Commercial Real Estate News Roundup For August 24, 2015

On a morning of Wall Street and global equity market correction, sell-side signs in commercial RE mount, yet the secondary and tertiary markets that lagged and logged the least recovery look best from an investment standpoint. It’s all here at the Commercial Real Estate News Roundup for August 24, 2015.

General

International

Office

Industrial

Retail

Multifamily

 

24. August 2015 by Wayne Grohl
Categories: News | Tags: , , , , , , | Leave a comment

Commercial Real Estate News Roundup For August 20, 2015

(Above: Fed Chair Janet Yellen addresses Congress).

Will she or won’t she (raise rates)?, Chinese capital jetting around the globe, Facebook’s $1B like-button storage facility, and hospitality sector optimism put to the test.  It’s all here at the Commercial Real Estate News Roundup for August 20, 2015.

General

International

Industrial

Retail

Multifamily

 

Hotel

Land

20. August 2015 by Wayne Grohl
Categories: News | Tags: , , , , , , | Leave a comment

Chicago Panel Diagnoses Causes Of Consolidation In Medical Property

 

Biznow Conference Image

A distinguished panel of six commercial real estate experts took the stage in Chicago last week to share perspectives on the radically changing property market for health care.

Assembled at Bisnow’s 4th Annual Chicago Healthcare Real Estate event was a collection of operators, brokers, designers and developers of medical space, including Loyola University Health System’s Director of Real Estate Mike Becker, who kicked things off with an answer about what’s driving consolidation in the space.

“Size drives leverage and size drives scale,” said Becker.  “It’s very important to a lot of folks acquiring space [that they get] to that significant size. The reality is that $130 billion has been pulled out of Medicare/Medicaid reimbursements, commercial payers have cut reimbursements significantly, so the larger you are, the more ability you have to negotiate buying power and larger reimbursements.  Also, the play today is access to capital, and health care is still a bricks and mortar business…access to capital is easier and flows more freely if your size is more significant.”

John Wilson, President of healthcare property advisors HSA Primecare, added that consolidation was a confluence of three major trends: “Demographics, regulation and technology.  In demographics, you have baby boomers, an estimate of 10,000 a day turning 65.  So there’s ongoing pressure to the systems.  With regulation, of course front and center is the Affordable Care Act, which is not only bringing the newly insured to the health care industry, it’s also shifting payment method from a fee based method to a value-based method, which is really driven by quality of care outcome.  And then of course, technology – more and more procedures are moving to outpatient settings.”

Watch The Source for more coverage of the Bisnow Chicago Health Care Real Estate event.

 

17. August 2015 by Wayne Grohl
Categories: Medical | Tags: , , , | Leave a comment

Google Reorganizes Into Alphabet: What Does This Mean For Its Real Estate?

A Google sign from their campus in Mountain Vi...

A Google sign from their campus in Mountain View, California. (Photo credit: Wikipedia)

This week’s announcement that Google will restructure itself and become one of a portfolio of companies under an umbrella named Alphabet adds even more mystery to the already guarded real estate plans of the technology giant.  Headquartered in Mountain View, CA, Google owns or leases around 10 million square feet of space in locations across the US including 3.8 million sf. in Mountain View alone. Where is Alphabet’s business headed and what kind of space needs are in the cards?

A look at the SEC Form 8K they’ve filed telling stakeholders about the restructuring contains only a few clues.  Their plan to create a holding company called Alphabet appears to accomplish a milestone separation. The core web and advertising services (which would include YouTube, Search, Maps, Android, and others) would remain within Google while the company’s major recent moves into biotech (Calico), internet service provision (Google Fiber), environmental controls (Nest), cutting-edge research and development (Google[X]) will be brought into Alphabet and under the direct financial guidance of founders Larry Page and Sergey Brin. At the same time, Larry and Sergey will hand the CEO role of Google to Sundar Pichai.

I see in this a classic sorting of business lines where the most capital-intensive and most speculative ventures are being pulled closer to the founding executives, making it so that an investment in Alphabet is a more direct investment in the vision of those executives.

While there’s no way to tell what direction Alphabet will take in space acquisition, I believe the loudest signals would come in the form of successes in its projects for driverless cars and national fiber optic rollout.  Viable automotive designs mean industrial real estate in Alphabet’s future, and probably lots of it.  And the more fiber Google can provide, the greater expansion demand for its own already-large data center construction.

 

14. August 2015 by Wayne Grohl
Categories: New Technology | Tags: , , , , , , , , | Leave a comment

Commercial Real Estate News Roundup For August 10, 2015

More women needed in CRE, Orlando retail and office buildings are in great demand, industrial market strong in Kansas City and more.  It’s all here at the Commercial Real Estate Real Estate Roundup for August 10, 2015.

