The likelihood of owning a home increases according to age. Accordingly, three-quarters of households under the age of 25 choose to rent, whereas 83% of households ages 70-74 and 80% of households aged 60-64 own their residences—around the same level as middle-aged households. The homeownership rate has been on a steady incline since the early 1980s; in fact, more households over the age of 60 own homes today than they did 20 years ago, even after the implosion of the housing market.

While demographics do play a role in this increase, other factors, such as the fluctuations in the credit markets, tax codes, inflation expectations and investment strategies, also impact one’s propensity toward homeownership, points out Nechayev. So in all probability, the accelerating foreclosure rate and tighter lending conditions will help push the homeownership level a bit lower, at least in the near term.

But that will be countered by the growing population of baby boomers. Citing projections from the 2009 State of the Nation’s Housing reports, published by Harvard University’s Center for Housing Studies, Nechayev notes that households aged 65 and over will be the fastest-growing group, expanding by more than 910,000 annually between 2010 and 2020. Those aged 55-64 will grow by 380,000 to 400,000 per year over the same period. Overall annual household formation over the decade will be between 1.25 million and 1.48 million, depending on immigration trends. As a result, says the economist, a larger share of the household formation over the next 10 years will consist of older Americans.

“Even under the assumption that their age-specific homeownership rates will remain where they are for the entire period, the sheer increase in the number of older households would push the overall homeownership rate by as much as a full percentage point,” he says. “Baby boomers remain the major demographic force supporting the nation’s homeownership rate,” continuing a 30-year trend.

That’s not to say the younger households, particularly those between ages 25 and 34, will have a minimal impact. Positive growth in that cohort will certainly favor the rental multifamily market; it’s just that their parents will have a greater impact on the overall housing market, in terms of both ownership and rentals.

“Seniors will be the largest consumer of housing for years to come,” says Nechayev. “With the affordability of homeownership still near record highs, the substantial homeownership rate declines that some expect would only make sense in the context of a truly negative economic scenario.”

Unless we get hit by another major crisis, the national rate of homeownership will fall a bit before stabilizing and then will ultimately rise again—a trend that will benefit the apartment sector. “Older people seeking homes with lower maintenance and taxes and better commutes will support owner demand, which in turn would help to lift home prices, and subsequently rents, from the low levels of today,” says Nechayev.

Thus, those in the multifamily sector would do well to cater to both ends of the demographic spectrum when planning, building and marketing their properties.

The bottom line is, if a class A office building cannot prove its own interests in energy efficiency or environmental consciousness, it may have a more difficult time backfilling vacant floors. Worse yet, it may also stand to lose some corporate tenants it has kept in place for years or even decades.

Hence the importance of traditional office towers stepping up to seek LEED-EB status from the US Green Building Council. The Leadership in Energy and Environmental Design certification program was expanded to existing buildings in recent years after owners discovered practical methods of modifying facilities to use less power and water, generate less garbage and reduce their all-important carbon footprint.

Wachovia Financial Center, the tallest office tower in Downtown Miami and Florida’s biggest vertical building with 1.2 million square feet in 55 stories, made a pretty big deal of its LEED Gold certification earlier this year. Although the building is 98% occupied, its management remains conscious of which prospective tenants demand green, as well as current occupants that have come under new corporate mandates since their last renewal, says Don Cartwright, the building’s leasing director with Cushman & Wakefield.

“How important that stacks up remains to be seen, but if you can answer to the affirmative that your building is certified green, it’s an important box for them to check,” Cartwright tells GlobeSt.com. “We are absolutely in the heat of battle when it comes to new leases and renewals.”

Getting LEED certification now certainly gives Wachovia Financial Center a jump on the competition among several nearby buildings looking to strike sweet leasing deals on space that is either freshly built or about to become empty once other tenants move to the new buildings. The new gold status puts the 26-year-old tower “ahead of everything the city has built over two decades,” says Tim Keable, the building’s general manager.

