Frederik Heller, our manager of Library and Archives here at NAR is an invaluable resource for answers about just about every historical aspect of the real estate business. I’m happy to say Mr. Heller has contributed a fascinating article about the REALTORS® Land Institute and I’ll be posting it here at The Source in a mini-series. Here’s the first installment of “70 Years Of The REALTORS® Land Institute — Plus 24 More” – WG
The REALTORS® Land Institute (RLI) is celebrating 70 years of serving and representing the country’s land professionals. In January 1944, the National Association of REALTORS®’ Board of Directors met in Chicago and approved the formation of an Agricultural Institute, to meet the “growing demand for a strong national association of all farm brokers.” By June, the Institute had already established its first two chapters (Michigan and Iowa), changed its name to the Institute of Farm Brokers, launched its newsletter service, and was busy recruiting members.
But although RLI as a national organization got its start in 1944, their story actually began many years earlier. And that story doesn’t just tell how RLI came into being — RLI’s story also tells how the real estate industry came to look the way it does today. Land professionals and RLI played a vital role in shaping the real estate landscape and in the development of the REALTOR® organization.
To find out how the idea that evolved into RLI originated, we have to set the time machine back a few more decades. It’s important to understand first that when the National Association of REALTORS® was founded in 1908, real estate was a completely different world than the one you enjoy now. There was no 30-year mortgage, no real estate license laws, no Code of Ethics, the term REALTOR® didn’t exist, and even written contracts and multiple listing were relatively new concepts.
The job of a real estate broker was also much more all-encompassing than it is today. In 1908, real estate professionals didn’t refer to themselves as residential brokers, or commercial property specialists, or farm brokers. A real estate broker’s job often included work with all types of property, along with appraisals, mortgage finance, zoning, subdivision development, and other duties that we consider separate professions today. Property specialties and niche marketing were not recognized concepts at that time. If your job was concerned with any aspect of the transfer of real property from one owner to another, you were a real estate broker. The National Association of REALTORS® was organized in 1908 to give a unified voice to the general real estate broker, no matter what aspect of real estate they dealt in.
Right after World War I, however, that generalized notion of the real estate broker began to change, and it was farm and land professionals who first brought about that change. The majority of NAR’s first members came from urban and suburban areas, but it was the brokers in rural areas who first set themselves apart as a specialized branch of real estate practice. They came to understand that their businesses and clients were different from those of real estate brokers in the cities. They dealt primarily with farm and ranch land, and their clients were mostly farmers and others who lived and worked on the land.
Watch for the next installment of Fred Heller’s “70 Years Of The REALTORS® Land Institute — Plus 24 More” right here at The Source
Pundits parse tea leaves, Baltimore Class A industrial properties draw a crowd, AirBnB keeps up the disruption, and farmland tops the list of good investments. All this and more in this week’s commercial real estate news roundup.
- 7 bold commercial real estate predictions, CNBC, March 24, 2014 – NAR favorite Peter Linneman and a host of big names in CRE practice and research look ahead at 2039 and see a radically altered commercial property landscape. This one’s a must-read.
- Canadian real estate’s next worry: commercial property, Globe&Mail, March 24, 2014 – North of the border, the industry worries about peaking.
- Ten hidden costs of commercial real estate – part 1, NapaValley Register, March 17, 2014 – Buried in any commercial property purchase can be nasty costs. Sometimes, literally buried.
- The Optimal Office, The Atlantic, March 19, 2014 – Another look at the noise, privacy and architectural issues of the popular “open office” design.
- Commercial real estate making strides despite office vacancies, Sun Sentinal, March 19, 2014 – South Florida’s vacancy rates remain stiff, even as rents rise. Did somebody call off the law of supply and demand?
- 7-Eleven looking at moving offices out of downtown Dallas, Dallas Morning News, March 20, 2014 – Convenience store HQ not finding downtown Dallas very convenient, eyes suburbs.
- Empty space, full wallet for Loop office owners? Crains Chicago Business, March 24, 2014 – Is the difference in sale value between a 90% leased and a 65% leased office building not as stark as it once was?
- Houston’s industrial real estate market diversifies to serve more consumers, Houston Business Journal, March 19, 2014 – Houston’s love affair with the energy industry means it’s news when commercial real estate reaches out for other users.
