HomeMy WebLinkAbout2013-01-28 City Council Minutes
MINUTES OF REGULAR MEETING BANGOR CITY COUNCIL – JANUARY 28, 2013
Meeting called to order at 7:30 PM
Chaired by Chairman Durgin
Councilors Absent: None
Meeting Adjourned at 9:35 PM
PUBLIC COMMENT None.
CONSENT AGENDA ASSIGNED TO
ITEM NO. COUNCILOR
MINUTES OF: Bangor City Council Regular Meeting of January 14, 2013, Bangor
School Committee Regular Meeting of December 12, 2012, Bangor
Water District Regular Meeting of December 18, 2012 and Special
Meeting of December 20, 2012, Infrastructure Committee Meeting of
January 15, 2013
Action: Approved and Accepted
Liquor License Renewal: Application for Liquor License, Malt, Spirituous, Vinous, Arayos SPRAGUE
LLC d/b/a Diamonds, 190 B Harlow Street
Action: Moved to New Business
Application for Liquor License, Malt, Spirituous Vinous, Chases SPRAGUE
Family Restaurant Inc. d/b/a Chases Family Restaurant & Hideaway
Lounge, 1575 Hammond Street
Action: Approved
13-062 ORDER Authorizing Execution of First Amendment to Indenture of Lease – LONGO
Maine Aero Services, Inc.
Action: Passed
13-063 RESOLVE Ratifying Action of Catherine M. Conlow, City Manager, Executing GALLANT
Amendment to Lease with General Services Administration - Bangor
International Airport
Action: Passed
CONSENT AGENDA ASSIGNED TO
ITEM NO. COUNCILOR
13-064 ORDER Authorizing the City Manager to Apply for a Grant from the HAWES
Corporation for National and Community Service- AmeriCorps:
Governor’s and Mayor’s Initiative
Action: Passed
Page 1
MINUTES OF REGULAR MEETING BANGOR CITY COUNCIL – JANUARY 28, 2013
REFERRALS TO COMMITTEE AND FIRST READING ASSIGNED TO
ITEM NO. COUNCILOR
13-065 ORDER Authorizing Issuance of $3,100,000 of the City’s Enterprise Fund BLANCHETTE
General Obligation Bonds and a Tax Levy There For
Action: First Reading and Referral to Finance Committee Meeting of
February 4, 2013
13-066 RESOLVE Accepting and Appropriating a grant in the amount of $150,859 from LONGO
the Federal Aviation Administration and $8,381 from the Maine
Department of Transportation under the Airport Improvement Plan
(AIP) program, grant # 57 for the canal fill wildlife abatement project
Action: First Reading
13-067 RESOLVE Appropriating funds not to exceed the amount of $500,000 from BALDACCI
Airport Department reserves for the purpose of completing
improvements to two buildings located at Bangor International
Airport
Action: First Reading
UNFINISHED BUSINESS ASSIGNED TO
ITEM NO. COUNCILOR
13-058 ORDINANCE Amending the Code of the City of Bangor, Chapter 231, Public Parks BALDACCI
– Use of Tobacco Products Prohibited
Action: Motion made and seconded for Passage
Dr. Robert Allen, representing the Public Health Advisory Board and
Dr. Paul Shapero, representing the American Lung Association of
Maine both spoke in favor of passage of this ordinance.
Residents Paula Matlins, Andrew Matllins and Laura Mitchell spoke
in favor of passage of this ordinance.
Motion made and seconded to amend the ordinance to prohibit
smoking with no designated smoking areas.
Councilor Baldacci read a letter from the American Cancer Society
and asked that the letter and other correspondence he had received in
regard to the subject be included in the record. A copy of the
correspondence is attached to the minutes.
Vote on Amendment: 4 – 5
Councilors Voting Yes: Baldacci, Longo, Sprague, Durgin
Councilors Voting No: Blanchette, Civiello, Gallant, Hawes, Nealley
Motion Failed
Motion made to amend the ordinance by limiting smoking within
200’ of a designated playground.
Motion died for lack of second.
Page 2
MINUTES OF REGULAR MEETING BANGOR CITY COUNCIL – JANUARY 28, 2013
UNFINISHED BUSINESS ASSIGNED TO
ITEM NO. COUNCILOR
Motion made and seconded to end debate.