In nearby Coral Gables, 355 Alhambra achieved LEED-EB Gold certification earlier this month. The 16-story, 224,000-square-foot building, which opened in 2001, earned its approval based on initiatives aimed at energy and water conservation, waste reduction, and green cleaning and pest control.

Brian Gale, managing director of the Miami office of Taylor & Mathis of Florida, the leasing agency for 355 Alhambra, says earning LEED status is necessary to compete with newer offices, even those built in the past decade. “Any new building is going to be built to LEED standards,” he says, “so it is important to be able to compete with those buildings.”

It may also become mandatory from a government standpoint, says Rich Bezold, chairman of the real estate department at Miami-based law firm Akerman Senterfitt. State and federal legislation may eventually mandate retrofitting of existing buildings to green standards, with upfront costs eventually being recovered through energy and other savings, he says.

“The owners gain a competitive edge if they can lower their operating costs, and that savings can be passed along to their tenants,” Bezold says. He points out that there are more green products on the market now than just a few years ago, and at more favorable pricing.

Renting space in LEED-certified office buildings is apparently no more costly than those that aren’t. Asking rents at 355 Alhambra and Wachovia Financial Center are within range of the averages for their respective submarkets—$40 per square foot in Coral Gables, $52 per square foot in Downtown Miami, according to Cushman & Wakefield.

An even clearer example of the magnification phenomenon can be found in Palm Beach County’s Delray Beach submarket, which has only 1.4 million square feet and a 58.9% vacancy rate, which is due to the loss, nearly a year and a half ago, of Office Depot, a huge tenant. But the office supply retailer, which now resides in a 625,000-square-foot space in Boca Raton, moved only two and a half miles away, says Erickson. In a place like Delray Beach, “even a 10,000 square foot lease can move the dial,” he says.

The Palm Beach County office market, and the Boca Raton submarket in particular, are stabilizing, says Erickson, but it is hard to characterize them as doing well. The Boca Raton market, in first quarter 2010, according to the CB Richard Ellis MarketView report, had a total vacancy rate of 29.5%. Corporate cut-backs,as well as the financial meltdown, have taken their toll, says Erickson. When Washington Mutual moved out of its 170,000-square-foot-space a little over a year ago, that really hurt, he says.

The West Palm Beach submarket, the second largest in Palm Beach County with 5.7 million square feet, has fewer swings, says Erickson. “That’s because it is the county seat and law firms and estate planners are entrenched there.”

According to the MarketView report, the Palm Beach County office market will continue to experience modest demand until the broader economy starts to rebound. As of first quarter 2010, office employment, mostly related to financial or other services, stood at 119,200 workers, according to CBRE Econometric Advisors. Over the last five years in Palm Beach County, office employment has declined 2.2%, but over the past 12 months, it has declined 4.5%. These declines deeply affect the office market. Office employment is projected to grow by 9,100 jobs during the 2010-2011 period, according to Econometric Advisors.

To cope with the financial uncertainty, says Erickson, some tenants are taking short-term leases of only three to five years. “You are talking about well-entrenched financial firms, for which three to five years is not a long time,” he says. For smaller, entrepreneurial businesses, “We are seeing short-term extensions for only one or two years,” says Erickson.

The good news for tenants in Palm Beach County is that office rents are down about 25% since the onset of the financial crisis. “In mid 2006, there were some businesses which wouldn’t look at Boca Raton, because it was too expensive,” says Erickson. “Now, they can, because office space and housing are more reasonably priced.”

And while Palm Beach County tenants are getting better deals from their landlords because of the recession, owners of existing properties are getting a boost from the fact that office construction has come to a halt and many of the planned projects which were expected to start in 2009, have been placed on hold for the foreseeable future.

Management has high expectations for improved sales growth as the economy recovers. Starbucks also declared its first dividend at its annual meeting of shareholders yesterday.

CEO Howard Schultz says that Starbucks will now “grow in a different way.” Do you think the company is ready to start opening locations again, or is the market still over saturated with its cafes?

