Big business and our government. The compromise between the free market and government regulation, and (my opinion) in the worse case, government run, entities.

How does the gap between the rich, the middle class, and the poor, influence our decisions? How do we feel about the influence of money in politics?

Why do we allow health, banking and oil companies to give so much money to our representatives? How are they so big and need our tax money to stay in business?

The big trusses for the great room came yesterday and were set. These big fir beams will be painted to match the other beams I have done for the home.
I spent the day painting the tongue part of the tongue and grove 2 by 6 ceiling planks for this room, approximately 220 sixteen footers. A little forward thinking here is that if the ceiling planks shrink any you might be able to see the raw wood if a seam opens up. So painting that area eliminates that from happening.

Special tax district for billion-dollar Huntsville office park could soon be reality
By Steve Doyle, The Huntsville Times
May 04, 2010, 6:44AM
Dave Dieter / The Huntsville Times
Redstone Arsenal employees make their way toward Gate 9 on Rideout Road, future site of a $1 billion office park for government workers and defense contractors.
HUNTSVILLE, AL -- A special tax district related to the Redstone Gateway office park seems destined for approval.
On Monday, the Huntsville City Council held a special work session to hear from other government agencies affected by the $1 billion project at Interstate 565 and Rideout Road.
But Madison County commissioners and Huntsville school board members were conspicuously absent -- a strong indication that they agree with the basic framework of the deal.
LW Redstone, a development consortium led by Maryland-based Corporate Office Properties Trust, is proposing to build 4.6 million square feet of office space for Army employees and defense contractors on federal land near Redstone Arsenal's busy Gate 9.
Plans also call for two hotels, multiple restaurants, an academic campus and outdoor concert venue on the 470-acre site. LW Redstone has said the first of 52 planned office buildings could be open by late 2011.
Under a contract OK'd last month, the city would pay for most of the necessary public improvements -- grading, water lines, sidewalks, wider roads -- using $76 million borrowed from the developer.
It would repay LW Redstone, plus 9.95 percent interest, using property taxes generated by the company's office buildings. The office park site is now empty federal land that produces no city taxes.
Huntsville will also spend up to $6.5 million running sewer lines to the site and $2.5 million more for a gate at Rideout and Goss roads, Finance Director Randy Taylor said Monday. The city will cover those costs with its own money, he said.
The deal hinges on creation of a Tax Increment Finance, or TIF, district encompassing the office park site and 400 adjacent acres.
If both the City Council and Madison County Commission give the thumbs-up, most property taxes produced by Redstone Gateway's buildings would be earmarked to repay the infrastructure loan.
But a 5.5-mill countywide education property tax would flow to Huntsville, Madison and Madison County schools from the beginning. It will be divided based on enrollment.
Taylor estimates Redstone Gateway will bring in $275 million in property taxes over the next 35 years, including $29 million in countywide education taxes. The city will also reap a windfall in sales, liquor and lodging taxes.
LW Redstone says the office park could eventually employ as many as 15,000 people with an annual payroll of about $1 billion.
The City Council is likely to approve the Redstone Gateway tax district at its May 13 meeting; county commissioners could follow suit on May 17.
Mayor Tommy Battle said the city plans to hire a project manager to oversee the infrastructure work. The bulldozers should start rolling by late summer, he said.
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I have just completed reconditioning two front doors.   First day I stripped down the doors by sanding.  In the first picture you can see where the upper part of the doors are sanded down to the wood.  These doors face east and get the morning sun.  The old finish was totally cracked and coming off.   Luckily the wood itself was still ok.
 

Completed doors then a detail shot.
 

