This Issue -- Wednesday, February 2, 2006 |
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Commercial Real Estate Deal - New Life in 2006 |
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by Andy and David Farbman |
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Andy and David Farbman |
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Residential Trends - Eminent Domain Stirs Continued Debate |
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The powers of eminent domain -- the ability of the state to take private property -- were expanded by the U.S. Supreme Court ruling in Kelo v. New London (2005). Prior to the Kelo case, governments generally reserved eminent domain for cases where private property was needed to complete construction of a public work -- something that fulfills a "public purpose," such as a bridge or highway. In the Kelo case, the City of New London, Connecticut, sought to acquire private property in order to build, not a bridge or a highway, but a private commercial development. At the heart of the argument was whether or not a commercial development, such as the one proposed in New London, serves a "public purpose." The Court decided that while a commercial development does not serve a public purpose in the same way as a bridge, park or expressway, new commercial development grows the economy and creates jobs: "Promoting economic development is a traditional and long accepted governmental function, and there is no principled way of distinguishing it from the other public purposes the Court has recognized." "The circumstances under which a goverment may use eminent domain have been widened," said Michael Kalil of NAI Farbman. "The decision has not been particularly popular among many homeowners, but it does open the door for ambitious developers to get big projects done that would have been impossible prior to the Supreme Court's ruling in the Kelo case." |
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Finance - Insuring Against the Unthinkable |
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After 9/11, Congress passed the Terrorism Risk Insurance Act of 2002 (TRIA) to guarantee financial losses up to $100 billion due to acts of terrorism. Federal action was deemed necessary to ensure the continued affordability and availability of property and casualty insurance, and to avoid disruptions to the nation's commercial real estate markets. Just before the 2002 act was set to expire, President George W. Bush signed a two-year extension to the law. No permanent solution has yet been adopted. "Terrorism insurance is a prudent investment for owners of properties in areas that are at high-risk of suffering a terrorist attack," said David Farbman of NAI Farbman. "However, there is one caveat: most terrorism insurance policies do not cover losses due to chemical, biological or nuclear attacks." |
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Health Care - Health Care to go Retail |
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Something big is looming in health care that may shake up the real estate market -- big as in big box retail. Look for health care to soon show up at your local discount retailer. A new concept called MinuteClinic offers a glimpse of what is to come, offering treatment for common health problems such as strep throat and other minor infections, as well as screenings and immunizations. MinuteClinics, typically located within Target or CVS stores, are open seven days a week. No appointments are necessary, and visits generally take 15 minutes. "Taking the MinuteClinic template a step further, imagine a big-box style health care 'store' that serves as a one-stop shop for preventive care, walk-in treatments, pharmaceuticals, food and dietary supplements, fitness gear, health education and training, vaccinations and more," said Andy Farbman of NAI Farbman. "That seems to be the next logical, yet highly revolutionary, step in health care delivery." |
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Automotive - Mixed Bag for Automakers in 2006 |
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The North American International Auto Show always seems to stoke automotive excitement, and economic chatter. More fire and brimstone are on tap for American automakers in 2006, according to some economists, while others say 2006 should usher in improved economic results for the auto industry. "It's an interesting time for us. It's the best of times on one hand; it's the most challenging of times on the other hand," Paul Ballew, GM's executive director for market and industry analysis, told members of the Detroit Economic Club during the club's 2006 Economic Outlook Luncheon. "We're posting record sales globally, we're at or near record levels in the U.S... We're the single largest consumer product category in the world." But dramatic structural changes in the global auto industry are the primary challenges facing the auto industry circa 2006, according to Ballew. At the same time, a KPMG survey of 140 global auto exectutives revealed that 76 percent of them believe that there will be a major automaker or supplier bankruptcy in 2006. The survey also revealed that 51 percent of the executives polled believe that one of the world's major automakers will be swallowed up by industry consolidation by 2008. The stakes are high-- a 2005 report from the Center for Automotive Research found that the auto industry remains the single largest manufacturing industry in the United States. "It's always difficult to spot a turning point as it is happening," said Andy Gutman of NAI Farbman. "But I believe that the events of 2005: the Delphi bankruptcy, the UAW/GM health care accord, reduced headcount at Ford and GM, as well as the possibility of Toyota becoming the world's #1 automaker in 2006 or 2007, all point to a turning of the tide in the history of the automotive industry. The impact it will have on real estate markets will be huge. The amount of square footage in this country at the industrial, commercial and retail level that is either directly or indirectly linked to the auto industry is staggering." |
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NAI Farbman publishes this e-newsletter to convey general information about real estate and not for the purpose of providing advice. The information you obtain from this e-newsletter is not, nor is it intended to be, real estate advice. You should consult an attorney for individual legal advice regarding your own situation. This e-newsletter and its contents do not create a professional relationship between NAI Farbman and any subscriber to this e-newsletter. Electronic mail ("E-mail") sent to NAI Farbman, or any of its brokers, agents, partners or employees will not create an professional relationship and will not be treated as confidential. Please do not send confidential information unless and until a formal relationship has been established. The links to other publicly available web sites are provided as a convenience. We make no claims, promises or guarantees about accuracy, completeness or adequacy of the information at those sites. For coverage comments or news tips, e-mail us or call (248) 353-0500. NAI Farbman |
There's an old Italian proverb that says "Anno nuovo, vita nuova,"
which means: "A new year brings a new life." While 2005 was
full of challenges, as well as opportunities and rewards, we hope that
2006 brings new life and a fresh start to real estate markets, particularly
in our home market of Detroit. According to the