Passed
Vote on Main Motion: 4 – 5
Councilors Voting Yes: Baldacci, Long, Sprague, Durgin
Councilors Voting No: Blanchette, Civiello, Gallant, Hawes, Nealley
Motion Failed
13-060 RESOLVE Appropriating a $202,268 Rebate of Group Health Insurance GALLANT
Premiums as a Result of the Patient Protection and Affordable Care
Act
Action: Motion made and seconded for Passage
Passed
13-061 RESOLVE Appropriating $846,987 of Arena Fund Revenues for FY 2013 Debt SPRAGUE
Service
Action: Motion made and seconded for Passage
Passesd
NEW BUSINESS ASSIGNED TO
ITEM NO. COUNCILOR
PUBLIC HEARING: Liquor License Renewal Application, Malt, Spiritous, Vinous of SPRAGUE
Arayos LLC d/ba/ Diamonds, 190 B Harlow Street
Action: Motion made and seconded to open Public Hearing.
Public Hearing Opened
Kathy Baldacci, Karen Foley and Sharon Gray spoke in opposition to
the approval of this application due to the disturbance its patrons
cause to the residence at the School House Apartments.
Motion made to table for 60 days with a temporary permit in order to
increase control and security.
City Solicitor Norman Heitmann advised that there is no provision
for a temporary license and recommended that the City Council take
action before the expiration of the current license.
Motion died for lack of second.
Jim Ellis spoke on behalf of Diamonds stating that he has been
working with the city to resolve issues and to alleviate the issues.
Motion made and seconded to postpone to the February 11, 2013
Council Meeting
Motion Doubted
Vote: 7 – 2
Councilors Voting Yes: Baldacci, Blanchette, Civiello, Hawes,
Longo, Nealley, Durgin
Councilors Voting No: Gallant, Sprague
Passed to Postpone until February 11, 2013
Page 3
MINUTES OF REGULAR MEETING BANGOR CITY COUNCIL – JANUARY 28, 2013
NEW BUSINESS ASSIGNED TO
ITEM NO. COUNCILOR
PUBLIC HEARING: Special Amusement License for Arayos LLC d/b/a Diamonds, 190 B SPRAGUE
Harlow Street
Action: Motion made and seconded to postpone this item until the February
11, 2013, Council Meeting
Passed to Postpone until February 11, 2013
PUBLIC HEARING: Application for Liquor License, Malt, Spirituous Vinous, Tuy Hien SPRAGUE
LLC d/b/a Little Vietnam Restaurant & Bar, 667 Hogan Road
Action: Motion made and seconded to open the Public Hearing
Public Hearing Opened
Motion made and seconded to close the Public Hearing
Public Hearing Closed
Motion made and seconded for Approval
Approved
Motion made and seconded to Suspend the Rules to hold a Public SPRAGUE
Hearing
Passed
Motion made and seconded to open a Public Hearing on the
application for an automobile junkyard recycling permit of One Steel
Recycling
Public Hearing Opened
Motion made and seconded to close the Public Hearing
Public Hearing Closed
Motion made and seconded to approve the application for an
automobile junkyard recycling permit of One Steel Recycling
Passed
13-068 ORDER Authorizing the execution of a lease between the City of Bangor and LONGO
the Maine Department of Public Safety for property at Bangor
International Airport
Action: Motion made and seconded for Passage
Passed
13-069 ORDER Authorizing the Sale of Lot 14 in the BanAir Industrial Park to BLANCHETTE
Kurt Thomas
Action: Motion made and seconded for Passage
Passed
__________________________________________
Lisa J. Goodwin, MMC, City Clerk
Page 4
� a
J
M
s
Cancer Action
Network -
January 28, 2013
Dear Members of the Bangor City Council:
fnericall Cancer sociel
Cancer .lection Network
1 B0vvd(_)III \1111 151211d. 5uitc IOO
� t�t�5 1�flll. M l . 04086
`(} 7, 3 1,O7
11,1! 11.�1t4�a[).11I'
The American Cancer Society Cancer Action Network (ACS CAN) is the advocacy affiliate
of the American Cancer Society (ACS), which is a nationwide, community-based, voluntary
health organization dedicated to eliminating cancer as a major health problem by preventing
cancer, saving lives, and diminishing suffering from cancer through research, education,
advocacy, and services.