Wall Street Journal Sizes up Obama - They've Got Him Figured Out
Article from the Wall Street Journal - by Eddie Sessions:
"I have this theory about Barack Obama. I think he's led a kind of make-believe life in which money was provided and doors were opened because at some point early on somebody or some group took a look at this tall, good looking, half-white, half-black, young man with an exotic African/Muslim name and concluded he could be guided toward a life in politics where his facile speaking skills could even put him in the White House.
In a very real way, he has been a young man in a very big hurry. Who else do you know has written two memoirs before the age of 45? "Dreams of My Father" was published in 1995 when he was only 34 years old. The "Audacity of Hope" followed in 2006. If, indeed, he did write them himself. There are some who think that his mentor and friend, Bill Ayers, a man who calls himself a "communist with a small 'c'" was the real author.
His political skills consisted of rarely voting on anything that might be deemed controversial. He went from a legislator in the Illinois legislature to the Senator from that state because he had the good fortune of having Mayor Daley's formidable political machine at his disposal.
He was in the U.S. Senate so briefly that his bid for the presidency was either an act of astonishing self-confidence or part of some greater game plan that had been determined before he first stepped foot in the Capital. How, many must wonder, was he selected to be a 2004 keynote speaker at the Democrat convention that nominated John Kerry when virtually no one had ever even heard of him before?
He outmaneuvered Hillary Clinton in primaries. He took Iowa by storm. A charming young man, an anomaly in the state with a very small black population, he oozed "cool" in a place where agriculture was the antithesis of cool. He dazzled the locals. And he had an army of volunteers drawn to a charisma that hid any real substance.
And then he had the great good fortune of having the Republicans select one of the most inept candidates for the presidency since Bob Dole. And then John McCain did something crazy. He picked Sarah Palin, an unknown female governor from the very distant state of Alaska. It was a ticket that was reminiscent of 1984's Walter Mondale and Geraldine Ferraro and they went down to defeat.
The mainstream political media fell in love with him. It was a schoolgirl crush with febrile commentators like Chris Mathews swooning then and now over the man. The venom directed against McCain and, in particular, Palin, was extraordinary.
Now, nearly a full year into his first term, all of those gilded years leading up to the White House have left him unprepared to be President. Left to his own instincts, he has a talent for saying the wrong thing at the wrong time. It swiftly became a joke that he could not deliver even the briefest of statements without the ever-present Tele-Prompters.
Far worse, however, is his capacity to want to "wish away" some terrible realities, not the least of which is the Islamist intention to destroy America and enslave the West. Any student of history knows how swiftly Islam initially spread. It knocked on the doors of Europe, having gained a foothold in Spain.
The great crowds that greeted him at home or on his campaign "world tour" were no substitute for having even the slightest grasp of history and the reality of a world filled with really bad people with really bad intentions.
Oddly and perhaps even inevitably, his political experience, a cakewalk, has positioned him to destroy the Democrat Party's hold on power in Congress because in the end it was never about the Party. It was always about his communist ideology, learned at an early age from family, mentors, college professors, and extreme leftist friends and colleagues.
Obama is a man who could deliver a snap judgment about a Boston police officer who arrested an "obstreperous" Harvard professor-friend, but would warn Americans against "jumping to conclusions" about a mass murderer at Fort Hood who shouted "Allahu Akbar." The absurdity of that was lost on no one. He has since compounded this by calling the Christmas bomber "an isolated extremist" only to have to admit a day or two later that he was part of an al Qaeda plot.
He is a man who could strive to close down our detention facility at Guantanamo even though those released were known to have returned to the battlefield against America. e could even instruct his Attorney General to afford the perpetrator of 9/11 a civil trial when no one else would ever even consider such an obscenity. And he is a man who could wait three days before having anything to say about the perpetrator of yet another terrorist attack on Americans and then have to elaborate on his remarks the following day because his first statement was so lame.
The pattern repeats itself. He either blames any problem on the Bush administration or he naively seeks to wish away the truth.
Knock, knock. Anyone home? Anyone there? Barack Obama exists only as the sock puppet of his handlers, of the people who have maneuvered and manufactured this pathetic individual's life.
When anyone else would quickly and easily produce a birth certificate, this man has spent over a million dollars to deny access to his. Most other documents, the paper trail we all leave in our wake, have been sequestered from review. He has lived a make-believe life whose true facts remain hidden.
We laugh at the ventriloquist's dummy, but what do you do when the dummy is President of the United States of America?"
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I finished up with the ceiling planks today.  Or I should say this first phase of them.   More are coming later this week so I will be back at it then.  All in all they came out great.  I will try to get a couple of pictures in a day or so of then installed.

EADS returns to air tanker competition; win could mean massive Mobile factory
By George Talbot, Mobile Press Register
April 21, 2010, 6:30AM
A lineup of U.S. air force KC-135 tanker planes seen at the Manas air base in Bishkek, Kyrgyzstan on Feb. 18, 2009. EADS announced Tuesday it would re-enter the contest to build the tanker's replacement.
The European Aeronautic Defence and Space Co. on Tuesday jumped back into competition for the U.S. Air Force tanker contract, challenging Boeing Co. for the potential $40 billion deal and rekindling hopes in Mobile for a massive new factory to assemble the planes. View full size(The Huntsville Times/Eric Schultz)
"We have a substantial team in place," said Sean O'Keefe, chief executive of EADS North America. "We have a superior product. We intend to win."
EADS, the parent company of Airbus, said it will compete as a prime contractor, taking over the lead role held by Northrop Grumman Corp. in a previous competition with Boeing.
EADS said it was committed to building its KC-45 tankers at a $600 million assembly plant at Brookley Field.
"This is a hell of an opportunity," said Ralph Crosby, chairman of EADS North America. "We are confident that our advanced tanker, the KC-45, is the superior aircraft and equally confident that the Department of Defense is committed to a fair competition."
The Pentagon said it welcomed competition for one of the biggest defense deals in U.S. history. The department said Tuesday that it would extend the deadline for bids on the contract by 60 days, until July 9, to allow EADS time to prepare its offer.
The Air Force said the delay will not alter its plan to pick a winner for the 179-plane order by early fall.
"The department is committed to conduct a fair, open and transparent acquisition process," Pentagon spokesman Bryan Whitman said.
Chicago-based Boeing said it was disappointed by the extension.
"I can't make any business sense out of an EADS bid," said Loren Thompson of the Lexington Institute in Arlington, Va. "I'm surprised they chose to bid at all."
"We hope for a fair and transparent competition, free of any additional changes intended to accommodate a non-U.S. prime contractor," said Boeing spokesman Bill Barksdale.
The Northrop-EADS team was awarded the 179-plane order in 2008, but the deal unraveled under protest from Boeing. The Air Force reopened the contract for bidding in February.
EADS has been laboring to assemble a new industrial team since Northrop dropped out of the contest March 8. Northrop said the Air Force's selection criteria were tilted toward Boeing's smaller KC-767 tanker.
EADS supporters in Alabama said they remain concerned about the fairness of the competition but were encouraged that EADS would compete.
"As long as we make sure the best airplane is selected, then I think EADS will win," said Gov. Bob Riley.
Analysts named Boeing as a clear favorite for the contract, saying that the EADS tanker, based on an Airbus A330 commercial jet, is larger and more expensive to operate than Boeing's KC-767.
"I can't make any business sense out of an EADS bid," said Loren Thompson of the Lexington Institute in Arlington, Va. "I'm surprised they chose to bid at all."
EADS said it still intends to augment production of tankers in Mobile by assembling Airbus A330 cargo freighters at the new plant. The combined project would create 1,500 jobs in Mobile and "tens of thousands" nationwide, the company said.
"We're making a long-term investment in this economy," Crosby said.
EADS introduced a group of subcontractors Tuesday that included engine maker General Electric Co. and avionics firm Honeywell International Inc.
"We have a substantial team in place," said Sean O'Keefe, chief executive of EADS North America. "We have a superior product. We intend to win."
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I should have no problem finishing up on the 2 by 6 planking I am painting this week.  Its suppose to rain tomorrow morning so that may slow me down some but probably not too much.