And while LNR has yet to make a formal announcement of its plans, industry observers believe any decision may have far reaching implications for commercial real estate. After all, the company’s special servicing arm, LNR Partners, manages a quarter of all loans in special servicing.

LNR’s booming special servicing business, which according to Fitch Ratings has more than doubled in the past year, may indeed be contributing to its current woes.

“They may be attempting to get out from underneath their obligations to advance interest payments to the unsubordinated senior tranches,” says Greg E. Schecher, managing member of Lexington Capital Advisors LLC in Boca Raton, FL.

LNR’s land and residential holdings may also be sinking the company. “They are, unfortunately, involved in one of the most volatile property niches in the market, land,” says Dan Fasulo, managing director of Real Capital Analytics. “Given the property value decline in that sector, it’s not surprising at this point that they are looking at bankruptcy protection as a way to move forward.”

In January, Bloomberg reported that LNR enlisted Lazard Ltd. and law firm Dewey LeBoeuf LLP to help restructure nearly $1 billion of debt and prepare for a possible bankruptcy filing. Calls placed to Dewey LeBoeuf were not returned, while representatives from Lazard and LNR declined to comment.

According to Bloomberg, Oaktree Capital Management, LNR’s largest creditor, is also seeking advice on restructuring the firm’s debt. Oaktree Capital and a handful of LNR’s other bondholders are considering a takeover, sources tell GlobeSt.com. Those same sources, who wish to remain anonymous, say LNR’s majority stakeholder, Cerberus Capital Management LP, is now running its operations. Calls to Cerberus were not returned.

Some observers suspect an investor will snap up LNR’s special servicing branch much like Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. did with Capmark’s servicing business, back in December. Since September 2009, Centerline Holding Co. has been in discussions with Island Capital Group LLC to recapitalize its special servicing arm, Centerline Capital Group.

LNR’s troubles came to light last November, when Moody’s Investors Service downgraded the firm’s credit rating to Ca from B3 because of the “rapid deterioration in LNR’s liquidity profile.” This affected some $900 million of the firm’s debt. LNR, the ratings agency said, is under mounting pressure from declines in cash interest income from its devalued CMBS investments. What’s more, the protracted credit crunch in the commercial real estate market has delayed collection of its special servicing resolution fees.

“Every time a property comes back to the special servicer it creates a liquidity issue because the servicer doesn’t have any real method to create liquidity, except through the disposition of assets,” Schecher says. A series of asset sales may seem like the obvious solution, but with a fiduciary duty to protect bondholders in the capital stack, it’s not that simple.

“Special servicers are hired just like an independent contractor and they have to work in the best interest of the trust,” says William Campbell, a partner at Strook & Strook & Lavan LLP in New York City. “Many investors feel, however, that because specials are conflicted they’ll seek to just take action to prevent their affiliates from taking losses. So they’ll extend loans rather than foreclose them. However, this concern may be exaggerated.”

Indeed, some wary observers of this practice question whether there is an inherent conflict of interest in having a B-piece buyer service its own loan. “There have been allegations toward some special servicers that they’ve been over zealous in their servicing of mortgages,” says Anthony Sanders, professor of finance in the School of Management at George Mason University in Virginia.

But Campbell observes, “The value of special servicing has risen as their affiliates’ investments have fallen, and to avoid lawsuits and rating agency downgrades, specials may be more vigilant in upholding their duties to the trust then some predict.”

Still, Sanders points out that special servicers have been accused of unduly calling performing loans or collecting fraudulent fees. Senior bondholders have also been known to sue special servicers if they are unhappy with the servicer’s course of action.

Appaloosa Management, for example, filed a motion on Tuesday alleging CWCapital Management, the special servicer for Stuyvesant Town/Peter Cooper Village, violated its fiduciary duty by seeking to foreclose on the property—exposing the trust to “wholly avoidable losses, risks and injuries,” like double transfer taxes.

