Global capital loves real estate. Attracted by its stability, performance and close indication of economic health, the wealth of the world sees real estate as a haven for growth. Opportunities abound for anyone looking out for them.
Making the transition from doing business in a single country to going international is not without its challenges, but as with any specialty, there are proven ways to get there. As always, networking and education top that list of ways. So, heads up: in October, Los Angeles will play host to a global real estate event packed full of both.
Destination Los Angeles is a special conference focused exclusively on working with global clients. Located just a few miles from downtown L.A. on October 2-3:
Destination L.A. will include:
- An Asia/Pacific and International Real Estate CIPS elective course.
- A networking reception at Noor, one of Pasadena’s coolest social venues.
- A full day of sessions on Oct. 3 featuring experts who will share information about how to grow global business.
The current lineup of speakers includes:
- Jennifer Bodetto, the “Hollywood Feng Shui Master,” who has been featured on HGTV’s “Selling LA” show and authored books and articles on this ancient science of design principles.
- Carmela Ma, CIPS, an international real estate practitioner since the 1970s, is a longtime CIPS instructor who has done business in dozens of countries and spoken around the world on a variety of business topics.
- Ronald Wong, a political and communications strategist with more than 30 years of experience who has worked for Fortune 500 corporations and served in President Clinton’s Administration. Wong is an expert in targeted outreach, marketing and communications.
Destination LA takes place at the Pasadena Convention Center, nestled in between the city’s Old Pasadena and Playhouse Districts and located just a few miles from downtown Los Angeles. The Pasadena Civic Auditorium, which hosted the Emmy Awards for two decades, sits adjacent to the Destination LA venue.
Access to all events will be $175, though registration for the CIPS course, the networking reception and one-day global event can be purchased a la carte. To learn more about or to register for this event, visit bit.ly/destinationLA or contact Jamie Hu at 626/446-2115 or Jamie@TheAAR.com.
In the latest Commercial Connections Podcast: Alex Ruggeri interviews Leil Koch, Chair of the 2014 NAR Commercial Committee and President of Equity One Real Estate. Leil is an international property specialist and former president of the Hawaiian Association and Maui Board of REALTORS.
When you’re willing to give your time and expertise to serve on local professional organizations, it’s a win for your local association and a win for your own career. Networking only adds new relationships, and most new business comes from new relationships.
Commercial real estate professionals should hear that leasing to the federal government just got a lot easier.
The General Services Administration’s mission is to manage and support the space requirements and other basic functions of the “alphabet soup” of federal government agencies. Of course that includes lots of Washington, DC real estate, but a recent expansion of a technology-supported property and space acquisition program has added Los Angeles, Seattle, Boston, Philadelphia, Denver and Dallas to the
It’s a savings to taxpayers to streamline the leasing process, and that’s what GSA has undertaken with its expanded Automated Advanced Acquisition Program (AAAP) program. As the GSA says, AAAP will
[...] [make] it easier than ever before for realtors, brokers, lessors, property managers, building owners and developers to electronically offer building space for lease to the federal government. The goal is to drive savings to taxpayers by improving federal leasing efficiency in the real estate market. GSA’s Automated Advanced Acquisition Program (AAAP), which originally launched in 1991 in the Washington, D.C. area, is now available in LA, Seattle, Boston, Philadelphia, Denver, and Dallas.
Here’s How It Works
Registered commercial real estate participants can submit and update offers to lease space to the federal government within specified time frames, in response to a GSA Request for Lease Proposal. The submission process is web-based, which as you can guess leads to
- a more efficient lease process
- cheaper acquisition of real property lease assets
- improved agency satisfaction
Keep in mind, AAAP is one of several procurement platforms GSA currently uses to lease office space in Washington, D.C., Atlanta, Chicago, New York, and Kansas City.
Ah, the political season. The time when persons with sometimes monumentally odd ideas about cause and effect stand on a stump and broadcast these ideas loudly and clearly.
Well, loudly, anyway.
Meet Ben Carson. A retired surgeon from Detroit, Carson’s political star is rising thanks to a strong showing in a recent straw poll. Riding the wave of recent notoriety brought him to a radio appearance, where an interviewer asked, in the context of Carson’s self-declared religious faith, if he had ever been “angry with God”.
The only other question I was given time to pose came [...] when I asked Carson, who self-identifies as deeply religious, if he’s ever doubted or been angry with God.
Yes, indeed, he indicated, recounting an incident in which the Lord apparently subjected him to Job-like tortures over a problem involving residential real estate. After buying a new house, he just couldn’t unload the old one. “My house was on the market for five years. And I said, ‘I pay my tithes. I am faithful. I try to help people. So why is this happening to me?’ ” Carson told me.
“And [then] I found out about the ‘1031 Exchange’ [named for a tax code provision] where if you sell a piece of property and you make a very, very large profit on it, you don’t have to pay huge taxes on it if you can roll it over into another property of higher value.”
