Attention Brokers: Virginia is now requiring all active brokers whose licenses expire after 6/30/08 to complete 24 hours of CE within their current two year license term. Of the 24 hours of CE required, 8 hours must be Elective Real Estate Related Subjects. The Local Cost Seminar satisfies 7 hours of Elective Real Estate Related Subjects for the broker’s RE CE.   
The Local Cost Seminar, to be hosted on May 12, 2008 by the Virginia Commonwealth Chapter of the Appraisal Institute (VCCAI), will provide real estate professionals: appraisers, assessors, brokers, salespeople and lenders a better understanding of development, and the costs associated with residential and commercial construction, as well as redevelopment and condominium conversion. The registrants will be exposed to the tools they need to better understand the aspects of new construction, and in turn be able to explain the aspects of new construction to their clients. Further, they will gain an understanding of how to compare new construction properties more accurately and competitively for listing, selling, lending and valuation purposes. In summary, the goal of this 7 hour seminar is to expand the registrant’s knowledge base on the cost aspects of the various types of construction in the Richmond market area, therefore increasing the registrant’s level of competency and professionalism in service to the Commonwealth of Virginia and the citizens that require their services.   
The program welcomes several well known and highly respected local speakers.
 
Mr. Allen Dorin: Virginia Commonwealth Chapter of the Appraisal Institute (VCCAI) Immediate Past President—Introduction
Mr. Scott Shaheen: Richmond Association of Realtors (RAR) 2008 President—Current Residential Market Trends in Richmond
Mr. Scott Schaffer: Main Street Homes—Residential Development Costs
Mr. Tripp Hines: Main Street Homes—Residential Single Family Detached Homes
Mr. Mark Damico: McKinney & Co., USA—Commercial Construction
Mr. Rett Turner: Virginia Commonwealth Chapter of the Appraisal Institute (VCCAI) Associates Guidance Chair - Introduction
Mr. Jim Walker: J.R. Walker & Co., Inc.—Custom New Single Family Housing Costs
Mr. Chris Johnson: Monument Construction, LLC— Condo Renovation, Redevelopment & Conversion Costs
Mr. Chad Joyce: Ryan Homes—New Construction Townhouses & Single Family Homes
Mr. Leon Shadowen: Brandywine Realty Trust —Commercial & Residential Development, Construction, Leasing Costs
To register online for this event paying with a credit card, please use this link: www.appraisalinstitute.org/education/VirginiaCommonwlth.aspx
To register for this event paying with a check, and to register three or more people using either method of payment, please print the attached registration form and mail or fax it to Karie Walker at the chapter office:
VCCAI 
2500 Grenoble Road 
Richmond, VA. 23294 
804.377.0940 
vaappraisalinstitute@cavtel.net  
      

101 Marshall Street | Broad Street Arts District
Friday | May 2nd | 5-8pm
OPEN BAR & Catering Sponsored by HomeLand Title 

Gumenick Properties Presents….
Monument Square Rocks
w/ Rapport

4:30-7pm | Party under the Tent (Rain or Shine!)
Entertainment | Appetizers | Libations

Location: 5200 Block of Monument Ave (near Willow Lawn)
Tickets: $5 if RSVP before 3/19 | $7 at the door

*All Proceeds will benefit our upcoming “Monte Carlo Night” Charity
Gala for Elder Homes. Stay Tuned.

Send rsvp to richmondrapport@gmail.com

The mission of RAPPORT is to foster professional development within the Richmond real estate community by bringing fellow professionals together to meet, share ideas and build relationships. Also, we will seek to engage in charitable and community oriented activites and programs to better enhance our industry’s visability and overall image.

Join our mailing list at www.RichmondRapport.com or by emailing RichmondRapport@gmail.com

CALL FOR VOLUNTEERS
We need your help to staff “Affordable Housing Awareness Week: April 20-26, 2008″
Register Today To Lend A Helping Hand! www.AffordableHousingRichmond.com
If you would like to volunteer with the Rapport Team email Rett Turner at rturner@petcorea.com

CALL FOR COMMITEE CHAIRS
If you would like to Chair a Rapport committee for the 2008 term please
send an email to richmondrapport@gmail.com with “Committee” in the subject.
We will be having a Board meeting in April.