On behalf of ACS CAN, I am writing to express support for the January 28 City Council
meeting agenda item pertaining to the tobacco -free public parks ordinance. We commend the
inclusion of all tobacco products and encourage you to pass a comprehensive tobacco -free
ordinance without any exemptions for certain public parks and without any amendments that
would allow only for the establishment of designated areas of the park to be tobacco -free.
Tobacco use is the leading preventable cause of death in the United States, equaling more
than 4001,000 deaths every year, Tobacco use increases the risk of at least 15 types of cancer
and contributes to more than 30% of all cancer deaths, including 87 percent of lung cancer
deaths. Smokers who quit can add up to eight years to their lives. Each year, smoking
accounts for an estimated 443,000 premature deaths in the United States, including 49,400
deaths among nonsmokers as a result of secondhand smoke. Tobacco use costs the nation
$193 billion in health care expenditures and productivity losses. Annually, tobacco use costs
Maine $602 million in health care costs, $534 million in lost productivity, and kills 2,200
Mainers.
According to a 2012 US Surgeon General report, every tobacco -related death is replaced by
two new smokers under the age of 25. Taking efforts like the ones being discussed at your
next meeting will allow the city of Bangor and state of Maine to improve health, reduce
costs, and allow the generations of today and tomorrow to thrive.
States and localities have been at the frontlines of tobacco control by legislating and
implementing effective, proven strategies to reduce youth initiation, encourage current users
to quit, and to protect all from secondhand smoke. Currently, more than half of the United
States population is covered by a smoke-free law. In 2009, the Maine Legislature passed a
law to prohibit smoking in, on or within 20 feet of a beach, playground, snack bar, group
picnic shelter, business facility, enclosed area, public place or restroom in a state park or
historic site. Many cities and towns across Maine have since taken efforts to pass similar
public health policies for city/town parks and beaches. Still, there is more work to be done as
Maine adults and children continue to be exposed to secondhand smoke in public places.
Continuing to pass smoke-free laws remains one of the ACS CAN's top priorities.
Secondhand smoke is a major health hazard proven to cause lung cancer, heart disease and
emphysema. With 4,000 chemicals and more than 60 carcinogens — including arsenic and
polonium — secondhand smoke is responsible for an estimated 3,000 lung cancer deaths in
nonsmoking adults each year. In 2006, the U.S. Surgeon General concluded that there is no risk-
free level of exposure to secondhand smoke. According to Stanford University, harmful exposure
to secondhand smoke can occur within 20 feet of an active smoker in outdoor settings.
Comprehensive smoke-free laws reduce exposure to secondhand smoke, encourage people to
quit or cut down on smoking, and prevent youth from starting to smoke.
ACS and ACS CAN are dedicated to reducing cancer incidence and mortality rates from tobacco
use. We know what strategies are effective in preventing children from even starting to smoke,
helping smokers quit their deadly addiction, and protecting all citizens from the health hazards of
secondhand smoke and will work with policymakers in reducing the burden tobacco has on our
nation, our state, and our local communities.
For these reasons, we urge the Bangor City Council to support efforts to prohibit tobacco use in
all city parks.
Please feel free to contact me if you need additional information or have any questions about the
information contained above.
Sincerely,
Hilary Schneider
State Director of Government Relations and Advocacy
1
t
r
ALPHA 2012/2013
Roy trd of Dire tor-.
1::x..1113 1..1!1'1'.11
1�11�! 1 �1,1�'ril:•ri.'I. 1'I�1 �.
1 ?nzr` .1ll�i'7;tc�:'..111'I 1
I�c'lllslli; .I c11.-i�1(ii71
.111'1 I. ,11(.111: S
1);11: V"'.11 -o. 1
Y,:1,..111)
1 :.�.'rt7!lI1'�' 1)IIT�yr1I'
kris111IaI1111]
January 28, 2013
Bangor City Council
Mayor Nelson Durgin, Council Chair
73 Harlow Street
Bangor, ME 04401
Dear Mayor Durgin and Members of the Bangor City Council:
My name is Tina Pettingill, the Executive Director of the Maine Public Health
Association. We are an organization which represents 400 public health professionals
and students across the State committed to creating an environment which sustains and
improves the health and well-being of Maine residents. Our diverse membership has a
common interest in the promotion and protection of the public's health. I am writing
today to urge you to adopt a 100°Y tobacco -free outdoor spaces ordinance for the
municipal parks, playing fields and recreational areas in Bangor.