- USAA buys 916k SF industrial portfolio in California’s Central Valley, Commercial Property Executive, March 24, 2014 – A central CA spec logistics project has a happy ending.
- Large Class A industrial vacancies have become nearly nonexistent in Greater Baltimore, Baltimore Business Journal, March 24, 2014 – If your Baltimore industrial needs exceed 100K sq. ft, you may have to head back to the drawing board.
- Cushman & Wakefield flies drones to capture real estate video, South Florida Business Journal, March 19, 2014 – Unmanned aerial vehicles are cheap, take plenty of video, and are ideal for showing many warehouses.
- Staples closures will leave a dent, NREI, March 18, 2014 – When you close 225 large stores across the country, you make a hole. How deep and for how long?
- Retail-residential development planned on Market St., Philadelphia Inquirer, March 20, 2014 – Philly’s central district eyes a spiffing up.
- 3 retail trends Orlando Fashion Square should cash in on, Orlando Business Journal, March 24, 2014 – What makes a hotel anchor success? Developers say wi-fi and entertainment restaurants.
- Sonoma County is tops in multifamily property, North Bay Business Journal, March 24, 2014 – Flat prices and few construction starts in wine country multifamily.
- Airbnb sublets in SF land some renters in the doghouse, San Francisco Chronicle, March 18, 2014 – Subletting is a violation of many apartment leases. Does AirBnB’s model acknowledge this? Landlords certainly do.
- Will Boston property market absorb new luxury rental apartments? Boston Globe, March 21, 2014 – Meanwhile in Boston, luxury rentals come online to high demand.
- The best long-term real estate investment: farmland, CNBC, March 24, 2014 – CNBC is bullish on a lot of things, and now CNBC is bullish on dirt.
- Chicago company purchases Colony Cove land for $35.8 million, Bradenton Herald, March 22, 2014 – Mobile home operator has visions of new lots around Bradenton.
- Agland values up 5 percent statewide in last year, Sioux City Journal, March 23, 2014 – Iowa farmland in 2013 rose 5%
When H. Michael Schwartz, CEO of Strategic Storage Holdings, spoke in San Diego at the recent REISA Spring Symposium, the head of one of the top ten operators of self-storage said something interesting about the state of the marketplace in self-storage.
The role of self-storage with regard to multifamily has long been assumed – apartment dwellers on the whole occupy less space individually than homeowners yet display similar consumption patterns leading to a demand for space for their stuff.
But what’s interesting about self-storage as a sector today is the financing for such projects is not as institutionally available as with other sectors such as health care property, retail and office. Few publicly traded real estate investment trusts (REITs) exist for self-storage while other sectors are well-represented by the dividend-throwing securities offerings.
Meanwhile, the self-storage market is “drafting off the success of multifamily,” according to H. Michael Schwartz of Strategic Storage Holdings. “We’ve been buying self-storage every year since 2005 and have seen traditional cap-rate compression, but also development opportunities. The lease-up opportunities from 2008-2011 are gone. We are now in a five-year phase of development.”
Schwartz adds that his firm is looking for retail locations in which to develop self-storage properties, and it looks at a 3- to 5-mile band to determine who its competition is. “We make sure we understand the market—what are people looking for in each market? What size unit? What features?”
The panelists also said the time is right for direct investing over REIT investing. “We’re not subject to the vagaries of the market the way a publicly traded vehicle would be,” said Lehew.
Schwartz added, “Public self-storage REITs are not developing, and this creates a nice alternative for investors in self-storage.”
For the $34 billion sector of real estate, there are only four publicly-traded REITs. The four include Public Storage (PSA), CubeSmart (CUBE), Extra Space (EXR), and Sovran Self Storage (SSS).
The path that capital takes to get to a self-storage development is a short one these days — and is mainly routed around Wall Street.
Photo credit: Wikipedia
- Commercial real estate ‘really strong’ in metro Tulsa, TulsaWorld, March 13, 2014 – The 46th largest US city and Oklahoma’s second largest is enjoying attention of new retail brands and developments.