9500 West Broad; former Haynes car sales; future 7-Eleven with gas?

7204 Brook Road; vacant shopping center outparcel; future Advanced Auto Parts?

3312 Skipwith Road; single-family home; future Greek restaurant?

11351 Nuckols Road; current Food Lion; future Bloom?

10010 West Broad Street; surplus land; future Touchfree Carwash?

“Three months ago, I expected the economy to skirt a recession. Now, I expect it to suffer a recession (in the) first half of 2008,” he said.

Zandi expects the Federal Reserve to slash the federal funds rate, currently at 3 percent, by another percentage point this year.

He expects home sales to hit bottom this spring, housing starts to reach a nadir this summer, and house prices to trough in the spring of 2009.

To register online, please use the following link:  http://www.appraisalinstitute.org/education/more_info.aspx?id=8289

To register with a check, please contact the chapter office at 804.377.0940 or vaappraisalinstitute@cavtel.net

To register with a credit card, please use the following link: http://www.appraisalinstitute.org/education/VirginiaCommonwealth.aspx

Questions? Please contact Karie Walker at the chapter office: 804.377.0940 or vaappraisalinstitute@cavtel.net

Following the seminar, Rob Moss with Virginia Realty and Relocation is hosting a real estate social with live jazz, cocktails, and appetizers. Please click on the invitation below for details.

Henrico

Richmond

Background

Portions of the property (which totals roughly 37 acres) were used as a creosote wood treatment facility between 1956 and 1990. Chemicals and compounds used to preserve wood included mineral spirits, No. 2 fuel oil, chromium zinc arsenate, copper chromated arsenate, creosote, pentachlorophenol, xylene, and fire retardant. Contamination of the area occurred through the drip-drying process whereby freshly treated wood dripped into the soil in the open areas of the site. Furthermore, in 1976-1977, approximately 1,100 to 1,400 pounds of copper chromated arsenate were dumped into a pit in the northeast portion of the site. A summary time line for the site is as follows:
1956 - The first wood treatment structure was installed.
1989 - The site was placed on the EPA’s National Priorities List.
1990 - All wood treatment operations ceased.
1998 - Remediation commenced (removal and off-site storage of contaminated soils and construction of concrete containment structures)
1999 - Remediation was completed at an estimated cost of $10,907,000.
2003 - A 5-year review was completed, giving the site a relatively satisfactory status.
2008 - A 10-year review is scheduled.

Much of the Rentokil property must remain undisturbed indefinitely, as illustrated in the conceptual plan in the RTD article (print version only). Without knowing the details of the sale of the property, I applaud the developer for rolling the dice on what may or may not be risky project due to environmental issues. It seems though, that in this day and age, and in our market, even the nastiest enviromental issues are actually non-issues. Maybe you’ve heard of a little development under construction in Henrico’s East End…White Oak Village? The former Lucent Technologies site was used for storage of chlorinated solvents until 1989 which contaminated the groundwater. In 1991, the EPA issued a Record of Decision requiring a groundwater remediation system which has been operational since 1995. The property was sold to Viasystems Technologies Corporation in 1996, but Lucent (later called Agere Systems, Inc.) retained all remediation responsibility. There reportedly was little interest in the site after cleanup began. As we all are aware, the site is now under construction with one of Richmond’s most abitious mixed-use developments - White Oak Village.

On a final note, I have spoken with numerous developers, lenders, and business owners about the impact (on value) to real estate in proximity to contaminated sites. The overwhelming response is that it isn’t an issue. I realize that anecdotal evidence is a poor tool in deciding the feasibility of a development. In the Richmond MSA though, there isn’t exactly a large amount of real estate activity around contaminated sites from which to glean useful analytical information. So if you’re considering buying one of these proposed “green” office/warehouse buildings in Henrico, you should think more about the positive aspects of the project: Henrico County business-friendly environment, LEED construction standards, convenient access, etc., and  less about the history of the surrounding property.

