Commercial Broker Quarterly: Summer 2003 - GWCAR, Greater Washington Commercial Association of REALTORS(R)

CBQ >> Summer 2003 Issue

NEWS NOTES

CB Richard Ellis On Top
CB Richard Ellis became the world's biggest real estate services company when it finalized its purchase of Insignia Financial Group last month for $431 million. The acquisition will boost the company's annual revenue by $1.7 billion, add another 14,000 workers to its ranks and expand its management and leasing operations into cities such as San Francisco, New York, Washington, London, Paris and Hong Kong.

In the Washington, DC region, CBRE has 375 employees working to service the Washington, DC, Northern Virginia, Suburban Maryland and Baltimore areas. CBRE's John Germano, Senior Managing Director, will lead the Washington Region team, which includes specialists in leasing, financing, sales and management of all property types as well as a host of other real estate services.

NEW BANKING ACCORD COULD COMPROMISE COMMERCIAL LENDING
The Basel II Accord, which lays out a new framework for calculating lending risks facing banks worldwide, inappropriately identifies some residential and commercial real estate lending as high risk, resulting in higher capital standards for these types of loans, said NAR in its comments to the Basel Committee on Bank Supervision, the Federal Reserve, Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The new accord is subject to the U.S. rule making process. The earliest implementation would be 2004.

NAR LAUDS DEPRECIATION PROPOSAL
NAR commended U.S. Rep. Bill Thomas (R-Calif.) for his proposal to permanently reduce the depreciation period for leasehold improvements from 39 to 20 years. Leasehold improvements are permanent enhancements made to commercial buildings on behalf of tenants. The American Jobs Creation Act of 2003, introduced by House Ways and Means Chairman Thomas, will also enhance the current bonus depreciation rules by shortening the recovery period for tenant improvements. That provision allows businesses a one-year, 50 percent bonus tax deduction on the cost of new leasehold improvements.

Federal Brownfields Reform Hits a Snag
Individuals from 25 groups have been meeting with the EPA to compose a new brownfields rule to encourage redevelopment of tainted sites. Three months into the process, participating real estate interests say some ideas being discussed are tougher than current standards and could actually discourage redevelopment.

The effort to create the rule stems from President Bush's signing last year of the Small Business Liability Relief and Brownfields Revitalization Act, which protects from liability prospective purchasers of brownfields and owners of adjacent properties that may have been cross-contaminated. The law requires that the EPA establish due-diligence standards and practices for prospective buyers by 2004. (An interim standard is in place.) The law would have wide implications for the estimated 450,000 brownfield sites in the U.S.