- Developers talk future of downtown at real estate event, Dayton Business Journal, March 11, 2014 – NAIOP event draws builders turning eyes to Dayton’s downtown business district.
- Health industry bright spot in lagging commercial real estate sector, News-Press, March 15, 2014 - As it turns out, southwest Florida has lots of potential for medical office space development. Linkage between health care demand and Florida’s older population: not exactly shocking.
- Shrinking law firms leave gap in DC real estate market, WashingtonPost, March 11, 2014 – Law firms in the nation’s capital are losing square footage. Article blames economic downturn, but if you’re like me, you know a lot of mainline firm attorneys who telecommute.
- Synergy Investors selling Seaport office property, Boston Business Journal, March 17, 2014 – Paying too much for office buildings leads to some fancy footwork.
- Office towers better than bonds luring global investors, BusinessWeek, March 11, 2014 – Global wealthy starting to prefer office rents over coupon payments for their cash flow.
- SK Foods Group picks Groveport warehouse for processing center, Columbus Business Journal, March 11, 2014 – Half a million square feet, 250 jobs newly committed to keeping the midwest stocked with edibles.
- Randall Park to be transformed into industrial park by developer Lichter, Crain’s Cleveland, March 17, 2014 – When is a shopping center an industrial park? When there’s a buck in it.
- New York’s hot property: retail condos, WSJ, March 16, 2014 – On the island of Manhattan, where average asking rents are in the thousands per square foot, the retail condominium is getting its due.
- Bargain retail lifts US shopping centers as big names stumble, Reuters, March 16, 2014 – There’s still money to be made in saving money, says Reuters’ Rick Wilking.
- Google hunts for space in New York’s Soho for first retail store, Business of Fashion, March 13, 2014 – There isn’t much under the sun in the retail world that can make Apple shake in its Birkenstocks, but a competing retail brand from Google is near the top of the list.
- Wash U’s real-estate czar focuses on partnerships, StLouisToday, March 14, 2014 – The monumental inflation of the secondary education sector is driving plenty of real estate plays on campus.
- Cityscape has multifamily projects underway in 3 states, IndyStar, March 10, 2014 – Indianapolis-based apartment builder gets busier than usual.
- Airbnb is raising the ire of WeHo apartment managers and tenants, Wehoville, March 14, 2014 – In West Hollywood, the rise of AirBnB’s room-rental listing is causing some to cry foul over zoning.
- Developers scramble for bare land to build houses, The Business Journal, March 17, 2014 – Central California’s San Joaquin Valley has absorbed all the false housing starts left fallow by the 2007 bust, says local Business Journal
- Springfield school district sues over land deal, News-Leader, March 17, 2014 – Springfield, MO land deal goes south.
- Land exchange sparks opposition, Great Falls Tribune, March 17, 2014 – Montana’s Big Sky country is host to a Texas-sized land swap. Or is it?
It’s hard to find a commercial property lease or purchase finance calculation that doesn’t touch the LIBOR interest rate in some way. The benchmark interest rate is used so commonly, the total transactions subject to it is estimated in the trillions of dollars.
As I’ve written before, LIBOR lurks in so many corners of commercial real estate, it’s big news when the banks responsible for the rate’s publishing are suspected of rigging the number.
And it’s even bigger news when the US government’s biggest insurer of bank deposits — the FDIC — takes those banks where the US Justice Department won’t: to court. Which is exactly what happened this afternoon:
The FDIC, acting as receiver for 38 failed banks including Washington Mutual Bank, IndyMac Bank FSB and Colonial Bank, claimed that institutions sitting on the U.S. dollar Libor panel “fraudulently and collusively suppressed” the U.S. Libor rate. Also named in the suit, filed today in Manhattan federal court, is the British Bankers Association, an industry group.
The failed banks “reasonably expected that accurate representations of competitive market forces, and not fraudulent conduct or collusion,” would determine the benchmark, the FDIC said in its complaint.
Regulators around the world have been probing whether firms colluded to manipulate interest-rate benchmarks including Libor, which affects more than $300 trillion of securities worldwide. Financial institutions have paid about $6 billion so far to resolve criminal and civil claims in the U.S. and Europe that they manipulated benchmark interest rates.
