Centex Corp. and KB Home this week said they would report poor quarterly results due to a slumping U.S. housing market that forced them to write down a combined $793 million in losses.
Centex, the nation's third-largest home builder, will book $450 million in the fiscal third quarter to reflect reduced land values and to abandon options to buy property, the Dallas-based company said. Centex was Southern Nevada's eighth biggest in 2005, recording 1,154 new home sales valleywide.L.A.-based KB Home, meanhwile, announced that it will take $343 million in property charges in the fiscal fourth quarter. The builder was the Las Vegas Valley's largest builder in 2005 with 3,936 new home sales. Home construction companies are canceling contracts and taking impairment expenses for their property holdings after facing the worst housing market in 15 years. Nationwide sales of new houses tumbled 18 percent in 2006 to 1.05 million, the biggest contraction since 1990. Shares of Centex fell $1.55, or 2.9%, to $51.61. Shares of KB Home eased 13 cents to $49.22.
Thursday, January 18, 2007
Wednesday, January 17, 2007
Architecture Billings Finish 2006 on Strong Note
Architecture billings finished 2006 on a strong note fueled by robust commercial and industrial sector activity, reports the American Institute of Architects, a non-profit industry trade group. It should translate into a high level of construction activity throughout 2007 since there is usually a nine to twelve month lag time between architecture billings and construction spending. The AIA’s billings index had a 59.5 rating in December, up from 57.4 in November. (Any score above 50 indicates an increase in billings).
“Despite a sluggish economy, there is no sign of a slowdown in nonresidential construction activity in the foreseeable future,” said Kermit Baker, AIA’s chief economist. “This is very positive news for the construction industry and those markets affected by it because 2006 ended on a strong rebound, after trending down for most of the first 10 months.”
The Northeast, West, and Midwest regions remained hot spots of activity, with the commercial/industrial sector recording its highest level of work since 1995. Institutional and mixed-use projects also saw a high volume of architecture billings.
“These very solid billings are further confirmation that the construction market has retained momentum going into 2007," said Mark Hughes, an analyst with SunTrust Robinson Humphrey. “This is important, timely information in light of the drift in many construction-related stocks since mid-year.”
“Despite a sluggish economy, there is no sign of a slowdown in nonresidential construction activity in the foreseeable future,” said Kermit Baker, AIA’s chief economist. “This is very positive news for the construction industry and those markets affected by it because 2006 ended on a strong rebound, after trending down for most of the first 10 months.”
The Northeast, West, and Midwest regions remained hot spots of activity, with the commercial/industrial sector recording its highest level of work since 1995. Institutional and mixed-use projects also saw a high volume of architecture billings.
“These very solid billings are further confirmation that the construction market has retained momentum going into 2007," said Mark Hughes, an analyst with SunTrust Robinson Humphrey. “This is important, timely information in light of the drift in many construction-related stocks since mid-year.”
Tuesday, January 16, 2007
Diablo Industrial Center sells for $59.8 million
SN Properties, a Harsch Investment Properties affiliate, has bought the 499,720-square-foot Diablo Business Center at the northwest corner of Arville Avenue and Russell Road in Las Vegas for $59.87-million, or $119.82-per-square-foot, from Diablo Investments LLC. Voit Commercial Brokerage’s Kevin Higgins represented both the buyer and seller.
The six-building light-industrial mid-bay complex is currently 100% occupied with average rents of 70 cents per-square-foot. The 28-acre complex is anchored by MGM Mirage Inc., which occupies 120,000 square feet, along with Klai Juba Architects and Carrier Corp., among others. The 12-year-old center has Russell frontage, and features 39 spaces with divisibility down to 5,000 square feet. Harsch expects to reposition the property to more office users as leases expire.
The six-building light-industrial mid-bay complex is currently 100% occupied with average rents of 70 cents per-square-foot. The 28-acre complex is anchored by MGM Mirage Inc., which occupies 120,000 square feet, along with Klai Juba Architects and Carrier Corp., among others. The 12-year-old center has Russell frontage, and features 39 spaces with divisibility down to 5,000 square feet. Harsch expects to reposition the property to more office users as leases expire.
Valley Office Demand Softens in 2006
Southern Nevada’s office market finished 2006 with a thud, recording a 10.5% vacancy rate, up 2.1% from the previous year, reports Applied Analysis, a local business advisory firm. It marks five consecutive quarters of vacancy increases. Class A space, as always, remains in high demand with a low 5.2% vacancy rate in the fourth quarter, while speculative space softened to 11.9%. Net absorption, meanwhile, dropped to 2.5 million square feet in 2006, which is 28.1% less than the previous year.
The market grew to 41 million square feet in the fourth quarter, adding 3.7 million square feet since 2005. Major additions included a new three-story, 72,000-square-foot Class A building in Thomas & Mack Development’s Corporate Gateway as well as buildings at GSG Development’s The Park at NorthPointe, among other projects. Much the activity was concentrated in the southwest and northwest submarkets along the 215 Beltway and US 95.