I have been working a new construction home this month.   I am painting a lot of the big wood beams that will go into the home and then I am going to paint the 2 by 6 tongue and grove for the ceiling in the great room.  I have been working in the garage and as you can see the wood framing indicating the drywall is not up yet.
The picture shows some of the painted beams and four big ones that just have the basecoat on. 
 

To paint the beams first I applied a primer, after that dried I applied a golden basecoat. Then I started to create the wood grain by painting the beams a medium brown  with a wood graineffect.  After that dried I used two passes of black both passes very light.  I used two passes becauseI wanted it dark but would have had to use too much paint to get it as dark as I wanted with only one pass.  The light passes of the black over the brown give it a lot of richness without seeming black.  The beams look old but not distressed.

APRIL 15, 2010
Real-Estate Bust Hurts Lending for Little Guys
By EMILY MALTBY
Since the mortgage meltdown, business owners can no longer reliably count on homes or commercial properties to secure financing.
Even as some segments of the economy bounce back, the lagging pace of improvement in the real-estate market continues to hamper owners' efforts at landing credit. "As the big guys are doing better, people ask, why not the smaller firms? Well, this is a huge part of the reason," says William Dennis, Jr., a senior research fellow at the National Federation of Independent Business in Washington.
Because business owners used real estate to support financing endeavors in a variety of ways, the subprime crisis hit Main Street particularly hard as it rippled through the credit markets. Before the real-estate bubble burst, home and business properties were a reliable source of collateral for many businesses.
And even those that were ineligible for a traditional bank loan could often draw capital from home values by writing loans against home equity. Unlike traditional loans, home equity loans and lines of credit are determined by the appraised value of the home, minus the mortgage, and are not issued on the basis of credit history or credit scores.
Experts such as Mr. Dennis say it will be a long time before real estate becomes a dependable borrowing mechanism again. Part of the problem, he says, is the inability to define what is normal, given the surge in property values that happened for years leading up to the meltdown. In August 2007, the Discover Small Business Watch survey showed that 30% of respondents tapped home loans for funding. Returning to those levels, he says, is doubtful.
Probably 10% "of those who historically qualified to use homes to gain capital could qualify for a similar loan today," says Rob Grosser, president of Luxury Mortgage Corp., a residential mortgage banking firm in Stamford, Conn.
Those owners who can tap into home equity find the amount to be far less than before. Kristian Traylor, president and founder of Sanvean LLC, bought his home in 2004 and—based on an old appraisal—thought he could get a home equity line of credit between $50,000 and $75,000 for his Atlanta-based start-up. He planned to use about $60,000 to revamp his Web site and accelerate promotional activities for the Golf Genie Guide—an instructional golf booklet and the company's flagship product. After checking with five banks, the highest offer he got was $8,000, which he declined. "It was a little big of ignorance," admits Mr. Traylor, who is bootstrapping the marketing efforts. "I thought we were immune because we were in a hot area."
Business owners expecting to offer personal and business properties as collateral for bank loans are also hitting walls. Nearly 30% of business owners with a line of credit said their financial institution changed conditions last year, including requiring more collateral, according to a survey published earlier this year by the NFIB. The stiffer terms are "hugely tied" to falling real-estate values, NFIB's Mr. Dennis says.
Even though "cash flow is the number-one reason for getting declined," according to Kathie Sowa, a commercial banking executive at Bank of America, "the value of the commercial building and the home—the combined net worth of the business and the owner—has been reduced, so collateral becomes more important in order to make sure that it's in line with the loan."
According to the NFIB, 7% of business owners used their personal homes and 11% used their commercial property as collateral for their business in 2009.
With real estate fluctuating in value, Bank of America and other lenders are issuing credit based on borrower's non-real-estate assets, such as inventory and accounts receivable. So-called borrowing-base credit lines increase or decrease in tandem with the value of those assets, which the lender monitors regularly to extend an appropriate line of credit.
Business owners who don't have sufficient collateral in homes or commercial properties to satisfy banks are also turning to alternative lenders for asset-based loans. A drawback: Such lenders generally exert a certain degree of control over the business's assets and can seize them if the borrower misses payments.
For example, an owner may find that a client's payment must first be deposited into an account controlled by the lender, who will transfer the money only if it's deemed adequate in relation to the amount borrowed. But "alternative lenders are a little less stringent on the cash flow and may allow for tighter margins," says Jeffrey Sweeney, CEO of U.S. Capital Partners Inc., an alternative lender in San Francisco. "It's a bridge back into traditional lending."
Write to Emily Maltby at emily.maltby@wsj.com