Carson’s story went on in this disjointed fashion, and didn’t seem particularly illuminating, except to suggest that it definitely wasn’t an ordinary crisis of faith and the Almighty must be a savvy adviser on the Internal Revenue Code.
So Where Did 1031 Exchanges Come From?
While it’s far from clear if Carson believes 1031 exchanges to be the work of a higher power than Congress, his answer provides food for thought. Given that I’ve written about 1031 so many times, I thought I might contribute some clarity on the point.
1031 exchanges first appeared as part of the Revenue Act of 1921, passed as a package of federal tax reductions by a Republican-majority Congress on November 23 of that year. Lauded by Treasury Secretary Andrew Mellon, the Act repealed a tax on wartime excess profits, reduced the top marginal rate on individuals from 73 to 58 percent and instituted a new and more easily avoided corporate tax.
Specifically for Dr. Carson’s benefit: everything Congress votes on is in the public record. And a quick look at that 1921 Senate vote (found here) lists many luminaries, including future President William McKinley (voted aye), Wisconsin firebrand Bob LaFollette (nay), and Delaware’s quasi-aristocratic Thomas du Pont (no vote).
The almighty, however, is not listed in the roll call.
(Photo credit: ttarasiuk)
Are you working toward the prestigious Accredited Land Consultant (ALC) designation? There’s no better time than this month to come to Chicago to pick up all three required courses and all three electives. Additionally, three courses on the track for ALCE Advanced designation are on offer.
The dates are set for June 22-30. Check out an ALC information page on ALC Education Week here.
Once upon a time, the term “office drone” made us conjure up images of the guy from three cubicles over who keeps handing in his TPS reports late.
But because we’re now living in the era of unmanned aerial vehicles — and because we’ve got office square footage to lease — the entire concept of “office drone” has gotten a serious makeover.
Today’s clip is the in-flight video capture of a radio-controlled vehicle’s tour of a large office space in Orlando. The “drone” vehicle: the AR Quadricopter. The video tour: an excellent overview of a raw space, its lighting and views. Usable as part of a sales package in its unedited video form (or even more effectively with time-compression video editing), this kind of fly-through video is packed with descriptive power.
The commercial real estate crowdfunding space gets…crowded, prime office space in Chicago fetches prices high enough that some are using the dreaded “b”-word, and speaking of high, what’s above your retail ceiling? It’s all here in today’s commercial real estate news roundup.
- Studley real estate brokerage merges with London-based giant Savills, LA Times, June 2, 2014 – The merger and acquisition mania that comes with a more healthy economy is touching commercial real estate.
- Fundrise, a crowdfunding website, raises $31 million, NYT, May 27, 2014 – Another entry into the CRE crowdfunding sector arrives to compete with Realty Mogul and others. (Pictured company team apparently includes a very intelligent dog.)
- How data analytics is transforming the real estate industry, CIO, May 28, 2014 – A neat interview with Colliers CEO Doug Frye where he describes a surprising, consultative, data-centered approach to client service.
- How Ericsson’s big Santa Clara lease could revive region’s commercial real estate market, San Jose Business Journal, May 29, 2014 - Electronics giant’s new digs promise to affect the wider space market.
- Commercial real estate: the right environment boosts morale, attracts new hires, Vancouver Sun, May 28, 2014 – Take a glimpse inside a tech firm’s space challenges to get a sense of how this ever-growing office leasing subsector sees its needs.
- Sky-high office tower prices don’t signal a bubble, Crain’s Chicago Business, June, 2, 2014 – $652/sq. ft. in Chicago’s River North is a number that’s dropping jaws everywhere, but Crain’s is here to soothe any bubble fears.
- Deal of the Week: Katy industrial park, Houston Chronicle, May 31, 2014 -
- Joint venture buys large Cleveland industrial portfolio, Commercial Property Executive, May 30, 2014
- Converting commercial properties into homes, WSJ, May 29, 2014 – When the words “quirks” and “vision” appear in a real estate news piece, you can bet someone’s rehabbing a former industrial space for residential.
- Surging US industrial property demand outstrips supply, sending vacancies falling, rents rising, DC Velocity, May 29, 2014 – Favorable national market news, Part XXVII: CBRE and Jones Lang agree: the national picture for industrial is monumentally sunny.
- Brace for more big brands: Austin’s retail market is ‘blistering hot’, Austin Business Journal, May 29, 2014 – Texas’s music capital is attracting plenty of the other kind of capital – retail sales.
- Blight or boom? Rooftops essential to retail development, The Sentinel, June 1, 2014 – Retail customer experiences need not be defined by whatever goes on under the ceiling. There’s also the roof.
- Commercial real estate outlook: Braves move just one factor in Cobb’s retail, office market, Marietta Daily Journal, June 2, 2014 – The red-hot Atlanta Braves aren’t the only story in Atlanta.
Are you a commercial practitioner in Indiana? Don’t miss the 2014 Indiana Commercial Real Estate Conference June 19th-20th and earn up to 8 CEU’s in one day!
