Wednesday, October 17, 2012

Barclay Jones on the Net Lease Market

Net Lease Market News Q: How do you view the net lease market today? A: The net lease market today continues to be pretty strong, and demand for income product generally remains high. The net lease market does distinguish between the quality of income streams and leverage levels are very sensitive to credit quality. Certain product types have stronger demand characteristics as well, with a general preference for well-located industrial. Q: How do you view the net lease market in 6-12 months? A: Over the next 6-12 months, I expect rates to stay low and the market to continue to have demand for yield product. Hopefully, the recovery will begin to gain strength and we will see continued recovery in the housing market as well. With continued recovery, I expect that eventually rates will firm up in anticipation of a stronger economy. Cap rates should rise slightly as well, but I expect the net lease market to continue to be vibrant. Q: What important factors should people be watching for? A: Caution is warranted with the experience of the European real estate and debt markets. Relatively modest vacancy and performance downturn have been met with serious market disruption due to the sovereign debt crisis and ensuing bank recapitalization issues. The US securitization market continues to recover, but this bears a close watch. Q: What trends do you see carrying on into the future? A: The demand for yield product and below long term trend economic growth appear to be trends that will carry into the near term future. Technology and the internet will continue to effect real estate markets as the world evolves with the web. Major metropolitan areas continue to benefit from the tech concentrations and the employment concentrations they create.

Thursday, September 27, 2012

Commercial Property Sales Outlook

Commercial Property Sales Outlook for U.S. Cut by ULI The Urban Land Institute cut its forecast for U.S. commercial real estate sales by 12 percent to $748 billion through 2014 because projections for economic growth are “down considerably” from six months ago. Deals for properties such as office buildings, shopping centers and warehouses probably will be $223 billion this year, $250 billion next year and $275 billion in 2014, according to a ULI survey released today of 39 economists and analysts from real estate investment, advisory and research firms. In a March report, sales were forecast at $250 billion this year, $290 billion next and $312 billion in 2014. REIT Returns One projection boosted from the last survey was for the performance of real estate investment trusts. Annual returns for equity REITs are forecast to be 15 percent this year and 10 percent both next year and in 2014. That’s up from the previous forecast of 10 percent this year, 9 percent next and 8.5 percent in 2014, the institute said.

Wednesday, August 22, 2012

Rich Folks Go Where Pensions Dare Not

Net Lease Market NEWS As big institutional investors pull back from investing in high-risk real-estate funds, these funds are turning to a new source for capital: rich people. Starwood Capital Group, Lone Star Funds, Carlyle Group CG -0.59% and others have raised billions of dollars over the past several months from wealthy individuals seeking to get in on the firms' newest "opportunity" funds, which buy or develop riskier properties and use higher levels of debt in hopes of reaping high returns.

Tuesday, July 3, 2012

Commercial Real Estate Loan Prices Rise in May

The aggregate value of Commercial Real Estate (CRE) loans priced by DebtX that collateralize CMBS increased to 88.2% as of May 31, 2012 from 88.1% as of April 30, 2012. Loan values were 81.6% as of May 31, 2011. “Commercial real estate loan prices climbed for a fifth straight month in May as underlying market conditions continued to improve,” said DebtX CEO Kingsley Greenland. “CRE loan prices in May benefited from a decline in Treasury yields.”

REIT Returns Slow in Second Quarter

Real estate investment trusts, which have become the darlings of investors over the past three years for their strong returns, are beginning to lose some of their luster, the Wall Street Journal reported. Citing data from the Dow Jones All REIT Index, which tracks 133 trusts, the sector returned just 4 percent in the second quarter, down from 10.5 percent in the first quarter and 15 percent in the fourth quarter of last year.