 

General

 

Office

  • Orlando Retail and Office Spiking, GlobeSt.com, August 7, 2015 – According to commercial real estate brokerage firm, Marcus & Millichap job growth will be up in Orlando by 3.9 % this for a total of 44,000 more jobs.
  • 5 Secondary Office Markets to Watch, National Real Estate Investor, August 7, 2015 – Real estate services firm, JLL reports office property sales were up 19.6 % this last year with Q2 2015 being the best quarter since the downturn of 2008.
  • 5 Takeaways from Half-Year Office Sales Performance, National Real Estate Investor, August 3, 2015 – First half of 2015 shows 400% gain in sales in two secondary markets,  Raleigh/Durham, N.C. and St. Louis, MO. according to New York’s RCA a data and analytics company.

 

Industrial

Retail

  • Who’s Opening and Closing Stores?, National Real Estate Investor, August 6, 2015 – Bed, Bath And Beyond looking fluffier as time goes on, while old-line grocery names are drooping.

Multifamily

  • New Trends in MF Rental Patterns, GlobeSt.com, August 4, 2015 – Handling the disruption to decades-old patters of suburban migration is an apartment market near you.

10. August 2015 by Wayne Grohl
Categories: News | Tags: , , , , , , , , | Leave a comment

Commercial Real Estate Roundup For August 3, 2015

Like-kind exchanges get a census, Q2 sales slump, office construction booms in ten markets, an intergovernmental turf war, and what does $12 million get you in Milwaukee? It’s all here at the Commercial Real Estate National News Roundup for August 3, 2015.

 

GENERAL

  • Sales Growth Slow in Second Quarter – GlobeSt.com – July 27, 2015 – Is lower volume due to higher CAP rates, concern over potentially rising interest rates or something else?

OFFICE

 

INDUSTRIAL

 

MULTIFAMILY

 

RETAIL

 

03. August 2015 by Wayne Grohl
Categories: News | Tags: , , , , , | Leave a comment

Retail Expansion Fueling Demand For New Net Lease Assets

Scattered retail expansion in Q2 of this year continued due to low interest rates and persistent consumer demand. Nationally, retailers continue to expand, re-tool their business models and test new markets. This, according to at least one market researcher, has added up to increasing demand for new-construction net lease assets that are in turn commanding premium prices due to the scarcity of these types of opportunities.

Lanie Rea, director of research for Chicago-based Stan Johnson Company, a firm specialized on single-tenant net lease properties,  says in NREI that the Southeast is currently leading the nation in 4 million sq. ft. of net lease new construction in the pipeline. Apart from the West, the remaining regions are holding strong with an roughly 2.5 to 3.5 million sq. ft coming online.

Cap Rates Staying Low

Cap rates in Q2 of 2015 for single-tenant net least retail have remained unchanged at their historically low rate of 6.4 percent, according to research firm The Boulder Group. The boutique investment real estate firm that specializes in single tenant net lease properties reported that the overall supply of net lease assets was up over 20% in Q2 with retail assets leading all real estate sectors at 23 percent.

Reportedly, some of the rapid retail growth is stemming from drugstores, grocery stores, restaurants and discount stores including Dunkin’ Donuts, Walgreens and Dollar General . According to Crittendon Reseach, Inc., a national analysis and forecasting firm also cited aggressive growth in 2015 especially from retailers such as Dick’s Sporting Goods, Aldi, GNC, Advance Auto Parts and others.

According to industry expert Jonathan Hipp, President and CEO of the Calkain Group and author of  “The Little Book of Triple Net Lease Investing”,  the most active states for net lease activity from Q1 of 2015 were 1. California, 2. North Carolina & tied for 3. Florida/Arizona. The figures for Q2 haven’t been published yet, but based on the flurry of retail growth we’re waiting to see where this upward trend leads.

CCIM reports in their July-August 2015 issue of CIRE magazine that many factors including seller hesitation will help to limit the amount of available inventory in the retail net least market.  See here for their synopsis.

 

Related articles

31. July 2015 by Wayne Grohl
Categories: Retail | Tags: , , | Leave a comment

Retail Comeback In Suburban Sprawl?

While retail’s national economic health picture remains mixed with the commercial real estate recovery applied unevenly across the land, recovery stories are appearing that demonstrate what could yet be for the national retail property market as a whole.

In Yorkville, IL fifty miles west of Chicago stands a 600,000 sq. ft. shopping center named Kendall Marketplace. Kendall is a shadow of the original development plan of 800K sq. ft., a plan that ran into the historic buzzsaw of the 2007-2008 financial crisis.  The development opened amid that chaos, trimming expectations for the intervening years.

The project lies at the extreme edge of suburban metro area, a gamble, ultimately, on sprawl. The trends of recent years leading back toward downtown living interest and development haven’t done Kendall any favors.

But seller representative Jones Lang Lasalle has the immediate surrounding area pegged for 13% growth during the next five years. Which in turn has Kendall’s owners, Greenwood Global Inc, doubling down on suburban lifestyle by buying residential zoned land surrounding Kendall.  Brian J. Rogal writes for Globe St.:

“This is the area that was supposed to be the next to develop,” Alex Berman, founder of the Northbrook, IL-based [Greenwood], tells GlobeSt.com. The center’s developers originally planned to have about 800,000 square feet, but “the sales, while decent, were lower than expected and it wasn’t entirely built. Growth is returning and we will be happy to complete the project, although it may take time.”