Bloomberg
Job Hunters Slack Off When Given a Helping Hand: Amity Shlaes
April 12, 2010, 9:20 PM EDT
More From Businessweek
April 13 (Bloomberg) -- Time was when you could rely on taxes to be the topic in the U.S. come mid-April. No longer. This year it’s jobs, jobs, jobs.
In Washington, Democrats want to extend expiring unemployment insurance. They see their plan as action in the spirit of Franklin Roosevelt, who put forward so many programs for the worker with his New Deal. Republicans are muttering about what the benefits do to individual initiative. But they are also going along with the plan to extend jobless payments.
The emphasis on extension sounds humane and necessary. Hundreds of thousands of families are losing benefits. Yet that emphasis is counterproductive, because it overlooks the problem that is making it hard for the jobless to get work in the first place.
Part of the problem is the relationship between the cost of hiring for employers and the cost of being unemployed for workers. By making hiring expensive through mandates such as health care, the administration is discouraging hiring. By extending benefits for the jobless, the same government is making unemployment less painful -- cheaper -- for workers. The combination sustains unemployment at higher levels, not lower.
One economist illuminating this dynamic is Casey Mulligan at the University of Chicago. Mulligan points out that many industries aside from manufacturing are now recovering. But many companies are finding ways to do so with fewer workers. This isn’t a general recession any longer. It is becoming a jobs recession where the incentives for employer and employee are out of whack.
Perfect Timing
Mulligan also notes that there is specific evidence of the counterproductive force of making unemployment less expensive. Two scholars, Stepan Jurajda and Frederick Tannery, looked at Pittsburgh in the first half of the 1980s, a period when the nation had two temporary increases in unemployment benefits. They determined that one third of those claiming unemployment found work within weeks of the expiration of their benefits, but not before.
Apply that Pittsburgh experience to today, when insurance is also running out. What it tells you is that jobs will come back faster if Washington doesn’t extend insurance benefits.
The Pittsburgh data are merely a tiny part of a large body of evidence. In policy discussions we make a big deal about the differences in payments to the unemployed, treating “relief” as different from “welfare” and “welfare” as different from “unemployment insurance.” Effectively, they all function the same way: they damp the incentive to find a job.
U.K. Record
The ultimate evidence here is from the 1920s, when the Labour Party came to power in the U.K. for the first time. Labour passed laws that gave unions power to demand higher wages and to create unemployment benefits. The result was that employment became more expensive for companies. Unemployment, meanwhile, became relatively less expensive to workers because the workers now received relief payments.
As scholars Daniel K. Benjamin and Levis Kochin pointed out in the Journal of Political Economy paper as far back as 1979, the moment was one in which “unemployment benefits were on a more generous scale relative to wages than ever before or since.”
The result was the mother of all jobless recoveries. For almost two decades, from 1921 to 1938, U.K. unemployment averaged 14 percent, and never got below 9.5 percent. For two decades Britons talked of the tragedy of “idleness” and the “dole.” The bitterness of the experience was so strong that both words fell out of use. “Dole” actually became a pejorative. You don’t hear Harry Reid, or any other leader in Washington, saying “2010, time for a dole.”
Today’s Hero
One New Deal politician who grasped at least part of what was happening in Britain was that hero of today’s Democrats, Roosevelt. Roosevelt understood that relief payments in the U.K. weren’t necessarily helping workers find employment. He appalled his progressive colleagues by disparaging the dole whenever he could. Rather than pay the unemployed, Roosevelt preferred creating jobs through the public sector.
Still, Roosevelt and his colleagues replicated other U.K. errors. FDR signed laws that put upward pressure on wages, the most dramatic example of these being the 1935 Wagner Act. This in turn led to real increases in wages, leading to slower hiring.
More recently the U.S. repeated the pattern in the Aid to Families With Dependent Children program, which made life worse for those families. They never got work. “Welfare,” the word we used for the program, likewise became stigmatized. President Bill Clinton signed the law that abolished the program, sending a signal that work is better for the country and individual than a dole, relief, or insurance.
Lawmakers now are reversing that progress, perhaps without being aware of what they’re doing. Eventually, they will understand. And eventually those phrases we utter now -- “insurance extension,” “mandatory health care at the workplace” -- will also be dropped from the language in shame. But of course, by then the damage will have been done.
Click on {LETT } to send a letter to the editor.
--Editors: James Greiff, Steven Gittelson
To contact the writer of this column: Amity Shlaes at amityshlaes@hotmail.com
To contact the editor responsible for this column: James Greiff at jgreiff@bloomberg.net.

I primed two dozen fir beams today to get ready to basecoat tomorrow.  What it is, they have got a lot of outside space with a roof over it and they have these big fir beams.   A dozen are 4 by 10 - twelve feet long and  a dozen are longer almost 16 feet long and they are 6 by 12's.   The 4 x 10's I pick up by myself only because they are fir and that is a light wood.  but the bigger ones forget it.
So on the ones I can lift I have them leaning up against the garage walls.  The walls are like 14 feet high.  that way I can paint all the way around them at once.  But the big ones I have laying down and I can only paint three sides at once then have to let them dry.
 
So I primed them all today but of course its more involved that just priming.  After I primed them and it dried I had to sand all sides on them because with such a soft wood the grain raised a lot.  So... sand it down and then fill in all the knot holes and cracks, which are a heck of a lot.  Tomorrow I will sand down the filler for the holes and basecoat them but I don't think I can get all that in one day.
 
The reason they are using fir is because its outside and fir will hold up much better than pine and with pt you can't paint it.  We are painting instead of staining for two reasons.  One, painting will last about ten times longer than staining and the desired color can't be obtained on fir with a stain, so...