Blackstone Makes Foray Into Houses

Net Lease Market News Blackstone Group LP (BX), the biggest buyer of U.S. commercial real estate since prices bottomed, is jumping into residential property as housing recovers. The private-equity firm has spent more than $250 million this year buying foreclosed single-family houses with the intention of renting them out, said two people with knowledge of the effort. The goal is to acquire enough assets to potentially take public as a real estate investment trust, or sell to another company or even to tenants, said the people, who asked not to be identified because the plans are private. The venture marks Blackstone’s first major foray into the U.S. residential market. The company was the top buyer of commercial real estate in 2010 and 2011, spending about $16.7 billion, according to Real Capital Analytics Inc. in New York. Deals included the $9 billion purchase of more than 500 shopping centers from Centro Properties Group and industrial properties valued at $1 billion from Prologis. U.S. commercial-property prices have gained about 26 percent from a post-crash low in January 2010, according to an index compiled by Moody’s Investors Service and Real Capital. In the housing market, price declines are easing. The S&P/Case-Shiller index of values in 20 U.S. cities fell 1.9 percent in April from a year earlier, the slowest pace since 2010. While mortgage rates are at record lows, rental demand has climbed because many Americans can’t buy homes because of insufficient income or bad credit, or because they prefer the flexibility of renting. Monthly apartment rents in the U.S. have jumped almost 6 percent since the end of 2009, to an average $1,018 in the first quarter, according to Reis Inc.

Tuesday, June 12, 2012

Net Lease Market Report

Net Lease Market News The most aggressive cap rates Jonathan Hipp, CEO of Calkain, says he has seen has been in the mid 4s for “McDonald’s-type credit.” Expect compression to continue, he tells “Given where Treasuries are headed, people are looking for yield. Also, there is so much buyer interest in this product now we have gotten to the point where we almost don’t need new buyers. What we would like to have is more products.” Not that the demand-supply imbalance will give investors pause, Hipp adds. “With everything going on, from the uncertain employment picture to the European debt crisis, at end of day people are still cautious on the economy. With the right combination of credit, location and length of lease it is a great time to be a seller in the net lease market.” Or even a buyer, he says—but with a caveat. In this environment, current buyers should beware that an eventual exit strategy could happen in a period of higher interest rates and a diminishing flight to quality.

Tuesday, May 29, 2012

Harbor Group Sells New York Office Building for $270m

Harbor Group bought the property in January 2010 from JP Morgan Chase for $107 million. Habor Group International LLC has sold an office building at 4 New York Plaza in Lower Manhattan for $270 million to a joint venture of HSBC Alternative Investments Limited and Edge Fund Advisors. Harbor Group bought the property in January 2010 from JP Morgan Chase & Co. (NYSE: JPM) for $107 million in a 15-year sale and lease-back deal for 75% of the property. The 1.1 million square foot building is located at the corner of Water Street and Broad Street

Friday, May 18, 2012

Net Lease Market Continued to Gain Momentum

The U.S. retail investment sales market staged a strong performance last year as property sales rose 32 percent from 2010 to nearly $61 billion. Prices for power centers and neighborhood centers increased 9.1 and 7.2 percent, to $148 and $135 per square foot, respectively. While the highly coveted single-tenant net-lease investment sector continued to gain momentum, shopping centers and other multi-tenant properties captured nearly 68 percent of total sales, for which cap rates compressed by 40 basis points. Gateway investment markets New York, Northern New Jersey, Los Angeles, Chicago, Washington, D.C., South Florida and Boston dominated this investment activity. New York City.

Tuesday, May 15, 2012

Net-Lease Sale in Las Vegas Hits $1,736 PSF Mark

Marcus & Millichap Real Estate Investment Services Inc. has closed a record-breaking sale on the Las Vegas Strip for a 16,016-square foot Walgreens drugstore. While the sales price of $27.8 million may not be the largest transaction by dollar amount, it breaks down to $1,736 per square foot, making this the most valuable single-tenant drugstore ever to trade in the United States.

Tuesday, May 1, 2012

DineEquity, Inc. Announces Solid First Quarter 2012 Results

DineEquity, Inc. DIN +9.47% , the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, reported financial results for the first quarter of 2012. "We are pleased with our first quarter performance. At DineEquity, we continue to work closely with IHOP and Applebee's on their respective brand-building strategies to innovate the menu, drive operational performance, and provide value for our guests," said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity. "Our business fundamentals remain healthy and our unique, highly franchised business model is generating strong free cash flow and enabling debt reduction, which are key measures of our success." First Quarter 2012 Financial Highlights -- Total debt was reduced by $85.9 million in the first quarter of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee's company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $69.0 million, Senior Notes by $4.5 million, and financing and capital lease obligations by $12.4 million.