Kendall Marketplace currently has about 590,000 square feet, which includes space occupied by shadow anchors Super Target, Home Depot and Kohl’s. Berman’s group bought 192,000 square feet of existing retail space anchored by Dick’s Sporting Goods, Marshalls and PetSmart, in addition to several vacant outparcels and adjacent residential land zoned for 192 single-family homes and townhomes. The price was not disclosed.

“We’re not a residential developer,” Berman adds, “but on the other hand, we think that as the property matures, the retail component will benefit the residential portion and the residential will benefit the retail.” Greenwood may eventually build the homes, or bring in a joint venture partner to help, but regardless of the route it takes, as demand for new housing in the area begins to swell again, Berman believes it’s important for the company to control this land.

Read the entire article here.

30. July 2015 by Wayne Grohl
Categories: Retail | Tags: , , , , | Leave a comment

Commercial Real Estate National News Roundup For July 27, 2015

 

Seniors, minorities and millenials push multifamily growth, industrial markets looking very healthy, more companies are moving their headquarters to urban centers, Class B housing on the rise for working class families and more. It’s all here at the Commercial Real Estate National News Roundup for July 27, 2015.

General

  • Economy Watch: 3 Economic Trends Affecting CRE, Commercial Property Executive, July 20, 2015 – Residential and multi-family starts up considerably since last year which should mean the need for more retail and office properties.

Office

  • Suburb-to-City Migration Here to Stay, GlobeSt.com, July 23, 2015 – Companies who want to stay competitive with a younger urban workforce are abandoning their corporate campuses in the sticks for new downtown digs.

Industrial

  • Speed Lands Rare Big Box Industrial, GlobeSt.com, July 21, 2015 – To snag prime space in this tight submarket, lessees must act quickly, negotiate and be able to take occupancy quickly.

Retail

  • How Retail Leasing is Changing, GlobeSt.com, July 21, 2015 – An extremely competitive market means retailers need to be more aggressive, creative and open to more non-prototypical locations and layouts.

Multifamily

 

27. July 2015 by Wayne Grohl
Categories: News | Tags: , , , , | Leave a comment

BOMA Updates Best Practices For Sustainability Through BEPC Contract Model

The Building Owners and Managers Assocation (BOMA) International has just announced the updated version of their groundbreaking BOMA Energy Performance Contracting (BEPC) Model to incorporate new best practices into building maintenance. BEPC was originally created in 2008 by BOMA International in a partnership with the Clinton Climate Initiative (CCI), several major real estate companies and energy service companies (ESCOs).

BEPC Is Updated For Today’s Best Practices

Unfortunately, since the initiative started in 2008 there was not much market emphasis on retro-fitting buildings with new energy-saving technology during the crisis of ’07-’09.  Now that the market has vastly improved and recovery is well underway,  BOMA is updating and sharing their program more broadly with the commercial real estate world.

A standout for best practice from BPEC: investors are well-advised to be proactive in managing their assets so they can make strategic investments to drive rents and occupancy.  Exhaustive management of utility expenses has become a best practice, but many of the older buildings have infrastructure that is approaching or at the end of its useful life, limiting potential to get a handle on all the utility usage information that true best practice calls for.

Gear To The Ground

You can’t manage what you can’t measure, and when it comes to sustainable ant truly controllable energy usage, that means extra equipment. Technology upgrades will be necessary in order for the buildings to remain competitive in today’s market.  Such refits can be large capital projects tending toward the complex, carrying a variety of risks. However, the risk of doing nothing is very real, causing rising maintenance costs, utility costs, increasing complaints from tenants and potential tenants.  Left unaddressed – especially in a competitive environment, these costs will negatively impact the owner’s bottom line sooner than later.

BOMA International Chair-Elect, Kent C. Gibson, BOMA Fellow, president of Capstone Property Management, LC. was quoted in BOMA’s press release, “BOMA International is pleased to provide building owners with a valuable resource that can help them increase asset value, improve operational efficiency and demonstrate to tenants a commitment to sustainability.”  Among these are investigations into technology applications that will help understand what’s really called for to improve building performance and reap the true benefits.

BEPC Designed To Enhance Performance and Efficiency

The BOMA BEPC was designed to manage risk performance, facilitate projects that enhance building’s performance and efficiency and aid in delivering predictable returns on capital projects. BEPC provides a conceptual framework and supporting template documents to help private building operators develop and execute investment-grade retrofits to enhance the value of their properties. BEPC also provides transparency on performance expectations, pricing and a clear guidelines for managing their retrofit project so that the owners meet their goals and finish their projects within their desired timeline.

Since its beginning, BEPC has facilitated projects in more than twenty cities across five continents. The BEPC Model works with a variety of funding models including ESCO or third party, Property Assessed Clean Energy (PACE) programs and self-financing.

Read all about the BEPC Model from BOMA here.

 

24. July 2015 by Wayne Grohl
Categories: Green Building | Tags: , , , | Leave a comment

← Older posts