Apr 7, 2010 2:27 PM, By Sibley Fleming, NREI managing editor
Under pressure from federal regulators and weighed down by an unhealthy exposure to commercial real estate, small banks or those in the $1 billion to $100 billion asset range are making haste to clean up their balance sheets, according to Oakland, Calif.-based Foresight Analytics, a unit of Trepp LLC.
In the fourth quarter alone, the nation s small banks cut the total outstanding balance of commercial real estate construction and land loans by about 13%, while large banks with assets of $100 billion or more only trimmed back by about 4%, says Matt Anderson, managing director for Foresight.
The contrast in the outstanding balance of construction and land loans is even greater when comparing the fourth quarter of 2008 to the fourth quarter of 2009. Small banks held $121.7 billion and $83.4 billion respectively, a 31.5% decline over one year.
Given that there s not much in the way of other financing out there right now, to the extent that they re shedding exposure, it s more through selling off the loans to someone else or potentially through foreclosures, says Anderson. The buyers of this debt have generally been private equity players that want to expand into commercial real estate, particularly if there s a discount involved.
However, Anderson points out that many small banks claim the haircuts on the sales haven t been as severe as they had originally anticipated.
Given that the volume of non-performing loans has continued to grow, I m guessing the ones that are selling are the ones where the bank isn t having to take as big of a loss, he says. They re choosing which ones to sell and they re picking the ones that can get somewhat better pricing.
The loans selected for disposition, in fact, may even be performing loans or less bad non-performing loans. For example, the discount on a loan for a piece of land far from an urban center and the discount on a loan for a project already under way in an urban setting is vastly different.
Bad rep
Over the past year, small banks have gained the reputation for not only being over-weighted in construction loans and mortgages but for holding loans of a lower quality than their larger bank brethren.
In February, the Congressional Oversight Panel, established by Congress in 2008 to oversee expenditures of the $700 billion Troubled Asset Relief Program, said that of the approximately 8,100 banks in the U.S., 2,988 are small banks that are dangerously exposed to commercial real estate.
In addition to the lack of diversification, these community and mid-sized banks also hold high concentrations of the riskiest and least sought-after loans, including transition properties and construction loans in secondary or tertiary markets, according to the panel.
The one plus, many small banks contend, is that on the mortgage side of the business they have a significant exposure to owner-occupied properties, which have performed better than income-producing properties. It s better but not problem free, says Anderson.
Owner-occupied properties made up 43% of total loans outstanding for small banks at the end of the fourth quarter, and had a delinquency rate of 4.8%. That compares with 57% of loans backing income-producing properties, which had a delinquency rate of 6% over the same period.
No going back
Despite paring back their commercial real estate exposure, small banks are unlikely to be making room on their balance sheets for new commercial real estate loans. [They are] cleaning up the risk and not planning on coming back anytime soon, says Anderson.
With $1.4 trillion in commercial real estate debt maturing over the next five years and no obvious source of funding to soak it up, Anderson does not foresee any major improvement for commercial real estate lending in the near term, even if commercial mortgage-backed securities issuance continues to recover at a healthy pace. Even if it doesn t end incredibly badly for everyone, at best [the commercial real estate industry] is essentially treading water.
www.CommercialPropertyDirectory.com

This week I have been working on samples for two different jobs.  I hope to start on one tomorrow or Friday at the lastest.  No pictures yet but as soon as I start I'll be able to share more what I am working on.

Apartment rents rose during the first quarter, ending five straight quarters of declines and signaling the worst may be over for the hard-hit sector.
Nationally, the apartment vacancy rate stayed flat at 8%, the highest level since Reis Inc., a New York research firm, began its tally in 1980.
Reis tracks vacancies and rents in the top 79 U.S. markets, and rents rose in 60 of them, led by Miami, Seattle and New York—all cities that have notched big rental declines in the past year.
Rents increased 1.6% in the first quarter in Miami and 0.9% in New York. The gains came during what is usually a seasonally weak period for apartments and suggested that landlords may have some momentum heading into the peak spring and summer leasing season.
"Deterioration seems not to have just been arrested but reversed," said Victor Calanog, director of research for Reis. "Several markets have bottomed and may be on track to recovery," he said.
Nationally, effective rents, which include concessions such as one month of free rent, rose 0.3% during the quarter compared with a 0.7% decline in the fourth quarter of last year and a 1.1% drop in the first quarter of 2009. Vacancies are tied to unemployment, because many would-be renters move in with family members or double up during a downturn.
"We clearly hit an inflection point in all of our markets in January and February," said Jeffrey Friedman, chief executive of Associated Estates Realty Corp., which owns and operates 12,000 units in the eastern U.S.
Renters are also staying put longer: the average renter now stays for 19 months, up from an average of 14 months, said Mr. Friedman, and despite low mortgage rates and greater home affordability, fewer renters are leaving to buy homes.
"This is the first time in many, many years that it feels like even people who could afford to buy are making the investment decision not to," Mr. Friedman said.
Difficulty in obtaining financing for new apartment construction, meanwhile, has limited the supply of new units that will be added in the coming years. Those fundamentals have landlords and investors excited about the potential for rents to pop once the economy gathers steam.
Biggest Annual Rent GainsRank Metro Market 12-month Effective Rent Growth
1 Colorado Springs 2.5%
2 District of Columbia
2.0%
3 San Antonio
1.5%
4 Dayton
1.4%
5 Little Rock
1.3%
6 Chattanooga
1.2%
7 Austin
1.0%
8 Suburban Maryland
1.0%
9 Louisville
0.8%
10 Pittsburgh
0.8%
.
Still, Mr. Calanog said that a "slow recovery" was likely and that landlords shouldn't expect "galloping rental growth" until the job market firms up, particularly because younger workers that are more likely to rent have borne the brunt of job losses.
Others warned that gains were fragile and that landlords could continue to offer concessions to fill units.
"Rent reductions are not over yet," said Hessam Nadji, managing director at real-estate firm Marcus & Millichap. He said he didn't expect to see sustained rental growth until the second half of the year.
Barely half of the 22,000 units in buildings that opened their doors last quarter were filled, and landlords may cut deals because they face deadlines to pay back construction loans. "That's where renters are going to find deals," Mr. Calanog said.
Portland, Ore., posted the largest rent decline, at 0.7%, followed by Las Vegas, San Diego, and Southern California's Inland Empire. Those three markets have all seen an uptick in home-buying activity, particularly among the low end from first-time buyers and investors.
South Florida, meanwhile, appears to show signs of stabilizing after a painful years-long slump prompted by heavy overbuilding. Rents gained 1.1% last quarter in Palm Beach and 0.8% in Tampa-St. Petersburg.
"That market has been so bad for so long that many people had started to forget about it," said Alexander Goldfarb, an analyst at Sandler O'Neill & Partners LP.
Write to Nick Timiraos at nick.timiraos@wsj.com
www.CommercialPropertyDirectory.com