Cole Real Estate Investments Crosses Milestone of $10 Billion Total Assets Under Management

Cole Real Estate Investments (Cole) announced its commercial real estate portfolio has surpassed the $10 billion mark in total assets under management, further establishing the company as a national leader in retail, office and industrial real estate investments. With nearly 350 employees across the country, Cole continues its mission to provide access to high-quality commercial real estate.

Tuesday, April 24, 2012

CWCapital Selling $345 Million of Distressed Real Estate Debt

Net Lease Market News CWCapital Asset Management LLC, a firm specializing in troubled commercial mortgages, is marketing $345 million of distressed debt in its biggest sale ever as investors circle souring loans. CWCapital, the second-largest servicer charged with resolving problem real estate contained in securities, is selling a portfolio linked to properties spanning the U.S. from Brooklyn, New York to Pasadena, California, according to Mission Capital Advisors, the manager of the sale. Retail buildings account for the largest share of the pool, comprising 36.3 percent, followed by office buildings at 28.2 percent, according to Mission.

Wednesday, April 18, 2012

Westfield Sells Eight U.S. Centers for $1.15B

The Westfield Group entered an agreement to sell a majority interest in seven of its non-core U.S. retail assets to Starwood Capital Group for $1 billion. Starwood will manage and control the platform, while Westfield will retain a 10 percent interest in the properties.

Tuesday, April 17, 2012

BofA unloads FiDi building for $230M

Bank of America has struck an accord to sell a Lower Manhattan office building to Beacon Capital Partners and L&L Holding for about $230 million, the Wall Street Journal reported.
Bank of America took ownership if the building when it merged with Merrill Lynch, which acquired the building in 1997.

Friday, April 13, 2012

AIG Is Planning a Return to U.S. Property Investing

But now AIG is beginning to make plans for fresh investments across the U.S. that will begin later this year.

A real-estate division of the New York-based company has reached out to developers of new apartment buildings in major metropolitan areas, said people familiar with the matter.

"We've done multifamily deals with them before, and we're interested in working with them again," said Hal Fetner, president and chief executive of New York developer Durst Fetner Residential LLC who has been contacted by AIG about new developments.

AIG hasn't set specific targets on the size of its future investments in real estate, but people familiar with the insurer say that eventually it will amount to hundreds of millions of dollars annually.AIG started its real-estate investing business in 1987 and built it into one of the world's largest property-investment platforms with $25 billion in assets at its peak a few years ago. Its real-estate team is led by Robert Gifford, a 55-year-old industry veteran who was hired in 2009, shortly before Robert Benmosche was appointed chief executive.

Thursday, April 12, 2012

Rite Aid 4Q Loss Narrows Amid Sales Growth

Rite Aid recently reported total drug-store sales of $7.12 billion, up 11% from a year earlier, mostly owing to an extra week of sales in the period. Same-store sales improved 3%, the drug-store chain's best showing in five years. Last week, Rite-Aid said that March same-store sales improved further, up 3.6%.

Looking to fiscal 2013, Standley said Rite Aid intends to remodel 500 stores into the wellness format and will focus on the Wellness+ program as the core component of the company's overall marketing and promotional efforts.

For the year, the company projected a per-share loss of 13 cents to 31 cents on revenue of $25.4 billion and $25.8 billion. Analysts polled by Thomson Reuters recently expected a loss of 25 cents and revenue of $25.74 billion. Rite Aid expects same-store sales growth of up to 1.5% over the just-completed fiscal year.

Wednesday, April 11, 2012

Owner-Occupied Real Estate Is Growing in Appeal

In a market featuring rock-bottom building prices and record-low interest rates, now is an ideal time for businesses to consider purchasing instead of leasing their real estate.

That was the consensus of the panelists on the most recent episode of the "Commercial Real Estate Show," which provided a look at the factors making owner-occupied real estate a more attractive option for businesses.

Show host Michael Bull, the president and founder of Bull Realty, said the possibility of rent spikes is one reason to consider buying.

"These prices are so low, it's incredible," he said. "With the lack of new construction [in recent years], I think we're going to see some huge rents in about five years."

Tuesday, March 20, 2012

Wendy’s has dethroned Burger King

NEW YORK — Wendy’s has dethroned Burger King as the country’s second biggest hamburger chain.