The cost for global investment banks could climb to $46 billion, analysts at KBW, a unit of Stifel Financial Corp., said in a report last year. JPMorgan Chase & Co. and HSBC Holdings Plc may face a European Union complaint as soon as next month from the bloc’s antitrust chief.
Better late than never — and with TBTF banking’s massive influence over US and international law, “never” was certainly in the cards.
Once again, it’s time to round up the major sectors of commercial real estate for the latest news. Tales of recovery, reversals and reinvestment abound:
- Real estate investors rediscover risk, Forbes, March 5, 2014 – International wealth is once again willing to gamble a bit for greater real estate returns, fueling recovery, says report.
- Providence reclaims a ‘Link’ to its past, WSJ, March 4, 2014 – Reversing the work done by bulldozers six decades ago, Rhode Island’s capital pieces its neighborhoods back together.
- Beige book bullish commercial real estate, Futures, March 6, 2014 - The Fed’s six-times-annually published compendium of anecdotes shows a sunny national commercial picture.
- Broker’s quarterly report a touchstone for local commercial market, Bradenton Herald, March 5, 2014 – Coldwell in Sarasota’s wonkiest commercial director runs the local market numbers every quarter, turning up increasingly excellent news.
- New DC office building proposed for International Finance Corp. expansion, Washington Business Journal, March 6, 2014 – A new office development in DC will bring the International Finance Corporation to K Street.
- Crossroads, other planned office space adds up, but when will it be filled up?, Omaha.com, March 9, 2014 - A bond issue for planned office developments gets touchy in the heartland.
- New EMP office building is Seattle’s first “salmon safe” building, Puget Sound Business Journal, March 7, 2014 – A new building, LEED-certified and easy on water consumption, earns Portland nonprofit’s certification as safe to salmon, meaning the building fits into the environment like keys into lox. (Sorry.)
- Industrial real estate association sees positive signs in 2014, March 4, 2014 – User sales and acquisitions are back, while distressed assets are on the decline, say midwest industrial brokers.
- Hines will flip huge Lenexa industrial package, Kansas City Business Journal, March 10, 2014 – Also seeing a resurgence in the industrial sector: the “f” word: flipping.
- Hong Kong to London, retail rents are up around the world, Real Estate Weekly, March 6, 2014 – The most expensive international markets for retail rents are only getting pricier.
- Everything must go: there’s a flood of store closings, CNNMoney, March 7, 2014 – Meanwhile, Staples, Sears, Radio Shack, JCPenney et al. are struggling for survival…
- Eastpoint Mall sold to Baltimore firm, Baltimore Sun, March 6, 2014 – …and malls anchored with their stores are facing an uncertain future.
- MetLife to boost apartment investments in US cities, InvestorsBusinessDaily, March 6, 2014 – Insurance giant boosts buys in multifamily.
- Outlook for Apartment REITs in 2014, MHNonline, March 6, 2014 – A nice explanation of the structure of REITs precedes good observations about multifamily REIT prospects: falling unemployment drives apartment absorption, mainly.
- Lakeland firm Coldwell-Saunders brokers big deal, theLedger, March 6, 2014 – Learn the details of a recent half-billion Florida land deal…
- Mormon church subsidiaries now own 2% of Florida with recent land buy, Orlando Business Journal, March 7, 2014 …and then learn about the buyer in that Florida deal: the Mormon church.
With the recent announcements by Sears, Staples and Radio Shack of huge numbers of national closures of retail stores, it’s time to look at national retail numbers to put the closures in context. Are we at the peak or at the beginning of a major correction in the retail space market?
Every five years, the US Census Bureau completes the Economic Census, a series of business reports that detail the US economy at a level of depth that makes researchers giddy for years. You can find the US Economic Census publication schedule here and see that we are right on the cusp of seeing fresh numbers to replace the 2007 data set.
Until the first of the retail sector reports appear in July, we have to make do with numbers from before the economic crisis of 2008. While there are plenty of data, one thing that jumps out at me is the square feet per capita. In a word, it was huge in 2007.
