing metallic elements within the gas atmosphere to vaporize and release large amounts of visible radiant energy. There are three main types of HID lamps: mercury vapor, metal halide and sodium. The names refer to the elements that are added to the gases in the arc stream which cause each type to have somewhat different color characteristics and overall lamp efficiency.
Ballasts and Warm-Up Time:Like any gaseous discharge light source, HID lamps have special electrical requirements that must be supplied by a ballast. With HID sources, however, the ballast must be specifically designed for the lamp type and wattage being used. In addition, HID lamps require a warm-up period to achieve full light output. Even a momentary loss of power can cause the system to restrike and have to warm up again—a process that can take several minutes. In applications where constant illumination is important for safety and security, a backup system is often required.
Metal Halide Lamps: Metal halide lamps are among the most energy efficient sources of white light available today. These lamps feature special chemical compounds known as “halides” that produce light in most regions of the spectrum. They offer high efficacy, excellent color rendition, long service life and good lumen maintenance. Because of their numerous advantages, metal halide lamps are used extensively in outdoor applications and in commercial interiors.
Sodium Lamps: High-pressure sodium sources were developed primarily for their energy efficiency. Mercury and sodium vapors in the ceramic arc tube produce a yellow/orange light with extremely high LPW performance and exceptionally long service life (up to 40,000 hours). High-pressure sodium lamps render colors poorly, which tends to limit their use to outdoor and industrial applications where high efficacy and long life are priorities. Since these lamps produce light at only one wavelength in the yellow region of the spectrum, they are used where energy efficiency and long life are the only requirements.
Mercury Vapor Lamps: Mercury vapor lighting is the oldest HID technology. The mercury arc produces a bluish light that renders colors poorly. Therefore, most mercury vapor lamps have a phosphor coating that alters the color temperature and improves color rendering to some extent. Other HID types that offer higher LPW and better color properties have largely superceded the use of this lamp.
LED Lighting: Lighting fixtures using LEDs are the most energy-efficient and versatile solution for lighting your warehouse. Their energy consumption is lower than that of any other light source, yet their Lumen output is comparable or superior.
The Central Los Angeles industrial real estate market encompasses approximately 300 million square feet of building area. This market includes the well-known submarkets: City of Vernon, City of Commerce, and Downtown Los Angeles. It should be noted that the following areas on the periphery to Downtown are also included in the Central LA market: Lincoln Heights, Glassell Park, City Terrace, East L.A., Boyle Heights, South Industrial, and the Goodyear Tract. In the Central LA submarket buyer and tenant demand remains strong compared to outlying markets. In fact, the Central submarket remains the tightest metropolitan industrial market in the nation. This submarket is an infill market and very little new construction occurs on empty industrial land (with almost no construction on other types of commercial real estate such as retail and office). The Central LA market is also the largest industrial real estate submarket in Los Angeles County.