Click on the flyer below for more information and to register.
The news in the commercial mortgage-backed securities (CMBS) market is positive year-over-year for the five major property sectors.
As suggested by earlier announcements by credit rating agencies including Fitch, distressed commercial real estate assets are receiving the benefit of special servicing, often by third parties, that are lending stabilization to the CMBS market.
Fitch Ratings-New York-01 May 2014: Delinquencies are likely to continue to recede and special servicer resolutions of distressed assets are likely to continue, supporting the U.S. CMBS market’s stabilization, Fitch Ratings says. We expect rating upgrades to continue to exceed downgrades for the near term. Most downgrades will be in below investment-grade classes.
In first-quarter 2014, Fitch upgraded 87 classes. For the same period last year, only eight classes were upgraded, with 58 classes upgraded for all of 2013. Downgrades shrunk to 119 classes compared with 333 for first-quarter 2013 and 864 classes total in 2013.
According to Globe St.’s Paul Lubny, nearly 12.5% of industrial CMBS loans were delinquent one year ago.
The number today? 8.94%.
May saw $1.3 billion in new delinquencies, offset by $1 billion in resolutions and $800 million in cured loans. Accordingly, the total balance of delinquent loans fell to $33.6 billion from $34.1 billion in April.
“The CMBS market continues to just plug along nicely,” says Manus Clancy, senior managing director at Trepp. “In each of the past two years, the market has seen springtime swoons that led to noticeable spread widening;” however, at present new-issue spreads “are near their 2014 tights, the new-issue dance card is full for the next few months and the resolution of defaulted legacy loans continue to push the delinquency rate lower.” However, Bank of America Merrill Lynch earlier this month cut its full-year forecast for new issues.
8.94% Is Good News — For Certain Values Of “Good”
It’s no doubt been a good year for structured credit and commercial real estate, one of unambiguous recovery. Will it hold up? Time will tell. But one thing we can already tell is that celebrating a delinquency rate in the 8% range is a concept that was utterly alien to the earlier adopters of CMBS as a financial innovation.
To see what I mean, check out this 2002 report from the Commercial Mortgage Securities Association, written by then-Morgan Stanley associate Marielle Jan de Beur.
Seems like the common rate of CMBS delinquencies back then…was closer to 1%.
The industry’s got a lot more recovering to do.
A big box’s real estate head retires, a venerable brokerage firm experiments with Google-ifying its own office layout, Blackstone still loves being a landlord, and lower Manhattan’s retail scene evolves. It’s all here in the Commercial Real Estate News Roundup for May 29, 2014.
- Brokers see benefit of auction process, NREI, May 20, 2014 – The online auctioning of commercial real estate doesn’t mean the broker’s role is irrelevant — far from it.
- Remaking the commercial real estate office, Sacramento Bee, May 27, 2014 – CBRE tests out a whole new millennial workplace layout philosophy.
- Maine’s real estate market expected to keep growing, Portland Press Herald, May 21, 2014 – Down east, the commercial real estate market is anything but down.
- Office rents cut at One World Trade, WSJ, May 27, 2014 – One WTC faces rent cuts while Larry Silverstein wants to get going on building the additional towers.
- Miami-Dade office vacancies fall, rents rise, Miami Herald, May 20, 2014 – Vacancies and unemployment are falling in Miami, and the seesaw means rents are on the rise.
- Retail’s online revolution boosting industrial real estate, Cincinnati Enquirer, May 24, 2014 – Withonline sales predicted to hit nearly $300 billion this year, logistics and warehousing are making hot markets out of out-of-the-way regions.
- Anne Arundel warehouse occupied by Under Armour sells for $26.5 million, Baltimore Sun, May 23, 2014 – Meanwhile in Baltimore, a $27M warehouse deal goes down.
- San Leandro warehouse deal reflects industrial market frenzy, San Francisco Business Journal, May 22, 2014 – Proving the old maxim that if you need space for people, space for stuff follows, San Francisco isn’t locked out of the industrial property groundswell.
- Target real estate chief to retire, Star-Tribune, May 21, 2014 – The executive shakeup at Target continues as John Griffith heads for the door.
- Retail real estate roars back, Minneapolis Star-Tribune, May 22, 2014 – With regional malls leading the way, Minnesota’s commercial property fortunes are looking bright.
- Lower Manhattan will undergo a retail revival, NYT, May 20, 2014 – Shopping below Chambers street is settling into a fully 21st-century pattern of growth – but will brokerage turf wars get in the way?
- As rents go sky-high, so do multifamily sales prices, SFGate, May 23, 2014 – Don’t look at the median apartment rent figure for San Francisco until you’ve fully swallowed your coffee.
- Cities need to adapt as senior citizens’ housing needs change, Washington Post, May 23, 2014 – Where does zoning fit into the greying of the United States?
- Blackstone hunts for apartments in latest rental foray, BusinessWeek, May 22, 2014 – The largest single landlord of single-family houses makes an(other) apartment building play.