“While the office market’s performance during the majority of 2006 reflected a relatively healthy environment, it is now showing clear signs that a materially softer condition is likely to prevail in 2007,” said Brian Gordon, principal of Applied Analysis. “Forward looking supply remains substantial with under construction projects representing more than 10% of existing inventory, a condition that will certainly cause vacancies to rise.”
There was also 4.2 million square feet of new space under construction in the fourth quarter, with another 4.7 million square feet worth of inventory planned for future development. Yet valley wide average asking rents increased to $2.29-per-square-foot triple net in 2006, a 15-cent gain over the previous year. Henderson had the highest rents at $2.42-per-square-foot, while the North Las Vegas was lowest at $2.24-per-square-foot. But the basic market dynamics remain strong with office using employment seeing a 10.6% growth over the last year outpacing all other major categories.
“Overall, 2006 experienced inflated prices, rising interest rates, construction costs, land prices and much uncertainty,” said Dave Dworkin, a market analyst with Grubb & Ellis. “In the year ahead, new construction will gradually slow while existing vacant product is absorbed into the overall inventory and the market goes through a much-needed, though mild, recovery cycle”
The market grew to 41 million square feet in the fourth quarter, adding 3.7 million square feet since 2005. Major additions included a new three-story, 72,000-square-foot Class A building in Thomas & Mack Development’s Corporate Gateway as well as buildings at GSG Development’s The Park at NorthPointe, among other projects. Much the activity was concentrated in the southwest and northwest submarkets along the 215 Beltway and US 95.
“While the office market’s performance during the majority of 2006 reflected a relatively healthy environment, it is now showing clear signs that a materially softer condition is likely to prevail in 2007,” said Brian Gordon, principal of Applied Analysis. “Forward looking supply remains substantial with under construction projects representing more than 10% of existing inventory, a condition that will certainly cause vacancies to rise.”
There was also 4.2 million square feet of new space under construction in the fourth quarter, with another 4.7 million square feet worth of inventory planned for future development. Yet valley wide average asking rents increased to $2.29-per-square-foot triple net in 2006, a 15-cent gain over the previous year. Henderson had the highest rents at $2.42-per-square-foot, while the North Las Vegas was lowest at $2.24-per-square-foot. But the basic market dynamics remain strong with office using employment seeing a 10.6% growth over the last year outpacing all other major categories.
“Overall, 2006 experienced inflated prices, rising interest rates, construction costs, land prices and much uncertainty,” said Dave Dworkin, a market analyst with Grubb & Ellis. “In the year ahead, new construction will gradually slow while existing vacant product is absorbed into the overall inventory and the market goes through a much-needed, though mild, recovery cycle”
Tuesday, January 9, 2007
Home Sales Limp through 2006
The Las Vegas Valley’s housing market limped to a close in December following a record breaking year of activity in 2005. There were 1,644 homes sold last month or 32.5 percent fewer than the previous year, reports the Greater Las Vegas Association of Realtors (GLVAR). Median sale prices dipped to $306,100 in December for a 2 percent drop from 12 months earlier. Available inventory soared to 17,834 units last month, which is 33.3 percent more than in 2005.
“[This year] is going to be about a balance in the market,” said Devin Reiss, GLVAR president. “Prices have decreased so slightly that it's hard to believe that we can expect anything other than the status quo for this market through 2007.”
Condo/townhouse sales saw a similar bumpy ride in 2006. There were a scant 977 sales in December, which is 32.7 percent less than in 2005. Meanwhile, condo/townhouse listings swelled to 4,833 units for an 86.2 percent increase over the previous year. And median sale prices dropped to $195,000 last month for a 4.4 percent decline over 2005.
Record inventory and stagnant pricing were reflected in the total dollar value for home sales in December with $614 million worth of activity or 33.5 percent less than in 2005. Condo/townhouse sales didn't fare much better with $86.8 million worth of activity last month, a 32.4 percent drop from the previous year.
“[This year] is going to be about a balance in the market,” said Devin Reiss, GLVAR president. “Prices have decreased so slightly that it's hard to believe that we can expect anything other than the status quo for this market through 2007.”
Condo/townhouse sales saw a similar bumpy ride in 2006. There were a scant 977 sales in December, which is 32.7 percent less than in 2005. Meanwhile, condo/townhouse listings swelled to 4,833 units for an 86.2 percent increase over the previous year. And median sale prices dropped to $195,000 last month for a 4.4 percent decline over 2005.
Record inventory and stagnant pricing were reflected in the total dollar value for home sales in December with $614 million worth of activity or 33.5 percent less than in 2005. Condo/townhouse sales didn't fare much better with $86.8 million worth of activity last month, a 32.4 percent drop from the previous year.
Subscribe to:
Posts (Atom)