Money
Brian S. Wesbury and Robert Stein 04.06.10, 12:01 AM ET
With evidence of a self-sustaining economic recovery now hard to deny, many pundits are finding new reasons to be bearish. The most recent is that the Federal Reserve has officially ended its massive ($1.25 trillion) mortgage purchasing program. This, some say, will lead to another downturn in housing, which could drag the economy down all over again.
Although the end of the Fed's purchases will certainly not help the housing market, we do not believe it will result in a "double-dip" for housing or the economy. Instead, we expect home building, home sales and home prices to all be up a year from now vs. where they are today. Not on every street or in every community, but for the nation as a whole.
First, it's important to recognize that while the Fed has stopped buying mortgage-backed securities, it is not planning on suddenly selling its holdings. Most likely, the Fed will hang onto the vast bulk of them for at least several years and allow the natural process of refinancing and principal repayment to gradually reduce the size of its portfolio.
Second, we do not expect mortgage rates to suddenly spike as the Fed exits the market. The Fed announced the eventual end to its mortgage purchases back in September 2009, when long-term mortgage rates were about 160 basis points above the yield on the 10-year Treasury (roughly the 20-year average). But today, even though the Fed has ended its program of purchases, the "spread" between mortgage rates and the 10-year is only 120 basis points. If mortgage lenders are suddenly having extra trouble finding the funds they need to lend, they sure have a funny way of showing it.
Third, watchful observers of the mortgage market know that the total amount of lending necessary to support the housing market in the next year is not particularly large by historical standards. Lower home prices, relatively low levels of sales and the high loan-to-value ratios that prevailed during the bubble years mean that the capital needed to support housing in the next year is not that substantial.
The average price of an existing home sale right now is roughly $220,000. Meanwhile, the typical homeowner now has a mortgage worth 62% of their home's value. So, if a buyer has to make a 20% down-payment (which means the new mortgage equals 80% of the home's value) and the debt that is retired by the previous owner is 62% of value, the demand for mortgage credit goes up by only 18% of $220,000, or approximately $40,000.
So if existing homes sell at a 5.75 million rate in the next 12 months (a 10% increase vs. the previous 12 months), that should require about $230 billion in net new lending. Meanwhile, new home sales should require about another $90 billion. (New homes average $275,000, and we're assuming 20% down and sales equal to 400,000.)
In other words the total new lending needed to support a 10% increase in housing activity over the next 12 months is just $320 billion. Compare this to the $150 billion to $200 billion in principal repayments over the next year and you can see that mortgage lenders do not need a large increase in their loan book to finance a rise in home sales.
Fourth, housing prices have fallen below fair value. Relative to rents, national average home prices are about 10% below fair value and have been the lowest relative to replacement cost in more than 30 years.
Markets are efficient and participants in the housing market are well aware of its problems, so we believe these prices already reflect the "shadow inventory" of foreclosures and short sales in the pipeline. Buyers and sellers are not blind, they don't have to wait to see homes pop up on the MLS to factor them into the price they are willing to bid or ask. That's why in the past three months some of the places with the largest excess inventories have seen the biggest gains in prices, including San Diego, Phoenix and Las Vegas.
Fifth, and perhaps most important, the labor market--the last of the lagging economic indicators--has finally fallen into place as a positive for the economy. Private sector payrolls increased 123,000 in March (198,000 including upward revisions to prior months). Meanwhile, civilian employment, an alternative measure of jobs that includes the self-employed and startup businesses, is up 1.36 million in the past three months, the most for any three-month period since 1994.
Yes, the housing market has taken it on the chin. And, yes, the Fed is finally backing out of the market. But for the five reasons above, we think the battered and bruised housing market is going to be in better shape one year from now than it is today.
Brian S. Wesbury is chief economist and Robert Stein senior economist at First Trust Advisors in Wheaton, Ill. They write a weekly column for Forbes. Brian S. Wesbury is the author of It's Not As Bad As You Think: Why Capitalism Trumps Fear and the Economy Will Thrive.
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By Larry Copeland, USA TODAY
WEST POINT, Ga. — This old textile mill town of 3,500 along the Alabama border 80 miles southwest of Atlanta is dealing with a problem it hasn't had in ages: Downtown is booming so much it's often hard to find a parking spot.
"It's a problem we don't mind," says Mayor Drew Ferguson, pointing out business after business that have opened recently, 24 in the past 20 months. "It's amazing, the economic viability of downtown."
At a time when once-viable manufacturing communities across the USA are struggling to hold on, West Point — which flirted with obsolescence after the textile mills moved abroad — is beginning to prosper once again. Sales and property tax receipts are going up, jobs are being created, and there's a sense of unbridled optimism here.
The excitement is being driven by the recent opening of Kia Motors' first North American manufacturing plant, which began building the Sorento here last fall. In an area that has been staggering since the textile mills began moving out 20 years ago, the Kia plant is generating enormous enthusiasm. Kia says 43,000 people applied for 1,200 jobs on the first shift; it's now sorting through 31,000 applications for 1,200 second-shift jobs.
State and local officials made a huge investment to get Kia — local, state and federal tax breaks, incentives, even a new exit off Interstate 85. People here say that investment is paying off.
"When I first came here, there were, like, tumbleweeds rolling around downtown," says Ruthanne Williams, owner of the Irish Bred Pub downtown. She and her husband, Trent Williams, poured their life's savings into the restaurant and bar, betting that Kia would attract enough business for them to succeed in a location where several restaurants had failed before they bought the place.
"We definitely came to West Point, aka Kiaville, because of the plant," she says. "And it's been a very good decision. We believe in this town. We believe in this community. And we believe in Kia."
Outsize economic impact
Researchers at Georgia Tech estimate that Kia will generate 20,000 new jobs in a nine-county area of western Georgia and eastern Alabama by 2012, generating an annual economic impact in Georgia alone of $4 billion a year.
That's a new heartbeat for West Point.
The city was once home to textile giant WestPoint Stevens, one of the nation's top producers of towels with thousands of employees in this area in the 1980s. Competition from Asian and South American manufacturers, outdated plants and a hostile takeover soon led to the closing of plants in this area and around the South.
This community lost about 16,000 jobs over the past 20 years, Ferguson says. Just since 2001, Troup County has lost more than 5,000 jobs, a 15% decrease, according to the Georgia Department of Labor. Most of those jobs were in manufacturing, primarily in textiles.
"After the mills left, you could ride through the middle of West Point on a Thursday or Friday afternoon and sometimes you wouldn't see a single car parked," says Griggs Zachry, 70, owner of Zachry Construction and secretary of the West Point Development Authority. "It was absolutely heartbreaking."
Zachry says the rebirth of West Point has been slowed by the recession. "It's been a little slow; because the economy is so bad, nobody can get any money."
Many workers not local
Another dark spot on West Point's bright horizon: Many of the new jobs are going to people outside the county, including to Alabamians.
Troup County's unemployment rate in January was 13.4%, making it the 35th highest of Georgia's 159 counties. State Labor Commissioner Michael Thurmond, who calls this area "the epicenter" of economic activity in Georgia, says success is "not without challenges. Not everyone will benefit unless they are educated, skilled or trainable."
Many of the Kia workers come from Alabama, which has long had a workforce of skilled autoworkers. The state has three automobile plants: a Mercedes-Benz plant in production in Vance since 1997; a Honda plant in Lincoln since 2001, and a Hyundai plant in Montgomery since 2004.
Western Georgia and the eastern Alabama communities just across the Chattahoochee River — such as Lanett, Valley and Shawmut — have long been closely linked, so Alabama is seeing a boom, too: About half the 20 or so new automotive suppliers in the area are there.
Residents here say the population in West Point is growing.
"I have been here 19 years, and now, for the first time, I walk down the street and don't recognize people," says Doug Shumate, owner of CopperMoon, a maker of exterior landscape lighting for high-end homes, and chairman of West Point 2100 Foundation, a non-profit group that buys and refurbishes old buildings.
There is a significant construction boom, concentrated mostly in Alabama. The Greater Valley Group, one of the area's largest development companies, has $195 million in residential, retail and commercial construction underway, spokeswoman Jeanne Charbonneau says. "To date, everything we've built is within 7 miles of the new Kia plant," she says.
Ferguson says West Point is positioned to leverage its good fortune to revitalize neighborhoods that have languished in disrepair for years. He says his city is acutely aware of how strong its position is compared with many former manufacturing towns.
"We have a huge sense of our place in history," Ferguson says. "We're so empathetic to what a lot of other communities in our country are going through. We are very thankful — and very aware of the opportunities that lie in front of us."
(c) USA TODAY