(Panelists)                      (Participants) 

I have to ask though: HOW DOES THIS INFORMATION APPLY TO RICHMOND? How much of our commercial real estate market falls into the “securitized” arena? I submit that it’s a miniscule amount. That brings me back to the original point of this post: WHERE IS THE USEFUL INFORMATION? The public should be informed about how OUR markets are doing. I guarantee you the statistics on Richmond’s commercial real estate market bears little resemblance to what we’re hearing about the nation in general. 

Update: http://www.virginiabusiness.com/edit/magazine/yr2007/dec07/cover.shtml
While there are pockets where commercial construction has slowed such as the Dulles corridor in Northern Virginia, overall commercial construction in Virginia remains healthy, says Steven Vermillion, chief executive officer of the Associated General Contractors of Virginia. Construction employment in Virginia in August was 252,300, which is not only 2 percent higher than last year, but Vermillion believes it is an all-time high for the state. “While much of what you read about the impact of the credit crunch on construction is negative, this is definitely not the case for commercial construction,” he adds. Projects recently breaking ground include the 360-acre One Loudoun, a 3-million-square-foot mixed-used project in Loudoun County, and a 1.3 million-square-foot industrial park in Suffolk. One key driver for the commercial real estate market is federal, state and local government agencies. “A good portion of commercial construction is with government entities for projects like schools, highways and sewage treatment plants, which aren’t as susceptible to credit issues as residential construction,” says Vermillion.

The village of Chester is noted for its historic charm and having a strong sense of community. Chester has at least 17 active neighborhood associations which communicate frequently with each other to promote responsible development in the neighborhod. The 2006 population is estimated at 22,700, resulting from a 2.7% annual growth rate since 2000. The quaint village atmosphere is being perpetuated by developments such as Chester Village Green ( www.chestervillagegreen.com), a cutting-edge New Urbanism project in the heart of town.Slightly outside of the village boundary is the proposed Branner Station (www.brannerstation.com). In September 2007 the Chesterfield County Board of Supervisors approved 2-1 a rezoning request from HHHunt to rezone 1,614 acres southeast of Chester along the west line of Branders Bridge Road, south of Bradley Bridge Road. Yes, the vote was 2-1 in favor of approval. The current plan is for 2,449 single-family homes, 1,331 condos and townhomes, 908 apartment units, and 300 assisted living units, as well as 470,000 square feet of proposed commercial space. To accommodate this growth, the plan proffers over 100 acres for a new elementary school and a new high school. The proposed development indicates a ”North/South Pkwy Extended” which will intersect Route 10 just steps from the village periphery, at the location of the former CSX railroad right-of-way (now a greenway).

So what’s the point of this post? I just find that the village of Chester is notable because it has managed to maintain its “throwback” identity in the face of development/sprawl. As much as I respect HHHunt, it looks like the old-time charm of Chester is facing an identity crisis.

 More later…

So why can’t a developer deliver an “affordable” lot in municipalities with low or no cash proffers? Basically, because of the aforementioned acquisition and development costs. The cost of land differs from area to area. So let’s back into what a developer can afford. In the areas where land is most affordable, public/municipal water and sewer are not available. So developers are tasked with creating lots with private/individual wells and septic systems. While the developer doesn’t usually pay for such infrastructure, the builder certainly does. Guess what it costs to install a well? $3,000. A septic system? $4,000. So we’re up to $7,000 already just for the well and septic for a home. If a developer could find some really cheap land in our area for say….$4,000 per acre, they might get 40 homes on 100 acres if the land is really, really good. So for the land acquisition, the engineering, the soils testing, the legal work, the road construction, etc., the developer is up to roughly $25,000 per lot in acquisition and development costs. Add in a reasonable profit….$31,250 per lot. So the developer in this scenario cannot sell the lot to the builder for less than $31,250 per lot (again, such a price point does not exist in the Richmond MSA, or C-ville MSA to my knowledge). The lot though, is not ready for a home. The builder must then fork out the $7,000 for the well and septic systems. So the builder is already up to $38,250 per lot which I assure you is A STEAL in today’s market. You just won’t find lots in that ballpark. So in this extremely conservative scenario, the builder is faced with $38,250 per lot. What can he build and make a profit? A $153,000 home, which is out of Mr. Affordable’s price range.

I hope this diatribe has been informative to Mr. Affordable and to those of you who wonder why “affordable” homes aren’t being built today.

 What does this have to do with real estate? Nothing.