As reported by Barbara Farfan in retailindustry.about.com:
Many experts believe that 2014 retail store closings are still due in large part to the overgrowth of the U.S. retail industry even before the U.S. Great Recession occurred. According to the 2007 Economic Census, there were 1,122,703 retail establishments in the United States and a total of 14.2 billion square feet of retail space. That means that there is approximately 46.6 square feet of retail space per capita in the U.S., compared to two square feet per capita in India, 1.5 square feet per capita inMexico, 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia.
With the explosive growth of Internet and mobile shopping, the oversaturation of physical retail locations operated by the largest U.S. retail chains becomes even more obvious. Downsizing the size of physical retail stores and the number of retail stores is a significant trend in U.S. retailing and it is a trend that will undoubtedly continue throughout 2014 and beyond.
U.S. consumers are, in a sense, in charge of physical store closings. With their online and mobile shopping behaviors U.S. consumers are casting their vote for which retail store experiences have value and which ones can be easily replaced by their own Internet and mobile counterparts. In response to these strong consumer preference shifts, many large, medium, and small retail chains will be closing physical retail store locations in 2014 because they can’t justify the dwindling sales per square footage results they produce. The era of if-you-build-it-they-will-come retailing seems to have ended for the U.S. retail industry.
With per capita numbers from the last decade looking that extreme, I can barely wait for what the 2014 Economic Census shows – sure to reflect much decline across the Great Recession, but by how much? And how much is yet to come? Stay tuned.
While I’m not sure if this is better imagined as news about a national urbanization trend or news about Walmart’s relentless expansion into new urban territories, the fact remains that Washington, DC’s two newest Walmart stores are a little different from what we’re used to. Rather than massive stores anchoring shopping centers, they’re sub 100k sq. ft. layouts serving as anchors for new apartment buildings.
The discount giant’s two newest DC stores bring an announced 600 jobs total to the city, and one building at 77 H Street, sporting 303 apartments has already been marketed and sold to Clarion Partners for an undisclosed figure.
Take a look at a video of the interior of the 77 H Street store and take in the unusual sight of Walmart’s unmistakable interiors and branding at the reduced scale of an urban anchor store.
The stores are Walmart’s first in Washington DC. The Walmart at First and H street runs 76,000 sq. ft and sports two floors of parking below-grade Walmart will officially open its first DC stores in two weeks. The locations on Georgia Avenue, and First and H Street NW will open their doors at 8am on December 4.
The 76,000 square-foot Walmart at 77 H Street NW (pictured above) will anchor a 303-unit apartment project. This location will have two floors of below-grade parking.
(Photo Credit: UrbanTurf DC)
The challenge of urban planning is eternal, but its vocabulary and techniques evolve. The latest wrinkle in the field is the concept of placemaking, a friendly word encompassing the dirty details and hard work of turning around underused and uninviting features of a community. Vacant lots, dilapidated sidewalks, stretches of vacant storefronts, poorly maintained streets all serve to drive down community morale, lower property values and to repel imagination and the investment that follows it. Fixing these problems is not easy, as government and community and landowners and real estate pros all need to get on the same page.
Placemaking addresses the fact that markets alone can’t always combat blight and that planning and community direction of some kind must co-exist with purely commercial approaches in order to successfully turn blighted areas into inviting, usable, accessible and safe places.
REALTORS® On Point (As Usual)
Naturally, REALTORS® and their associations are in ideal positions within their communities to see up close what areas need work and to have an advanced sense of what is needed to revitalize an area. Even though that’s a significant head start, the challenges remain: how exactly does need translate into action steps?
Happily, NAR has some great answers. Check out NAR’s recently published (and excellent) 38-page guide to placemaking (available for free download here).
Packed with examples from around the country, “Placemaking for REALTOR® Associations” will open your eyes to credible, proven solutions to thorny problems of blight and accessibility. Unsurprisingly, we find that when REALTOR® associations take the lead in their community efforts against dilapidation, it greatly increases the chances of success.
Project For Public Spaces
Foundational to the approaches NAR compiles in this guide is the work of the Project for Public Spaces, a venerable nonprofit dedicated to neighborhood revitalization success since 1975. Check out a 2008 NYT article on PPS here.
REALTORS® help build communities. As a commercial practitioner, find out how NAR’s Community Outreach Programs can help you make a difference in 2014. Visit the Community Outreach Facebook page or bit.ly/NAROutreach