By Sule Aygoren Carranza
NEW YORK CITY-A sense of relative optimism has pervaded the investment arena in recent months, and most players are confident the market is at least stabilizing, if not nearing bottom. And among the various asset classes, investors seem to feel particularly good about multifamily, which is expected to lead the commercial real estate industry in the recovery. That’s the consensus of the PricewaterhouseCoopers Korpacz Real Estate Investor Survey for the first quarter of 2010, titled, "Investor Sentiment Improves, But Challenges Persist in 2010."
That’s not to say the sector is performing well. Rather, the national average vacancy rate sits at a historic high, climbing 130 basis points over the year to hit 8% at year-end, points out PwC, citing Reis data. Rent cuts and concessions—including an average of three months’ free rent, reduced or eliminated deposits and fees and merchandise giveaways—are now common practice in just about every market. The multifamily market, many investors believe, will "bump along the bottom" this year, with conditions changing little.
Like in other property sectors, sales activity has diminished for apartments, but demand is high for well-located, high-quality assets. PwC notes that a 92% occupied, 612-unit property in a good location generated 14 bids during its 21 days on the market, before being sold for $54 million to the Prime Group in a deal that took just two days to close. Another first-quarter deal involved a 254-unit asset near the California State University, which Strata Equity bought for $21.2 million, representing a 7% overall cap rate.
Overall cap rates for apartments have actually fallen over the final three months of last year, ranging from 5% to 11%, with an average of 7.85%, down from 8.03% in the third quarter of 2009. However, the current cap rate was still 97 basis points higher than it was a year ago. The average residual cap rate isn’t that far off, coming in at 8.01% this quarter, also an 18-basis-point decline.
Discount rates, or IRRs, on unleveraged, all-cash deals remained relatively unchanged quarter-to-quarter, 10.18% in Q1, but were up 113 basis points from last year. Meanwhile, properties for sale are sitting on the market for shorter lengths of time. The average asset sold within 8.06 months this quarter, a 9.03% drop from the prior quarter. In terms of pricing, those polled said apartment prices nationally will decrease an average of 3.81% this year, with responses ranging from a 25% value decline to 25% pricing uptick.
On a regional basis, the performance of the apartment market depends largely on the performance of the individual markets’ employment scene. In Washington, DC, for example, where the federal government has been boosting the job numbers, vacancy rates were little changed over the past six months. Rents in the Mid-Atlantic region actually saw a 60-basis-point uptick during that time. The pace of property sales has picked up in both the Mid-Atlantic and Pacific regions, but uncertainty has brushed somewhat of a negative film over projections for rent growth. Cap rates have also decreased in both regions by 50 and 46 basis points, respectively. The bulk of survey respondents feel that multifamily market rents should grow by an average of 2.41% over the next eight years, following a 91-basis-point decline in the first year.