Wendy’s edged out Burger King in U.S. sales volume for the first time last year since Wendy’s was founded in 1969, according to a report by the food industry research firm Technomic Inc. that’s set to be released next month.
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Wendy’s had sales of $8.5 billion in 2011, compared with $8.4 billion. McDonald’s remained far larger than both with $34.2 billion in sales.
The figures are based on Technomic’s estimates of system-wide sales at franchise and company-owned restaurants, rather than corporate revenue, which includes fees from franchise operators. Worldwide, Burger King still has far more restaurants than Wendy’s and remains the second biggest hamburger chain behind McDonald’s.

Monday, March 19, 2012

Distressed Commercial Real Estate Continues Retreat

The amount of commercial real estate backed by troubled loans in the United States continues to fall from a high of $191.5 billion set in March 2010.

So-called distressed real estate, which included properties in default or foreclosure and real estate taken over by lenders, totaled $166.9 billion in January 2012, down $4.7 billion since October 2011, according to data from Real Capital Analytics.

Tuesday, March 13, 2012

David Sobelman will be a Featured Moderator at the ICSC in Vegas

David Sobelman, executive vice president of calkain companies, will be a featured moderator at the ICSC Net Lease property panel in Las Vegas

ICSC is hosting the first ever Net Lease Property Panel Discussion to take advantage of the confluence of attendees at the RECON conference. Hear from the industry's foremost and dynamic practitioners.

Topics to be discussed are:

• Developer issues and dynamics of today's single tenant properties
• Institutional investments and trends of net lease properties
• Brokerage perspectives and market analysis
• Legal issues when working with single tenant properties

David has been with Calkain since its inception. While not only charged with overseeing the operations and transactional activity for the firm, David works with our exclusive clients.

A critical part to the expansion and development of Calkain, David has been a part of the divisional growth of the firm into private-market and institutional transactions and due diligence assessments.

David is considered by many as an expert in his field and is consistently sought out for his opinion and counsel.

RECon conference is the global convention for the shopping center industry and provides networking, deal making and educational opportunities for retail real estate professionals from around the world. With over 30,000 attendees and 1,000 exhibitors it is the largest industry convention, making it an unparalleled opportunity to do a year's worth of business in just three days! So if you are looking to meet with retailers to discuss new or existing leases in your center, then you need to have a presence at RECon.

Wednesday, February 29, 2012

US Commercial Real Estate Markets Improving, Says NAR Report

US commercial property market are showing signs of improvement, with vacancy rates expected to drop over the coming year. According to the National Association of Realtor s’(NAR's) quarterly commercial real estate forecast, a strengthening across all sectors of the market is anticipated. Two-thirds of the professionals questioned stated they believe there will be an improvement during the first quarter of 2012, while rental increases are also on the cards. NAR chief economist Lawrence Yun commented: "Sustained job creation is benefiting commercial real estate sectors by increasing the demand for space. Vacancy rates are steadily falling."
A decline in the empty space available in the office, industrial, retail and multifamily housing sectors is predicted between the first three months of this year and the same period in 2013, with vacancy rates in the retail industry likely to fall the most - dropping from 11.9 per cent at present to 11 per cent in a year's time.

Annual industrial rent is expected to rise 1.8% in 2012 and 2.3% next year. Net absorption of industrial space nationally is seen at 40.6 million square feet this year and 57.7 million in 2013.

Retail vacancy rates are forecast to decline from 11.9% in the current quarter to 11% in the first quarter of 2013.

Monday, February 27, 2012

New York City Widened its Lead Over Competitors

NYC increases lead over London as top commercial property market

After taking over the top spot for global property investment in the third quarter, New York City widened its lead over competitors. The city attracted $35.7 billion in commercial property sales, including multi-family buildings, compared to $29.2 billion in London and $22.6 billion in Tokyo, according to a global property market report released today by Cushman & Wakefield.

Overall, global sales activity, including multi-family properties, rose 14 percent in 2011 to $808 billion, and the volume is now 83 percent greater than 2009′s lows. Half of all activity occured in Asia, but the North American market showed the greatest improvement in the last year, with investment volumes rising 52 percent. That increased demand led to the greatest compression of yields in the Americans, as capitalization rates fell in the region by 31 basis points, compared to the global average of 20 points. And overseas investors took notice, as the Americas saw a 94 percent increase in cross-border investment activity.