Reliable and credible sources such as our nation's highest medical official, the U.S.
Surgeon General, as well as Stanford University researchers and Repace & Associates
have published reports warning about the dangers of secondhand smoke in outdoor
settings. This research proves that drifting secondhand smoke can indeed pose a
significant health risk for nonsmokers sitting or standing near smokers outdoors.
Conclusions from researchers include that smokers need to be at least 20 feet away
from non-smokers in order to avoid concentrations of secondhand smoke and that
contaminant levels can be as high in outdoor settings as in indoor settings. This is
revealing and enlightening information as we know that there is no safe level of
exposure to secondhand smoke- a toxin that is more deadly then arsenic, asbestos or
lead.
The reason this type of policy change works is simple- this is what the vast majority of
Maine people want. Surveys consistently demonstrate that over 75% of Mainers
support smoke-free environments including restaurants, bars, homes, workplaces,
parks and beaches.
In addition to Maine people wanting this type policy, smoke-free parks ordinances have
proven to be self -enforcing. The University of Minnesota did a large-scale survey of 257
parks directors that had smoke-free policies in 2004 and found that:
• 74% reported no problems with policy violators;
��-�ti��-.mainenublicl�calrh.o r�
A%
r
• 88% reported no changes in park usage and for those reporting a change in park use following the policy, 71%
reported an increase in usage;
• In addition, 58% of park directors reported less litter in park areas.
This same study reveals that enforcement was an area of worry for nearly all park directors without a policy. However, in
communities with a policy, few park directors actually experienced compliance problems and 99% of park directors with
policies would recommend such a policy to other communities.
Successful implementation of this type of ordinance relies on everyone working together. Education, signage and
community and patron awareness are the keys to success, as is the passage of an ordinance itself. When people
understand that an ordinance is in place, via signage and community messaging, compliance rates are high. In cases
where they don't comply, The American Lung Association of California reminds us that "part of what makes these laws
self -enforcing is that they are enforceable if needed. They are real laws with penalties and consequences for violation."
On behalf of the Board, staff, 400 members of the Maine Public Health Association and the 80% of Bangor residents who
do not use tobacco, I thank you for your thoughtful consideration of a tobacco -free parks ordinance. This ordinance will
protect our parks, people, pets and wildlife; it will be self -enforcing and put Bangor in line with State parks... a win-win
for everyone involved.
Feel free to contact me with any questions at mainepha@gmail.com or 730.1040. Thank you for your time.
Kristina Pettingill, MPH
Executive Director
l 11-1 1)I'iv-C, .1UiItI-,[a, X11_>;�I
,,vwxv.mainepublichcalth.org
As an emergency medicine physician who practices in Bangor and a member of the Maine
Medical Association's Board of Directors, I read with frustration a report on the City Council
government operations committee discussion Monday night regarding the proposal to restrict
tobacco use in city parks (Bangor Committee Debates Tobacco Restrictions for Public Parks,
Oct. 4
Several Council members commented that smoking is an issue of individual rights. This is
correct in the sense that tobacco is a legal product and adults have a right to use cigarettes and
tobacco products. However, Dr. Gratwick got it right when he said this is an issue of public
health. An individual's right to smoke should end when it will adversely impact the health and
raise health care spending for the rest of us. Families, children and those of us who don't smoke
(nearly 80% of adults in Maine are non-smokers) should be able to enjoy the use of Bangor's
playgrounds and outdoor spaces without worrying that we are putting our health at risk or having
to be the ones to get up and leave. The City is careful to keep the parks clean and well cared for
so people don't get hurt on the playground equipment or slip and fall in the parking lot.
Shouldn't the City also take a simple, no cost step to keep those of us who don't want to be
exposed to it safe from tobacco smoke?
We know that second hand tobacco smoke, even in outdoor places, is dangerous. Exposure to
outdoor tobacco smoke can subject people nearby to similar or even higher levels of particulates
than indoor tobacco smoke. And, we know that exposure to second hand smoke has an
established connection to adverse health outcomes in adults and children, including asthma,
respiratory infection, and lung cancer. More recent work has shown an association between
second hand smoke exposure and reduced cognitive ability in children, increased respiratory
disease in adults, and increased coronary heart disease in women.