There is no easy answer or quick fix to the problem of appraiser pressure. I just hope that awareness of the problem might give pause to salespeople, buyers/sellers, and lenders the next time appraised value doesn’t meet their expectations. The appraisers are reporting market value. They’re not sabotaging sales.

http://biz.yahoo.com/ap/071102/homebuilders_ratings.html?.v=2

Beazer homes just suspended its dividend and intends to lay off 25% of its workforce.

Where is the bottom?

So what does this chart command us to do? I guess it orders investors to make real estate the 2nd or 3rd largest portion of their investment portfolios. Seriously though, I’m surprised that real estate doesn’t show a stronger return in the 5- and 10-year columns.

How about this one? I read that Richmond is perhaps building too much retail space.

This presentation didn’t include much on the office market in Richmond. Here is a graph with a projection for the industrial market.

So Mr. Wilkerson is projecting 15% NOI growth for industrial property in Richmond over the next 5 quarters…seems reasonable. I interpret the cap rate side of the graph to say that Richmond’s industrial property will command cap rates almost 50 basis points higher than the national average.

That’s it for my summary of the VCU Real Estate Trends conference. If you would like additional information on any of the speakers, I’m happy to provide it.

I happened to run into a couple of clients of Dabney Properties and they both reported excellent accommodations and service. I’m not promoting this company by any means. I just thought it is a creative way to earn a living in the real estate industry.

His presentation, and his job in general, instructs municipalities and developers how to build communities which:
- streamline cost and target investment dollars
- support pedestrian access between residences and commercial space
- incorporate public transportation, thereby reducing traffic

I urge anyone considering developing in the Charlottesville MSA to contact Mr. Rue. Any tidbit of information that he could pass on is invaluable.

SB 373 (2006) - Transfer of Development Rights. This bill allows municipalities to set up an system to allow for transferring development rights from one area to another area, presumably to direct growth/development to the appropriate areas.

HB 2500 (2007) - Expansion of Conditional Zoning. This bill granted most municipalities the right to accept cash proffers. While most of you might think this is obvious, I present you with the following graphic:

 Notice anything odd?

HB 3202 (2007) - Urban Development Areas. This bill requires 67 high growth localities to establish Urban Development Areas with compact densities of at least 4 units per acre. It mandates New Urbanism principles in these development areas. This bill also allowed additional municipalities to impose road impact fees in addition to base cash proffers. 

…a public instrumentality authorized by the City Council or County Board of Supervisors…for the purpose of providing public infrastructure.

They are established to finance and construct roads, bridges, and other infrastructure needed to serve the municipality as a result of the development. The CDA is basically a bond secured by the land which the municipality authorizes to develop the project. The municipality is not accountable for repayment of the bond. The bond is repaid by special tax assessments. Google will provide you with more than enough resources to educate you on CDAs. Below are some interesting cases in the Commonwealth handled by Stone & Youngberg.

The Farms of New Kent, 30 miles east of Richmond (New Kent County), September 2006
$85,666,000 bond amount
1,450 age-restricted units / 300 estate lots / 450 sfd / 100 resort cottages / 830,000 sf commercial / 18-hold golf course / winery, vineyards, polo, farmers market
Developer - Boddie-Noell Enterprises, Republic Land, and K. Hovnanian
Use of Proceeds: road, water, and wastewater infrastructure

Reynolds Crossing (Henrico County), May 2007
$14,594,000 bond amount
250-room Westin Hotel / 480,000 sf office / 170,000 sf restaurant and retail
Developer - Reynolds Holdings, LLC
Use of Proceeds: road improvements, water and sewer infrastructure

The Shops and White Oak Village (Henrico County), October 2007
$23,870,000 bond amount
870,000 sf open-air retail / 150-room Hyatt
Developer - Forest City Enterprises, Inc.
Use of Proceeds: earthworks, off-ramps, parking, traffic lights, water and sewer infrastructure

I find CDAs particularly interesting because I’m working (slowly) on a large (potentially 900 acres) mixed-use development in Fluvanna County. This property — and Fluvanna in general — almost certainly needs a CDA to be developed properly. So while many at the VCU conference may have found Mr. Powell’s presentation boring, I was extremely interested.

