Economy Watch – Case-Shiller Index Sees Another Uptick
By: Dees Stribling, Contributing Editor
Aug 26, 2009 – Is this the bottom? For sure? Everyone in the housing industry, and a lot of other people besides, are probably asking that question after the release of the latest S&P/Case-Shiller index report on Tuesday. The index, which measures home prices in 20 major metro areas, ended June up 1.4 percent, turning in a second monthly gain in a row. Prices were up in 18 out of the 20 metro areas, and it was the second monthly increase in the index since the mid-2006, just before the bubble popped.
Separately, the Federal Housing Finance Agency reported that prices were up 0.5 percent in June, when compared with May, for properties tied to mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Upward is good, but the trend is uncertain. What happens when the $8,000 tax credit for first-timers expires later this year, or if unemployment and its close cousin foreclosure bump up more later this year?
On the commercial side of the fence, a new report by Realpoint L.L.C. noted that the delinquent balance for CMBS actually decreased in July when compared with June, down to $26.85 billion from $28.65 billion. The downward bump was mainly due to about $4.8 billion worth of General Growth Properties-sponsored loans returning to current status after spending much of June in the 30-days-late penalty box.
The industry isn’t cheering the news, however. Realpoint predicts that CMBS delinquency will continue its upward march for the rest of the year, to as much as $50 billion by the beginning of 2010. The July 2009 total was over 500 percent higher than the total in July 2008.
The retail industry as a whole might be in the doldrums, but there are still pockets of activity, even ongoing developments that have been in the works since before the panic last fall. One unusual example of this is MetraMarket in downtown Chicago, which is slated to open this fall.
The 100,000-square-foot development is street-level retail and restaurant complex connected to the Ogilvie Transportation Center, one of Chicago’s main commuter rail stations, a fairly distinct location that aims to attract Metra commuters, downtown workers, area residents and tourists. The property will have more than a collection of usual-suspect retailers: the centerpiece of the development is the 15,000-square-foot Chicago French Market, a French-style market that will actually be run by Frenchmen, the Bensidoun family. The Bensidouns are renowned in France as the operators of more than 80 markets in metro Paris, and they operate 15 markets in the United States as well.
Most of the vendors who have signed on to operate booths at the French Market are individual Chicago-area operators. Among others, the French Market will be home to Albano’s Deli, an Italian specialty store; Canady Le Chocolatier, from the South Loop of Chicago; Completely Nuts, a nut shop; Flip Crepes, a French-style crepe shop; Pastoral Artisan Cheese, Bread & Wine; and Wisconsin Cheese Mart. There isn’t anything else quite like the French Market in Chicago retail, which is the main reason the project has been able to go forward, said Camille Julmy, vice chairman of developer U.S. Equities.
“What we’re trying to do is create a kind of special destination,” Julmy told CPE. “And while it’s fair to say that the state of the economy has slowed down the project, putting these shops in this location still works as a retail venture.”
Even so, Julmy added that U.S. Equities was fortunate in getting its financing squared away when it did, about a year ago. “Even a month later, and we might have had to wait for the next cycle,” he said.
Wall Street managed an up day on Tuesday, with the Dow Jones Industrial Average ending 30.01 points higher, or 0.32 percent. The S&P 500 gained 0.24 percent and the Nasdaq was up 0.31 percent