Finally, one of the primary reasons for encouraging the development of smoke-free policies in
outdoor locations frequented by young families and children is that such environments are very
effective in preventing youth tobacco use in the first place. Prevention is critical because if young
people don't start to use tobacco by age 26, they almost certainly will never start.
For these reasons, the American Medical Association supports the elimination of smoking in all
public places. The Maine Medical Association, a membership organization of 3600 physicians,
including over 300 who live or work in Bangor, also support policies that protect non-smokers
from involuntary exposure to hazardous tobacco smoke. We are proud of Bangor for
considering this ordinance and know the Council will do the right thing to protect Bangor's
residents and visitors. We hope the Council does not water down the proposal to have a
complete ban on smoking in parks.
Charles F. Pattavina, MD
On Behalf of the Maine Medical Association
: ;1; .. t .. — M `f z ±7 r'1'. f� • � . .. �-5:;ss, + .. '1 - '1,. - -'..i - :1
Dr. pattavina is an emergency medicine physician who practices at St. Joseph Hospital and a
member of the Maine Medical Association Board of Directors
0 STAR
..
Rent Estate I (arm. a ion
News: National
January 23, 2013
Written by Mark Heschmeyer (mheschmeyer@costar.com)
T �=�s 1.� � �.. � ' `� � .d. �, f � � e � :. 11 � �r M t z, � i - - �' ••,�' s'_ -° r��� i � � i''� 'tel � i
' � } � � M1 � �• 3,.� � � 1 � , �! '�..... ,,.i 'yam, .�� t i..i {,..: 1 iii � d ' .,p L,, ai� �:,
CRE Firms Herald Flurry of L a to Year Deals Even as Some Worry Investment Activity Driven
More by Policy Than Property Economics
Clarion Partners, a leading New York -based global investment manager, epitomizes what has been
occurring in the U.S. commercial real estate investment sales market over the past few weeks. Clarion
has been on a tear, as has the investment market.
• In a joint venture with MetLife Real Estate Investors, Clarion purchased the 1.4 million -square -foot
Constitution Center, the largest, privately -owned, trophy office building in Washington.. DC, for $734
million.
• Acting on behalf of a separate account client of the firm, Clarion paid $129.3 million for a six -
property, 407,458 -square -foot office portfolio in the Four Point section of Boston's Seaport District.
• In New Jersey, Clarion paid $76 million for the 353 --room Hanover Marriott on behalf of -an
institutional investor.
Three huge deals that closed in a span of few short weeks, which has been the story for much of the CRE
market as We've rolled into 2013• Cassidy Turley estimates the uptick in deal volume at the end of 2012
was close to 20% above historical norms.
Share this story with your followers Tweet
But the big question on nearly everyone's mind is: Can it continue?
Tim Wang, a director, head of investment research and a member of Clarion's investment committee,
thinks so, and says compared to other options available to investors, CRE is very attractive right now.
"The European sovereign debt crisis seems to be stabilizing. China's economy has rebounded. The U.S. is
finally ready to confront our budget deficits and long-term structural issues," Wang said. "So, on balance,
the economic outlook is relatively positive. On the other hand, investors are facing a volatile stock market
and ultra-low bond yields. High quality commercial real estate is a logical choice for investment today."
That sentiment is shared by research analysts at most commercial real estate firms across the country,
although some are concerned the deal flow seems to have more to do with policy matters and tax
avoidance rather than underlying economic and property fundamentals.
"Though investor demand for multifamily, CBD office, trophy shopping centers and net leased investment
remains extremely high, the late year flurry of deals that we saw in December had more to do with fear of
'taxmageddon' than anything else," said Garrick Brown, director of research at Cassidy Turley in San
Francisco. "If anything, I think this trend does not speak to underlying economic fundamentals but
ongoing policy concerns."
And that, Brown said, is very good news.
"Policy concerns are now the greatest threat to the economy -not weak underlying economic
f=undamentals," Brown said. "And though the fiscal cliff deal was wanting and certainly set the stage for
more discord with debt ceiling II, I also think that the worst short-term damage was averted with that
deal. Business confidence is up.
Copyright (c) 2013 CoStar Realty Information, Inc. All rights reserved.
CONTINUED: Do a Few Good Weeks Portend a Good Year Ahead?