Birmingham area real estate suffered in 2009
By Michael Tomberlin -- The Birmingham News
March 19, 2010, 6:30AM
The Birmingham area's commercial real estate business took some lumps in 2009.
All the industry's key sectors -- office, retail and industrial -- found the going tough in one of the roughest markets in memory. The findings in a new report by EGS Commercial Real Estate, one of the city's largest commercial real estate firms and a major player in all three sectors, tell the story.
"In all sectors of real estate, 2009 was a very challenging year," EGS President Bill Pradat said in an interview. "All of these product types have something in common and that's the fact that they depend on jobs."
The bottom line: While some geographical areas fared better than others in specific sectors, really about the best thing that can be said about 2009 is that it's over.
And what about the prospects for a recovery?
"Everybody is cautiously optimistic about a bit of an upturn in the latter part of 2010," Pradat said.
But, he added, there will be almost no new development this year in the Birmingham area, where the jobless rate stood at 11 percent in January.
"Until we see employment return, we won't see a recovery in the industry," he added. "There also needs to be a growing sense of consumer and corporate confidence. We're not seeing that yet."
'Challenging year'
The strain caused by a down economy has been keeping consumers' pocketbooks closed -- and that is bad news for the retailers that lease space in shopping centers and malls.
During 2009, some big retailers collapsed into the bankruptcy, including Bruno's Supermarkets, Linens-N-Things, Circuit City and Goody's. That left nine separate large vacancies totaling more than 250,000 square feet in the Birmingham market.
"Birmingham's retail market faced one of its most challenging years in 2009," the EGS report says.
Still, retail space in the Birmingham area actually showed increased occupancy for 2009: 88 percent, up from 87.5 percent for 2008.
A gradual recovery in 2010 could have retailers and developers scouting potential new locations in anticipation of a return to growth later, the report says.
EGS said the Eastwood-Irondale area was the weakest market, with 84.3 percent occupancy at year's end. The U.S. 31 corridor stretching from Hoover to Pelham, Alabaster and Calera was strongest, at 92.3 percent.
Worst over?
Landlords with office space didn't have much to cheer about in 2009.
Occupancy rates in multi-tenant buildings dropped 3 percent, average rents were mostly flat, and net vacancy rose sharply, meaning more space was vacated than occupied during the year. While 2008 saw a net vacancy of 25,500 square feet, last year's figure was 490,000 square feet for the year, the EGS report says.
Office rental rates averaged $19.42 per square foot at year's end, a slight uptick from $19.15 per square foot in 2008. Landlords stuck to charging quoted rents in most areas, choosing to give tenants other concessions, such as increased tenant improvement allowances, the EGS survey found.
The good news: Signs emerged late in the year that the worst may be over as brokers reported increased activity in the fourth quarter. The EGS report predicted a gradual recovery for the area's office market this year.
The market that includes Homewood, Mountain Brook and Vestavia Hills was the strongest office market last year, with occupancy at 94.6 percent. Struggling the most was the Vulcan-Oxmoor market, with 85.4 percent occupancy. Overall occupancy stood at 90.5 percent.
Industrial space
Birmingham's multitenant industrial market -- warehouses, distribution and plants -- had a vacancy rate of twice the national average at year's end, according to the EGS survey. Overall occupancy slipped nearly 3 percent to 80.3 percent.
Net vacancy totaled nearly 308,000 square feet for the year, meaning more space was vacated than occupied. The 2008 figure was 294,000 square feet.
The Oxmoor Valley area was hit the hardest, with a net vacancy of nearly 158,000 square feet and an occupancy rate 82.9 percent. The Southwestern market actually saw a gain in occupied space by 55,500 square feet, but its occupancy rate was 64.4 percent.
The problem? The EGS report says the poor economy and a lack of lending were to blame, along with contractions in the construction industry that slammed suppliers.
The report found there's light at the end of the tunnel -- in the form of trains. A new CSX railroad hub in Bessemer and a planned $112 million Norfolk Southern in McCalla could boost demand for industrial space "as companies from outside the Birmingham market that utilize this mode of transportation will look to open distribution centers, warehouses and manufacturing plants."
Join in the conversation by commenting below or e-mail Tomberlin at mtomberlin@bhamnews.com.

Commercial real estate still a tough sell, say experts
By Kathy Jumper Mobile Press Register
March 11, 2010, 6:01AM
Got tenants? Try to keep them.
That was the tune sung by most industry experts at Wednesday's Gulf Coast Commercial Real Estate Summit & Market Review at the Arthur Outlaw Convention Center.
The retail, apartment, industrial and hotel/motel markets are tough, so hang on tight and don't expect improvement until 2011 or later, the commercial Realtors said.
The third annual event drew 260 people, down by 28 percent from last year, according to the Center for Real Estate Studies at the University of South Alabama's Mitchell College of Business. USA partnered with the Mobile Area of Chamber of Commerce on the day-long seminar.
Don Kelly of The Mitchell Company's gave a succinct report on the prospects for the retail sector: "There is no demand for retail. Vacancies continue to rise while rents decrease. The retailers' focus is on evaluating existing stores, and unfortunately, closing the under-performing stores."
Landlords want the same rents they were getting when the market was hot in 2005 and 2006, he said, adding that "consumer confidence had turned to consumer caution, and now it's turned to consumer fear."
Industrial buildings had a vacancy rate of 17 percent in 2009, more than double the 7 percent 2008, and could reach 23 percent this year, according to Jeremy Milling of White-Spunner & Associates' Fairhope office. "This is not a time to have to fill vacancies," he said.
Prior to Hurricane Katrina in 2005, apartment occupancy rates were almost 100 percent in Mobile and in the high 90s in Baldwin County, according to Stephen Ankenbrandt of Rock Apartment Advisors in Birmingham. After Katrina, developers came in droves to build apartments, he said, but the poor economy and resulting job losses have gutted the market. He said five properties in southern Baldwin County may soon go back to lenders.
With an estimated $250 million worth of distressed apartment projects in the coastal market, there will be plenty of opportunities for buyers in 2010 and 2011, he added.
"Mobile is such a dynamic market that when the economy comes back, you will see signs of rent growth," he said. "The good thing about the apartment industry is that when there is job growth, our recovery is quick."