Thursday, February 23, 2012

Property Group is Planning to Develop 2.2 million sf of Mixed-Use Space

Property Group is planning to develop 2.2 million square feet of mixed-use space

After years of battles, Washington may finally realize a decades-old desire to rejoin two downtown neighborhoods with a $1.3 billion project on a platform over a stretch of Interstate 395.

City officials say they hope to close in the next 60 days on the sale of six embattled acres of land and air rights to Property Group Partners, a developer that owns or manages about three million square feet of office buildings, mostly in Washington. Property Group is planning to develop 2.2 million square feet of mixed-use space, mostly office with some retail and housing.

Friday, February 3, 2012

Commercial Property Values in the U.S. Probably will Climb About 6 %

Commercial-property values in the U.S. probably will climb about 6 percent in the next six months, based on recent trading in real estate investment trusts and fixed-income yields, Green Street Advisors Inc. said.
“The increased optimism being expressed by REIT investors and the decreased skittishness evidenced in the high-yield market should eventually find their way into property valuations,” the Newport Beach, California-based research firm said today in a report introducing its Commercial Property Price Forecast. “That’s a notable improvement over the outlook a few months back.”
Property values were little changed during the past several months after a two-year rally that brought them to within 10 percent of record highs reached in 2007, Green Street said in a Jan. 6 report on its Commercial Property Price Index.

Thursday, February 2, 2012

Two Office REITs Post Higher Earnings

Boston Properties Inc. and SL Green Realty Corp. reported stronger-than-expected quarterly earnings, a sign that the nation's largest office landlords have been able to boost revenue despite tepid job growth.

Boston Properties, which owns office buildings in New York, San Francisco and Boston, reported late Tuesday that fourth-quarter funds from operations, a key profit metric, was $1.21 a share, two cents higher than analysts projected.

Meantime, SL Green, Manhattan's largest office-building owner, reported late Monday that funds from operations rose to $1.02 a share in the fourth quarter, up from 97 cents in the same period last year and $1.01 in the third quarter. Analysts had projected per-share funds from operations of $1 for the fourth quarter.

Wednesday, February 1, 2012

Blackstone Spies Retail Recovery

Blackstone Group LP's $11 billion bet on retail property is showing signs of paying off.

As the retail property market struggled over the past year with high vacancies and competition from online shopping, the private-equity giant made a bold play: It bought up three major retail portfolios to become one of the largest owners of U.S. shopping centers.

Now there are signs that the industry is near its bottom, and perhaps starting a slight recovery.

In the span of 12 months, Blackstone snapped up Centro Property Group's 588 U.S. centers, 36 grocery-anchored centers from Equity One Inc. and—in January—a 95%..

Goldman Fund Plans Fight Over Hancock

A Goldman Sachs Group Inc. real-estate fund that has walked away from a number of struggling investments is taking a different approach with a Chicago skyscraper, deciding to fight its creditors rather than surrender ownership of the building.

Goldman and its partner, property manager Golub & Co., are required to repay on Feb. 9 some $400 million in debt that they put on the John Hancock Center after they purchased the 100-story tower in 2007. But a default is likely because the owners haven't been able to sell or refinance for that amount.

Tuesday, January 31, 2012

Gores Group LLC Acquired Pep Boys for $791 Million

Pep Boys -- Manny, Moe & Jack agreed to go private in an acquisition by Gores Group LLC valued at about $791 million after the auto-parts retailer’s previous attempts to sell itself were unsuccessful.
The cash offer of $15 a share is 24 percent higher than Pep Boys’ closing price on Jan. 27, the companies said today in a statement. Including debt, the deal is valued at $1 billion and is expected to be completed by the end of the fiscal second quarter of 2012, according to the statement.
The transaction is the largest in the auto-parts retailing sector since 2008, according to data compiled by Bloomberg. Pep Boys, founded in 1921, has more than 7,000 service bays in 700 locations across the U.S. Pep Boys halted efforts to sell itself last year after failing to attract high enough bids, two people with knowledge of the negotiations said in February.

Dollar General Market Sold for $3.6 million

A subsidiary of Inland Diversified Real Estate Trust, Inc. has acquired a fee simple interest in the 20,707 square foot Dollar General Market store in Port St. Joe, FL for $3.6 million. The cap rate for this property is approximately 8.5 percent based on the purchase price paid at closing.