"Though it didn't have a huge impact on pricing and cap rate trends, we did see some sellers whose
pricing had previously been set in stone suddenly accept offers they had previously rejected to close
deals," Brown continued. "But we also saw a lot of activity from people who contacted us late in the year
simply looking to self a property quickly."
Jacques Edelin, director of research at Newmark Grubb Knight Frank in New York, said underlying
business conditions could put a damper on the investor enthusiasm of the last few weeks.
"Corporate earnings growth for the big S&P 500 companies turned negative in the third quarter of 2012
for the first time in 11 quarters (nearly three years), which means the economy is not improving despite
what the media and politicians are telling us. That doesn't bode well for 2013," Edelin said.
So what's an investor to do?
"The key challenge for core investors in 2013 will be availability of properties for sale," said Lee Menifee,
managing director, research and strategy at American Realty Advisors in Glendale, CA. "With foreign
investors,. REITs, pension funds and retail investors all poised to increase their exposure to U.S. real
estate, there may not be many sellers, and the high quality properties that come onto the market will
spark intense bidding wars. But investors who choose to sit on the sidelines in the coming year are likely
to find the 2014 environment similarly competitive, and will miss out on a year of attractive income
returns and potential appreciation."
Menifee expects value-added and opportunity investors will find competition even more fierce this year
than last.
"Many troubled assets are "self -curing' due to rising property values, reducing the number of distressed
sales," he said. "Instead of distressed owners, value added and opportunity investors increasingly will
have to buy distressed assets, which are always more challenging and expensive to reposition."
As always in commercial real estate, a key to sustained growth will be financing.
Menifee said he beelieves the net deleveraging of commercial real estate will constrain value growth,
particularly in tertiary markets. "Despite the growing availability of debt for core properties, banks and
most other lenders are decreasing their exposure to U.S. real estate," he said. "CMBS markets could play
a bigger role in 2013, but investor demand is as likely to ebb as it is to flow, depending on the regulatory
environment and perceptions of the quality of the underlying properties."
CoStar asked other CRF professionals for their take on how they expect 2013 will progress based on their
experience over the past few weeks. Here are some of the additional responses:
A Better Year Than 2012
One or two good months does not a "trend" make! That said._. I do believe that 2013 will be a better year
than 2012. We are certainly experiencing an uptick in activity in our Tucson office market, in both sales
and leases. Even the general "chatter" in the street is a bit more intense. Some of it is due to pent-up
demand in requirements to purchase or lease. Some of it is due to a feeling of more confidence in what
the future will bring.
But I expect this increase in the level of activity will be fragile and the day-to-day news coming out of
Washington, as well as state and local governments, will have great effect on the direction of this "trend."
I do believe we are recovering. But the pace will be slow enough that it won't really feel like things are
getting much better until the day sneaks up on us and we realize that it's happened!
Thomas .I. Nieman, principal, commercial properties at Cushman & Wakefield I Picor Commercial Real
Estate Services in Tucson
More Deals Because There Are More Options
Copyright (c) 2013 Costar Realty Information, Inc. All rights reserved.
CONTINUED: Do a Few Goad Weeks Portend a Good Year Ahead?
As cap rates compress too low for many investors for core assets in the most sought-after gateway
markets, more investors are open to secondary markets and lesser -quality assets to achieve reasonable
returns. There are more acquisition options as investor criteria expands.
Most investors feel this is a great time in the cycle to acquire real estate. Now that values are clearly on
the rebound and most markets are seeing improvements in occupancy and rates, investors are less
apprehensive about the market. Sellers feel pricing has improved enough to sell. Sellers feel better about
selling assets now than they have in four years, so there are more willing sellers.
In some property sectors and market areas, values are still less than replacement costs. Plus new
development is still more difficult to finance. This further drives the acquisition vs. new development
decision toward acquisition.
Michael Bull, president at Bull Realty Inc. in Atlanta
Unless Washington Mucks It Up
We expect the recovery to show some acceleration in 2013. It has been a long, slow road to get to this
point, but we believe that the business community's confidence levels are finally returning to a level of
equilibrium. Provided Washington does not dislodge that confidence, the fundamentals also appear to
point to higher levels of real estate activity across most sectors.
