Monopoly Game Has A New Look

Posted by: Chris Palmeri on November 24, 2009

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I suspect many a real estate mogul got their start playing the board game classic Monopoly. It has a new look this year. This time rather than just houses and hotels, players can also build industrial buildings, railroads and sports stadiums, many in 3D versions in the center of the board.

This being a game, players can also put up bonus buildings that protect their properties or “hazard buildings” that lower the value of opponent’s properties. Not sure what the real world equivalent of those would be, maybe a night club.

Parker Brothers launched Monopoly during the Great Depression and it was a huge hit in those tough times. This year though, going bankrupt and losing property seems a little too close to home.

Green Buildings: Fewer Sick Days, Higher Rents

Posted by: Chris Palmeri on November 19, 2009

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Environmentally-friendly construction practices have gotten a lot of hype over the past few years but do they really pay off as an investment? A new study found that tenants in green buildings experience increased productivity and fewer sick days. The research also found that that green buildings have lower vacancy rates and higher rents than non-green counterparts.

The study, conducted by the University of San Diego and commercial real estate broker CB Richard Ellis Group, found that tenants in green buildings such as the Behnisch Architekten-designed Unilever offices in Hamburg above are more productive based on two measures: the average number of tenant sick days and a productivity change. Respondents reported an average of 2.88 fewer sick days in their current green office versus their previous non-green office. About 55% of respondents indicated that employee productivity had improved.

Based on the average tenant salary, an office space of 250 square feet per worker and 250 workdays a year, the decrease in sick days translated into a net impact of nearly $5.00 per square foot per year. The increase in productivity translated into a net impact of about $20 per square foot. The study also showed that green buildings have 3.5% lower vacancy rates and 13% higher rental rates than the market.

The work was based on surveys of 154 buildings under CBRE's management, totaling more than 51.6 million square feet and housing 3,000 tenants in ten markets across the U.S. The study defined a green building as those with LEED certification at any level or those that bear the EPA ENERGY STAR ® label.

Another report out in the past week concluded that constructing new green buildings or retrofitting existing structures with energy efficient air conditioning, solar panels and the like will support 7.9 million U.S. jobs and pump $554 billion into the American economy over the next four years. The study, by the U.S. Green Building Council and Booz Allen Hamilton, determined that green construction spending currently supports more than 2 million American jobs and generates more than $100 billion in gross domestic product and wages.

The economic impact of the total green construction market from 2000 to 2008, the study found, was $178 billion. It created or saved 2.4 million jobs and generated $123 billion in wages.

The U.S. Green Building Council certifies LEED buildings and obviously has an interest in the movement, but Rick Fedrizzi, chief exec of the group said something remarkably down to earth in releasing the report: “Our goal is for the phrase ‘green building’ to become obsolete, by making all building and retrofits green – and transforming every job in our industry into a green job.”

Can't argue with that.

Trump Cuts A Casino Deal

Posted by: Chris Palmeri on November 17, 2009

He’s back. After seeing his New Jersey casino empire slide into bankruptcy for a third time, real estate baron Donald J. Trump has returned to the table.

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As part of a deal cut with bondholders and announced today, Trump will receive a 10% stake in a newly recapitalized company, which owns three casinos in Atlantic City that carry the Trump name.

In exchange Trump and his daughter Ivanka, both former board members, agreed to drop a lawsuit they had against the company. Trump will be free to use his name on other gambling ventures, just not in five neighboring states.

Trump left the board of Trump Entertainment Resorts in February. It is struggling under $1.7 billion in debt. "I have always felt a tremendous responsibility to New Jersey, and especially to Atlantic City," he said after cutting this new deal.

Others parts of Trump’s empire—wobbly though it may be—continue to grow. The Trump Waikiki hotel opened this week in Hawaii and the Council on Tall Buildings and Urban Habitat just recognized his Trump International Hotel and Towers in Chicago as the sixth largest building in the world thanks to a new way of measuring skyscrapers. Previously they were measured starting with the front entrance, but since many buildings have multi-level entrances, the new standard is the lowest pedestrian entrance.

Hooter's Las Vegas in Default

Posted by: Chris Palmeri on November 16, 2009

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I once told my colleague Dean Foust, who was writing an article about the Hooter’s restaurant chain, that a planned Hooter’s casino in Vegas was a sure thing. “I’d invest in that,” I said. Scantily-clad women, beer, gambling, what could go wrong?

Alas, the latest results for 155 East Tropicana, the entity that owns Hooter’s Las Vegas, shows that in Vegas there are no sure things. The company lost $14.5 million for the first nine months of this year on revenues of $35 million. Among the results, a 20% decline in food and beverage sales. That’s a lot fewer chicken wings.

A Securities and Exchange Commission filing says the company has received a notice of default from its lenders and is actively trying to restructure its $147 million in debt.

The filing says “the company does not believe that cash on hand at September 30, 2009 of $5.6 million and expected cash flows will be adequate to meet the total financial obligations.”


Hooter’s Las Vegas suffered problems fundamental to all bad real estate investments—a second-rate building in a crummy location. Half its 696 rooms were closed in the third quarter due to plumbing issues. And as Union Gaming analyst Bill Lerner notes, road construction in front of the off-the-Strip property discouraged walk-in visitors.

Even football great Dan Marino punted. His restaurant inside Hooter’s will be renamed the Mad Onion in December.

Maybe the frat boy crowd has less money to gamble. Or maybe people don't want to go to an establishment in Vegas that they can visit in their own home town.

In my own defense I don't think Hooter's management did a great job marketing the casino. I once saw ads for it targeting families. Clearly not the right demographic.

Milken Institute Ranks the Best Cities for Jobs

Posted by: Chris Palmeri on November 13, 2009


The Milken Institute came out with its annual list of cities that are best able to create jobs. The top ten were culled from a list of the nation’s 200 largest cities. All have managed to avoid the worst of the economic meltdown driven by falling housing markets and job losses in manufacturing and global trade.

The 2009 top 10 performers


1. Austin-Round Rock, TX
2. Killeen-Temple-Fort Hood, TX
3. Salt Lake City, UT
4. McAllen-Edinburg-Mission, TX
5. Houston-Sugar Land-Baytown, TX
6. Durham, NC
7. Olympia, WA
8. Huntsville, AL
9. Lafayette, LA
10. Raleigh-Cary, NC


Texas cities dominate the list. The free-marketers at the Milken Institute already love the Lone Star State with its lack of zoning laws and no state income tax. Communities such as Houston, Austin, Killen and not too far Lafayette, Louisiana never saw a big run up in home prices and they have the still strong energy sector supporting their economies.

The Milken folks noted that the biggest decliners on list included multiple cities in Florida and California where housing related jobs continue to disappear. Michigan cities are also among the nation’s weakest performers, with heavy losses in durable goods and automotive manufacturing.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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