“Industry tailwinds look to be gaining steam, but we believe Toll has one very large impediment to cross: The sequester,” said housing analyst Stephen East at ISI Group. “With a large portion of its sales in the Mid-Atlantic area, the next few months order streams will be extremely important as the sequester knife is falling hard on well-paying defense industry jobs.”

Sequestration could even slow the improvement in the nation’s foreclosure rate. It would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling through HUD grants, according to the government agency.

(Read More: The Inside Story of America’s Economic Crisis)

“This counseling is crucial for middle class and other families who have been harmed by the housing crisis from which we are still recovering, and are trying to prevent foreclosure, refinance their mortgages, avoid housing scams, and find quality, affordable housing,” said Secretary Donovan. “Studies show that housing counseling plays a crucial role in those two efforts. Distressed households who receive counseling are more likely to avoid foreclosure, while families who receive counseling before they purchase a home are less likely to become delinquent on their mortgages.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100474955

Umpqua Bank CEO Ray Davis has made Bay Area growth a priority.

Umpqua Bank 
 

Umpqua Bank
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has hired Bruce Lawrie to lead its new commercial real estate lending office in Walnut Creek, Calif., outside San Francisco.

As the San Francisco Business Times reports, the new office caters to developers and investors with construction lending on income properties, a market segment that fell out of favor, to put it mildly, in the dark days of the downturn.

Portland-based Umpqua has been rapidly expanding its footprint, with Bay Area growth a priority.

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Article source: http://www.bizjournals.com/portland/morning_call/2012/05/umpqua-bank-expands-bay-area-real.html

• By: Rich Miller
  March 12th, 2012
• Tweet

The growth of cloud computing is prompting increased demand for data center space in North America, according to a survey commissioned by Digital Realty. The growing interest in cloud adoption, along with the resumption of planned expansions that were deferred due to the economy, suggests robust growth ahead for the U.S. data center industry.

Ninety two percent of IT decision makers at large companies said they will “definitely or probably” expand their data center footprint in 2012, the highest number in the six-year history of the survey by Digital Realty, which is the largest operator of data center facilities. By comparison, 70 percent of respondents said they had expanded their data center operations over the past two years, suggesting

An intriguing data point: 41 percent of companies that are adding space reported plans to use a containerized module as part of their expansion, suggesting that a growing number of companies are open to deployments that use modular designs to house either IT capacity or power and cooling infrastructure.

Customer Sentiment Improving

The survey, conducted by Campos Research, included 300 IT decision makers at large corporations in North America with annual revenues of at least $1.0 billion and/or at least 5,000 employees. It’s not surprising that Digital Realty believes demand will be high, since the company is in the business of building and leasing data centers. But the findings are useful in tracking customer sentiment about their requirements for data center space.

“These results are consistent with what we are seeing with our customers across our portfolio,” said Michael Foust, Chief Executive Officer of Digital Realty. “There are a number of factors that we believe are driving the increase in demand for data center space as reported in the survey. These include the continued adoption of public, private and hybrid cloud computing solutions, pent up demand from enterprise customers that had deferred expansion plans in previous years due to economic uncertainty, an improved economic outlook, and the proliferation of data requiring appropriate computing and storage environments.”

The survey results provided some hints at the scope and breadth of customer expansion plans for 2012:

• 38 percent expect to expand in three or more locations.
• 54 percent expect to pursue projects of 15,000 square feet or more in size.
• 49 percent expect their data center projects to be supported by at least 2 MW of electrical power, including 12 percent reporting data center projects that will have 5 MW or more of electrical power.
• 50 percent of companies planning North American expansions also expect to expand in Europe or the Asia Pacific region, and 21 percent reported plans for projects in South America.
• 4 percent of companies reported having no plans for data center expansion in 2012 or 2013.

The most frequently cited locations for expansion in the U.S. include, in order, New York/New Jersey, Chicago, Los Angeles, Dallas, San Francisco Bay Area and Phoenix.

Article source: http://www.datacenterknowledge.com/archives/2012/03/12/cloud-growth-spurs-demand-for-data-centers/

One real estate sector is still booming; is it about to bust?

^{A version of this article originally appeared on our US site, Fool.com.}

Real estate. They’re not making any more of it. Demand is only increasing. Those arguments helped fuel an epic real estate boom and bust over the past decade — except when it comes to Internet data centres, which have continued to boom on explosive growth in cloud computing. They haven’t been able make those fast enough. But that may be changing, too.