The property is leased to Dollar General Corp on a fifteen year, triple-net lease expiring in November 2026. The lease is renewable for four five-year terms, through November 2046. This Dollar General Market store includes both non-grocery and grocery components.

Monday, January 30, 2012

Lehman's Estate Gets a Montana Resort

The estate of Lehman Brothers Holdings Inc. is now the owner of a Montana ski and golf resort, after assuming control of the assets of Moonlight Basin Ranch LP.

Moonlight Basin filed for bankruptcy more than two years ago, after Lehman's estate said it had fallen behind on loan payments. Lehman itself collapsed into bankruptcy in September 2008.

Opus Makes a Fresh Start

The family behind Opus, once one of the largest private developers in the country, is making a comeback after settling years of messy battles with creditors and former employees.

The Rauenhorst-family-controlled Opus, reorganized and renamed Opus Group, recently announced plans for a 33-story rental-apartment tower in downtown Minneapolis. It is constructing a fully leased headquarters for household-products maker Church & Dwight Co. in Ewing, N.J., and is developing a 120-unit student housing and retail property in Minneapolis.

Wednesday, January 25, 2012

Office & Industrial Report

The single tenant Office/Industrial market is highly competitive today, however, this competitiveness varies due to the nature of the tenant and the relevant market. High credit tenants in primary – especially urban – markets are among the highest in demand. According to Costar the market for single tenant NNN investments is averaging 10,000 transactions a quarter.
A majority of those were Retail spaces, Corporate and Regional HQ’s in Primary and Secondary Markets. Of these primary markets, none is more interesting than Washington DC. Many Investors and Corporations have excess cash holdings and seek less volatile investments than the open stock and bond markets.

This trend has been realized through the increased activity of Institutional Investors, Private Equity Groups, and both publicly and privately traded REIT’s D.C. is particularly fascinating with the inclusion of Government and Government Contracting Tenants such as SAIC, Booz Allen, Lockheed Martin, Northrop Grumman, etc.

Generally considered some of the most desirable tenants in terms of longevity and credit, Contractors are frequently subject to shorter leases (5-7yr periods depending on the time frame of their contract), but they also tend to renew due to the nature of the space amenities they often require. Government (Federal or State) tenants are typically a highly favored tenant as well.

Investors however must be comfortable with a “non appropriation of funds” clause which the government entity may exercise because of budgetary constraints. The DC metro, particularly Northern Virginia, has many prospects for advancement, such as: » Several New Developments in the Ballston/Rosslyn corridor through Arlington (attracting tenants into new facilities who seek proximity to DC).» Phase I Dulles Metro Rail expansion scheduled to be in operation in 2013 should help the Dulles/Tech Corridor and Tyson’s Corner. » BRAC’s (Base Realignment and Closure) southward shift along the I-395/I-95 corridor south to Stafford and Fredericksburg.

It is anticipated that these shifts will draw strong investment grade tenants into these areas in the form of regional headquarters, manufacturing facilities, single tenant satellite operations and those who need proximity to either the tech or DOD (Department of Defense) base. Each of these developments should be considered as having quality single tenant investment opportunities in the coming 12-18 months.

Tuesday, January 24, 2012

Zoning Laws Grow Up

This city's zoning codes regulating the size, use and location of buildings could sap the life force out of all but the most zealous urban enthusiasts.
"Zoning has always concerned itself, for better or worse, with social matters, such as banishing noxious uses," said Julia Vitullo-Martin, a senior fellow at the Regional Plan Association. "What's different now is that the planning commission is moving from zoning that's negative on social issues to being positive, like mandating green markets and bike rooms.
It's reasonable for city government to encourage people to move in a beneficial direction. Whether zoning is the correct device is another matter. A market person might say it's better to go with incentives than mandates." As such, zoning is something of which every New Yorker and visitor ought to be aware.

Judah Hertz is buying office buildings

California investor Judah Hertz is buying office buildings

After a four-year hiatus on the sidelines, California investor Judah Hertz is buying office buildings in small cities with some of the highest vacancies and lowest demand in the country. That probably means more torment for other landlords in these markets.
Attractive yields are increasingly luring investors like Mr. Hertz further afield to office markets in smaller cities and suburban areas. During most of the downturn, investors have focused on major cities like New York and Washington, but this has driven prices up and yields down, to under 5% in some cases.

"I should be in a very competitive situation," Mr. Hertz says.