Like many of its competitors, LNR Partners has been brought to court for breech of contract, though there are no recorded judgments against the special servicer. With LNR’s current crisis, some question how a bankruptcy filing may affect the trusts to which the company must answer.

Stephanie Petosa, a senior analyst at Fitch, says bankruptcy courts generally protect the interests of the filing entity with regard to its special servicing business. Including the special servicing arm in bankruptcy could jeopardize its agency ratings.

A reorganization of LNR may result in a surge of distressed commercial assets sales. “If LNR files for bankruptcy, it is going to need cash and liquidity. So it sounds to me that it would probably want to be auctioning some of loans in the portfolio,” says John Garth, partner and managing director of originations for the East Coast for the Pembrook Group.

Recovery rates for resolved CMBS loans are lower than the historical average, according to Fitch. But the agency’s most recent data show that LNR had a 90.7% recovery rate as of the end of Q3 2009. That number, however, may be a bit deceiving since LNR has the largest portfolio of loans in special servicing, and at the time had resolved just 119 of its 1,000-plus loans.

Loan extensions may be too costly an endeavor for LNR to continue in earnest. A torrent of asset transfers, like LNR has experienced, can be a crushing expense if monthly base fees or resolution fees are only trickling in. Special servicers may handle appraisal costs, legal fees and other expenses, with the hopes of reimbursement.

To cover operating expenses, Schecher points out special servicers typically borrow money from line lenders, which require haircut equity. But he says, “The amount of foreclosed properties that are coming into the CMBS default arena creates a liquidity crisis for the special servicer.”

He continues, “You can’t continue bringing in bad assets and not sell them and continue to borrow to pay the advances on real estate taxes, insurance and interest payments; this is a losing proposition.”

LNR’s $1-billion senior credit facility is set to mature in 2011. Moody’s suspects the company, likely unable to refinance, will default on its credit obligations. Schecher suggests this line lender turmoil may create problems for other special servicers, if LNR defaults.

“You are going to see line lenders getting nervous about their position with lesser servicers,” he says. “The uncertainty of this could cast a pall on the industry for some time, and that means the velocity of transactions will remain static.”

A month after Moody’s took action, Fitch Ratings downgraded the special servicing entity, LNR Partners, because of its parent company’s financial trials. With 1,107 loans valued at $18.6 billion as of January, LNR has been named special servicer for the largest amount of CMBS debt, according to Trepp.

Were LNR Property to file for bankruptcy, those loans would continue to be serviced, says Sanders. “Even if the worst happens and they start moving toward a process of liquidation, the servicing rights will just be sold to other servicers out there. And there are still plenty of players out there,” he says.

What’s more concerning, he adds, is how this situation reflects on the state of commercial real estate. “It’s sending a signal out that there are some serious structural issues going on in the commercial market.” Sanders stresses that the skyrocketing level of defaults and delinquencies in the commercial real estate space continues to be largely ignored by the public.

Petosa says, “All servicers are stressed and most of them are under financial pressure. The whole special servicing landscape is going to change this year, whether that’s through consolidation or the purchase of existing servicers.”

“We have no comment other than to confirm we have satisfied The Related Group’s lender obligations, and we have sold the two projects (Trump II and Trump III at Sunny Isles) to former partners in these developments,” Betsy McCoy, Related’s vice president and associate general counsel, said in an e-mail.

This comes after Related and its lenders—likely to take title soon to the Icon Brickell towers—slashed prices on the nearly vacant Miami project. And Related no longer owns a site in Downtown Miami where Perez planned another condo tower.

“In an economy like this, when developers like Related became so big, they actually contract,” says Michael Cannon, executive director of Integra Realty Resources in Miami. “What [Perez] is going through is a contraction rather than an expansion, and this is what a lot of developers are doing.”

Related was one of the most prominent condo developers in South Florida over the past decade. The company built Murano at Portofino, Icon South Beach and Apogee in Miami Beach, plus 50 Biscayne, 900 Brickell and Loft Downtown in Miami.