I would describe the ingredients as a combination of improving confidence, positive growth from the
housing sector (which has been a major detraction for several years), a healthier financing environment
and an employment market that is not strong, but is trending positively. These economic fundamentals
are set against a backdrop of limited new supply in the real estate market, so any pickup in demand is
having. a meaningful impact on the markets.
James R. Wrigley, executive vice president of Trefoil Properties LP in Lansdale, PA
Absorption Will Be Key
Class A office in Dallas seems to be selling well. Class B office fundamentals seem to be improving finally,
but most B and C buildings are not primed for sale due to low occupancies and low rental rates. Some
Class A owners may feel that their in-place rental rates are still too low to sell despite higher occupancies.
It seems unlikely that cap rates will decline further and likely will remain flat for next few years.
Owners of Class B office should be hoping that Class A office rates and occupancies are becoming high
enough to be restrictive to tenants and that Class B buildings will therefore benefit. I think that this may
begin in 2013. There are statistics and anecdotal evidence to indicate that concessions are diminishing
and that tenant's leverage has already peaked and is on the decline.
Ryan Phillips, president of Signature Asset Management Inc. in Dallas
I track absorption closely and it has been increasing steadily each quarter. Vacant spaces need to be
absorbed before landlords can get any real pricing power. We are probably 12 months away from any
price increases.
Todd Hamilton, associate broker at Cutler Commercial in Phoenix
Employment Primary Driver of Recovery
We believe activity will be firing on all cylinders and continuing the momentum over the past two months.
This includes sales velocity, better occupancy, less concessions, more development, continued cap rate
compression for core product in core markets and more investment capital in secondary and tertiary
markets.
Employment tends to be the primary driver of this CRE recovery. You are seeing stronger employment
numbers in the core markets which is increasing occupancy for office product, more discretionary dollars
For retail spending and increased confidence by both companies and investors to put their money back to
work. In addition, the low interest rate environment is allowing for continued momentum for both buyers
and sellers.
Joel Dumes, vice president of investments from The Dumes Falk Group of Marcus & Millichap in Cincinnati
Copyright (c) 2013 CoStar Realty Information, Inc. All rights reserved.
CONTINUED: Do a Few Good Weeks Portend a Good Year Ahead'
Still Too Early To Tell
The market continues to be a story of haves and have-nots. Some real estate firms have embraced the
new economy, and are doing business in a new way. Much of that requires learning and letting go. Some
firms have, and some have not.
The market is different than it was in 2006 and even 2010 for that matter. We've reached a peak and a
bottom both over the last five years. Values have been rising. There is job growth, it is modest, but it
exists. Most importantly, there is money. Debt and equity capital is readily available for trophy deals,
value add deals so long as they are priced correctly.
Bottom line, 2013 will likely be ok or good. I don't expect it will be great.
Aasif M. Bade, president of Ambrose Property Group in Indianapolis
The New Normal
I think it only signals that the market has adapted to a new normalcy, which should continue in 2013.
Retail sales have been near or above pre -recession highs For two years. Unemployment is the only thing
holding the recovery back farther. The divergence of the two (retail sales and employment) suggests two
things. Firstly it signals a structural retrenching where the outcome of the retooling of corporate America
in response to the recession - i.e, more efficient operations doing more with fewer employees.
Secondly, the lag in construction -related activity (which we know to be true) vs. retail sales has been
somewhat surprising to some, but requires the full repricing effect on home ownership to finally work
most of the way through the system.
Gabriel Silverstein, president of Angelic Real Estate LLC in New York
Bearish Sentiment Should Subside
We glided off the cliff mostly unscathed, Europe seems to be relatively stable, and housing inventory
seems to have dwindled (even the shadow kind) due to a rush of enthusiasm for discounted/distressed
housing in 2012. Overall, very few clouds ahead - corporations should begin spending and expanding,
which should propel job growth, and investment activity should continue with less uncertainty in the air.
Provided that we don't have any surprises, bearish sentiment across the country should begin to
substantially recede in 2013.
Nelson B. Garcia, managing associate at CGI Merchant Group in Miami
Keep up weekly on national news, trends and property leads with the Watch List Newsletter, a weekly
pdf that includes other news and leads not found on the CoStar Group web news pages. Sign up for the
Watch List E -Mail Alert. A new issue is published late each Wednesday.
Copyright (c) 2013 CoStar Realty Information, Inc. Alf rights reserved.