If you accept a positive corellation between credit risk and the TED spread, I think the above graph puts today’s credit risks into historical perspective.

Hooray for Richmond….

Boo for Richmond

For those of you in the real estate business who haven’t attended a VCU Trends conference, you should. I would like to see more attention given to Richmond or even the Commonwealth, but overall its a great event. There is ample time before the speakers, and between sessions for you to meet other people too.

Westchester Commons / Watkins Center in Chesterfield County, $165 million
1.3 million square feet of retail
2 million square feet of office and industrial space
1,600 residential units

The Shops at White Oak Village in Henrico County, $161 million
900,000 square feet of retail space

Miller & Rhoads Renovation in the City of Richmond, $95 million
250 hotel rooms
130+ residential condominium units

Meadwestvaco Corporate Headquarters in the City of Richmond, $80 million
300,000 square foot build-to-suit office building

The Richmond MSA saw a nearly 20% decline in year-over-year home sales for September.
The average sale price rose nearly 4% to $276,438.

I was on what used to be the eastern periphery of the VCU Monroe Park campus today appraising some property, and inspecting two recent sales. The first is the sale of 600-606 West Grace Street, more commonly identified as the BP-Amoco on the corner of Belvidere and West Grace Street. The 0.35-acre site has a 456 square foot c-store kiosk and a 302 square foot office/storage building. The four 10,000-gallon underground gas tanks provide fuel for six 3-hose dispensers and one 2-hose dispenser. The property sold September 17, 2007 for $1,100,000. While some value was added by the existing fuel infrastructure, the $1,100,000 equates to $71.19 per square foot of land area….pretty crazy for the City of Richmond (outside of the CBD). The new owner reportedly will demolish most of the existing improvements and install new equipment to operate an Uppy’s Convenience Store. What I really find interesting about the sale though, is that VCU didn’t buy it. This property is an important part of the Monroe Park campus master plan, and it is transferring hands in the private sector.

The second sale I also find interesting, chiefly because I find infill developent in the City so interesting. It’s the sale of 114-118 South Belvidere Street. the 19,000 square foot site includes a vacant residential shell building with little to no value. I haven’t verified the details of the sale, so I don’t know if it will be remodeled or demolished…let’s hope for the latter. The site is immediately north of the 7-Eleven and I-195. It was listed for over a year for $1,250,000 ($65.79/sf), and sold August 2, 2007 for $1,000,000 ($52.63 per square foot of land area).

That’s all for now.

Friday, September 21st – Virginia Association of REALTORS®, Glen Allen, VA
Registration: 8:30 a.m.
Seminar: 9:00 a.m. to 4:00 p.m. (lunch included with registration)
(qualifies for appraisal continuing education; pending real estate continuing education)
The Copyright for Professionals Seminar provides professionals with the understanding of what copyright is and how to protect their work. The Seminar also provides information on how to avoid infringing on another professional’s work product.

The objective is to orient the participants to the basics of copyright protection, demystify the process, eliminate misconceptions about copyrights and to provide the participant with the means to enforce their rights.

Please call 804.264.5033 to register!

–

Membership Meeting:
Special Guest 2007 AI PresidentTerry Dunkin
September 25, 2007

To register online (paying with credit card) simply click these links:
Chicken Entree: http://www.appraisalinstitute.org/education/VirginiaCommonwealth.aspx
Swordfish Entree: http://www.appraisalinstitute.org/education/VirginiaCommonwealth.aspx

To register through the chapter office (paying with a check) simply fill out the attached registration form and fax it to 804.377.0941.

Party@Creeks Edge
(If you missed the first one, be sure to mark your calendar!)

Free Drinks, Poolside Venue
and Great People!

WHEN Wed. Sept. 19th, 2007
TIME 5pm-8pm
WHERE Creeks Edge @Stony Point
TICKETS $7 at the door $5 if you bring a new member

DIRECTIONS: Creeks Edge is located directly in front of Dicks Sporting Goods at Stony Point Mall. GO directly through the security gates via the GUEST ENTRANCE. Park back by the clubhouse.

Special Thanks to Wells Fargo Home Loans & Chaplin, Qureshi & Hoyle for sponsoring this event!!!