But when the housing market and economy collapsed in 2007, Related and its joint venture partners were left owning thousands of new luxury condos.

Perez’s personal net worth has also declined. He was ranked at No. 197 on the Forbes 400 list of the wealthiest people in 2006, when his net worth was estimated at $1.8 billion. Last year, he fell off the list when his net worth dipped below $900 million, according to Forbes.

One of Related’s partners was the Dezer family. Related and the Dezers co-developed the Trump Towers, but the relationship ended Dec. 31, according to four people familiar with the project who declined to be identified.

“It wouldn’t surprise me, unless he had a major stake in the [Trump Tower] project, that he would terminate the agreement and move on,” says Cannon, who has no direct knowledge of the deal.

Related had a 50% share in TRG Sunny Isles VII, the company behind the oceanfront project, until Jan. 13 when the Dezers took full control, according to the Florida Division of Corporations. Related and the Dezers joined forces more than five years ago to build the three-tower oceanfront Trump project on Collins Avenue and 160th Street. Each 45-story tower has 271 condos.

In 2007, TRG Sunny Isles obtained a $345.7-million construction loan from Wachovia Bank, now owned by Wells Fargo. On Dec. 31, Wachovia modified the loan and extended its maturity date. A mortgage filed with Miami-Dade County did not disclose the due date.

One tower is sold out, another has a few units sold, and the third is vacant. The unit prices have dropped nearly 40% since pre-sales started five years ago.

Trump Towers condos are selling from $350 to $400 per square foot, down from about $550 to $650 per square foot a few years ago, said Craig Studnicky, president of the International Sales Group in Aventura, whose company represents buyers of Trump Towers units. “At $350 a foot,” he says, “there is not going to be any profit realized by the developer.”

Related also took a big loss on the sale of a Downtown Miami parcel where the company planned to build condos. It sold a 28,500-square-foot lot at Northeast Third Street and Second Avenue for $4.4 million on Dec. 29 to Miami investor Rafael Kapustin, who had sold the land to Related for $12 million in 2007, as the condo market was beginning to deteriorate.

After reacquiring the site, Kapustin sold it to Miami-Dade College for $5.5 million. Related paid off a $5 million mortgage with HSBC Realty Credit Corp. at the time of the sale.

Now Related is working to resolve its problems at Icon Brickell. The company has nearly 1,500 condos to sell and is delinquent on construction loans totaling nearly $700 million.

Related’s McCoy says the developer was negotiating to hand over Icon’s three towers to the lenders with the condition that the company continues to run the project. “We are in a workout process so we would continue to manage [Icon],” she says.

The Miami builder’s shares surged nearly 9% on Thursday after it announced late Wednesday winning an auction for a portfolio of about 5,500 residential and commercial real estate loans from 22 failed banks. Lennar agreed to pay $243 million for a 40% stake in the portfolio. The rest will be held by the Federal Deposit Insurance Corp.

A subsidiary of Icahn’s company, Icahn Enterprises LP, emerged as the only qualified bidder this week after two competing bids were deemed unqualified, an examiner appointed by the US Bankruptcy Court in Miami said in documents filed with the court, the WSJ says. Icahn has pledged $106 million for the project, plus $50 million in financing during bankruptcy proceedings.

Hotel consultant Sumner Baye, president and partner of International Hotel Network LLC, who has worked with Icahn many times in the past, tells GlobeSt.com that Icahn “certainly has a taste for the gaming industry.”

Baye explains that Icahn’s “past gaming investments have turned out very well for him” and that Icahn continues to be on the lookout for more gaming opportunities ahead.

One of the “past gaming investments” that Baye is referring to includes the Stratosphere, which Icahn sold for $1.3 billion to Whitehall Street Real Estate Funds, an affiliate of Goldman, Sachs & Co. Icahn started investing in the Stratosphere in 1997 when he purchased $82 million of the property’s $203 million in mortgage debt. Another gaming investment Baye mentioned in support of Icahn’s “taste for the gaming industry” includes the Tropicana Atlantic City, which he, along with creditors, claimed ownership of in 2009 in exchange for $200 million worth of debt.