A warning shot over the bow

On its recent earnings call, Akamai (NASDAQ: AKAM.US) was asked about co-location price trends in Internet data centres. Here’s what the company had to say:

… it’s like a real estate market. There are some places where our prices are holding. There are other places where there are very aggressive price declines, and we try to take advantage of that gain in terms of how we deploy our network assets. … The other lever we have on co-location costs, of course, is to make our servers more efficient and get effectively more throughput for our footprint in the co-lo facility.

Based on Akamai’s comments, co-location supply is still constrained in some markets. In others, it’s starting to meet demand. That brings to mind a classic real estate maxim: location, location, location.

Economics 101 teaches us that supply and demand affect pricing. When supply is constrained, prices rise. Internet data centres have been benefiting from that situation. But high prices attract more supply, and eventually supply will catch up with demand. When that happens, prices — and profits — are destined to fall. And that’s starting to happen. What’s more, increasingly efficient IT equipment can offset much of the growing demand for more processing, bandwidth, and storage. What’s good for Akamai can be the opposite for co-location and hosting companies.

Growing up

One factor affecting demand is companies that are shifting from the consumer equivalent of renting to buying their own home. Much like a young adult moving out of Mom and Dad’s place for the first time, companies moving onto the cloud often rent a temporary meets-my-needs-for-now space with no intention of a long-term commitment. As the companies mature, gain a better understanding of their needs, and gather cloud assets, they often began building their own data centres.

Generally, it’s the largest, most attractive tenants that make that shift. Recent examples include Apple (NASDAQ: AAPL.US) and Facebook. They’re following the example of Google (NASDAQ: GOOG.US), which has built its own data centres for some time. As the horde of young companies pursuing cloud strategies gain scale and mature, many more are likely to follow in Google’s, Apple’s and Facebook’s footsteps.

Other tenants are likely to go bust. From a co-location landlord’s perspective, that’s the corporate equivalent of having a tenant lose his or her job and move back in with Mom and Dad. Too much of that, and rental rates take a hit.

Build it and they will come?

Many data-centre developers are doing the equivalent of building on speculation that there will be a tenant. To wit, the CEO of Equinix, a large data-centre operator, has acknowledged that overbuilding is a “main concern.” 

Equinix invests heavily in the IT infrastructure used to serve its clients. Given the rapid depreciation on IT equipment, pricing pressure could make Equinix’s capital expenditures less profitable than anticipated. Pricing pressure is potentially a huge risk for the company.

Say when

When might co-location and hosting supply catch up with demand? Tier1 Research estimates that data-centre utilization in key markets is currently running between 81% (Northern Virginia) and 88% (Silicon Valley). That’s less than I’d expect in an exceptionally tight market.

And it’s a fast-moving market. In the San Francisco Bay area, which includes the Silicon Valley, rental rates for large tenants have reportedly declined 20% over the past 18 months thanks to new supply that’s coming online. A fresh surge of supply is expected in the area before year’s end. In the coming two quarters, data-centre landlord CoreSite Realty predicts that the new supply will outpace demand by as much as 50%.

A recipe for getting burned

With the sector viewed as a cloud play, valuations are sky-high. P/E ratios typically exceed EPS growth rates — that is, when EPS is positive. Over the last four quarters, CoreSite’s EPS was -$0.31 while Internap’s was -$0.10.

The trouble is, supply will catch up with demand sooner or later… and it looks like it might be sooner. When that happens, prices, profits, and P/E ratios are likely to plummet. A UBS analyst stated last December that data-centre developers were grappling with slowing growth, rising competition, and pricing pressure that made their valuations “unsustainably high.”

Foolish takeaway 

When prices sneeze, revenues catch a cold and profits catch pneumonia. Akamai’s comment about pricing trends in co-location centres signals that it may be time for investors to break out the handkerchiefs.

More on US shares:

• Where Should You Invest? This Indicator Will Tell You
• This Oil Stock Has Incredible Opportunities
• A Tale Of 2 Silicon Valleys

The Motley Fool owns shares in Google.

Article source: http://www.fool.co.uk/news/investing/2011/08/01/the-coming-digital-real-estate-bust.aspx