As GlobeSt.com previously reported, the deadline for submitting a qualified bid for the stalled $3-billion, 3,800-room Las Vegas Strip resort development was set at 5 p.m. PST on Friday, Jan. 15, 2010. The last bid supposedly topped Carl Icahn’s $156.2-million “stalking horse” bid by at least $1 million.

Several hedge funds looked closely at the Fontainebleau in the past few weeks but ultimately decided not to bid, a person close to the situation told the WSJ. Penn National Gaming, a regional casino company, scouted the project for months but dropped out last week after determining that the market couldn’t support the $1.3 billion to $1.5 billion the company believes it would take to finish the Fontainebleau.

In other Icahn news, as GlobeSt.com recently reported, through Icahn Partners LP and certain affiliates, the billionaire investor acquired 51% of the first-lien debt owed by Trump Entertainment Resorts to Beal Bank for $229 million in cash and has the option to purchase the rest for around $220 million, according to papers filed on Dec. 11 with the US Bankruptcy Court for the District of New Jersey in Camden. The deal was part of a bankruptcy reorganization plan Icahn negotiated to help the troubled casino company emerge from Chapter 11.

As many as 110,000 rooms in Miami-Dade, Broward and Palm Beach Counties are expected to be filled during the 10-day buildup to Super Bowl XLIV on Feb. 7, including the Jan. 31 Pro Bowl. It’s the first time the National Football League has held both its marquee events in the same stadium.

“For this year, it’s the perfect situation,” Bill Talbert, president and CEO of the Greater Miami Convention & Visitors Bureau, tells GlobeSt.com. “That will bring in more fans and more media earlier than it normally would.”

While South Florida has had plenty of experience as a Super Bowl site, and will bid to host the game again in 2014, the region is treating this one like it is the first. That means rounding up hundreds of local volunteers and, for hotel owners’ part, treating their properties like they are game central.

Besides 25 miles of contiguous beaches, unlimited golf possibilities and even eco-tours of the Everglades, the region’s biggest selling point is what it has always been in winter: warm weather. “It’s doubtful anyone can challenge it at this time,” says Talbert, who also serves on the South Florida Super Bowl Host Committee.

Miami and surrounding areas could certainly use a boost during an overall tough market for the US hotel industry. Occupancy at local hotels earlier this month averaged at least 75% with daily room rates averaging $173, according to Hendersonville, TN-based Smith Travel Research. That’s well ahead of national average occupancy close to 40% and ADR just under $92.

To understand how area hotels can benefit from a national football championship, check out Los Angeles, where the Bowl Championship Series college title game was held Jan. 7. Occupancy in the market rose to 62% for the week, while ADR reached nearly $128, STR reports.

The NFL estimates a $400-million economic benefit to South Florida from hosting both the Super Bowl and the Pro Bowl, which is traditionally played in Hawaii the weekend after the Vince Lombardi Trophy has been awarded. The Pro Bowl will return to the islands the next two years, though Talbert believes more such games could be staged stateside if this year proves successful.

In the meantime, the region will undoubtedly benefit from having two signature NFL events during a global recession, he says. “Timing is everything, and our timing is great.”

For insight on this issue, CoStar interviewed Greg Maloney, president and CEO of Jones Lang LaSalle Retail, whose firm has been appointed as a receiver or is dealing with several retail properties in foreclosure. In December 2008, Jones Lang LaSalle announced it had been appointed as the receiver for 10 retail properties. Today, the firm has 25 properties in receivership status that it is managing while it either tries to sell or reposition foreclosed properties.

Most of 2009 was marked by lenders and special servicers trying to get their arms around properties struggling with their loans, sorting out the most pressing problems, and attempting to tackle those in a “very thoughtful and hopefully profitable way,” said Maloney. He said the timing of foreclosures and receivership announcements occurring at the end of the year was largely driven by year-end decisions by their lenders. “Servicers and banks were saying, ‘if we’re going to close these things out in 2010, lets foreclose on what we can by the end of the year.’ ”

Maloney expects this activity to continue well into the first part of this year as lenders that have decided to foreclose will want to do so “sooner rather than later.” In an effort to keep costs down and speed the process along, Maloney expects many lenders and servicers will opt to “bypass receivership, foreclose on the subject property, put it in their REO portfolio, hire somebody to come in and secure the asset, and then turn it over to their investment sales people to get rid of it.”

The exceptions that are more likely to first go into receivership, said Maloney, will be the very distressed assets, such as unfinished properties caught in disputes between the borrower and lender, and retail properties hit hard by a large number of vacancies.

With the caveat that there can be many circumstances affecting the strategy lenders and servicers decide to take, Maloney said, “Receivership is generally a very expensive process that [lenders] usually put a very troubled asset that has lost a lot of its value and they don’t want to take on the liability risk at this time.”

However, if the property is simply under-performing without a great deal of liability exposure, the lender might as well just foreclose on it, he added.

Regarding retail loan default trends, Fitch Ratings recently reported that the CMBS loan delinquency rate rose again in November — reaching 4.29%, which is up 43 basis points from the month prior. While delinquency rates were up in November among all property types, the retail delinquency rate rose only slightly, from 3.55% in October to 3.81% in November, accounting for $5.2 billion in delinquent retail CMBS loans. This rate is up from only .63% delinquency in November 2008.

However, Maloney said the CMBS loan default rate is no longer the key driver of shopping center foreclosures and receiverships. “The majority of the troubled retail CMBS loans have already been turned over to the special servicer or lender. There will still be more. However, the real traunch is the non-CMBS stuff, which is really starting to come up in 2010 and 2011. These are loans that are just going to mature and the lenders are very concerned because most of the properties have lost value. The property is worth less than what they loaned on it two to five years ago. That is what’s really going to take place in 2010 — a lot of borrowers and lenders, even more than before, trying to come to some sort of agreement to extend the loans and keep things going,” or turn over the keys, said Maloney.

In the receivership process, Maloney said that in most cases, a lender hopes the receiver will stabilize the property, finding tenants for vacancies and keeping current tenants in place, so that it ultimately can be sold out of receivership, rather than taking it through the foreclosure process.

But that is easier said than done in today’s market as potential buyers are still reluctant to execute sales at current pricing levels, said Maloney. “We have them in the market and I think we’re very close to it. I think in the first quarter you’re going to see a lot of the assets starting to trade hands — especially out of receivership and foreclosure.”

In most cases, especially in the first half of this year, Maloney said he expects sale prices to be low — in many cases well below their previous purchase prices.

“I think the properties we’re going to see sell first are the ones that have lost a lot of occupancy and NOI,” said Maloney, adding that he expects a large number of distressed properties brought to market in the beginning of this year with the hope of making a quick sale and reposition for recovery by the end of 2010.

According to CoStar information, the fact that the number of retail properties in distress continues to rise supports Maloney’s expectation. In the Sept. 24 CoStar article, ”

                                                                                      
If, as Maloney expects, the industry sees more retail receivership work and foreclosures this year, is this work a good replacement for the lack of transaction income?

“I think we all thought we were going to get a lot more of this work, especially in retail, than we have,” Maloney said, adding that fees from receivership and management services of these properties “is not enough to make a difference.”

From a brokerage standpoint, Maloney said the transactions in receivership typically are renegotiations, not new lease deals. And given the difficult sales environment, the small number of sales that do go don’t generate a great deal of commissions.

“It has not been a windfall,” he explained. “The amount of business has not been big enough to spin off and make into a separate division, for example,” adding that JLL simply treats the work as an added client service.