Content Partner

NAI Global: Industrial Demand Rooted in Long-Term Changes to Distribution, Manufacturing

by Sarah Daniels May 12, 2021

Shifting behaviors and expectations for consumers, manufacturers and distributors have made industrial space central to the commercial real estate landscape. “This is an asset class that for 25 years of my 39 years in the commercial real estate business was a boring, middle-of-the-road class. But this steady investment has just exploded,” says Jay Olshonsky, president and CEO of NAI Global. Much of the most recent change has been driven by the particulars of the COVID-19 pandemic. Delivery became a way of life for those socially distancing, creating an instant need for more distribution and warehousing centers. Olshonsky explains that the behavioral changes starting in March of 2020 accelerated trends (online shopping, delivery/pickup services and working from home) that might otherwise have taken five or more years to come to fruition. Olshonsky explains that there are still hurdles for this ascendant product type to overcome, but the changes we’ve seen over the last year will remain. Industrial Not a Bubble “Industrial is here to stay,” says Olshonsky. “COVID accelerated trends that already existed, but those trends were already in motion. We’re seeing some changes that are fundamental.” The need for delivery and warehouses is fed by new expectations: “Ecommerce is the …

May 12, 2021

Bohler Due Diligence Development Redevelopment

Bohler Content Partner Development Features Midwest

Six Factors to Consider During Due Diligence for Land Development or Redevelopment

by Sarah Daniels May 4, 2021

Whether you are buying undeveloped land or assessing a property for potential redevelopment, thorough due diligence is critical to good decision-making. With the speed at which today’s commercial real estate market operates, you may face time constraints and you definitely want to limit expenditures related to due diligence — but you don’t want to cut corners. An incomplete understanding of the challenges at the site will limit your ability to scope out the project and could impact your ability to keep it on schedule and within budget. Even if you need to complete due diligence on an expedited timeline, make sure you check all the boxes. Here are six key items that should be on your checklist to ensure you limit unexpected costs and delays. 1. Geotechnical and Environmental Investigations Depending on your project scope, some form of a geotechnical investigation makes sense. Prior to design, it’s important to find out if soil constraints pose risks or design challenges. Geotechnical due diligence will disclose information about the physical properties of the underlying soil including rock, historic fill, unsuitable organic layers, seasonal groundwater and/or buried debris. Environmental due diligence will provide information about existing site challenges including wetlands, floodplains, brownfields, archeological factors …

May 4, 2021

Content Partner Features Leasing Activity Midwest Multifamily Office Retail Southeast Texas Walker & Dunlop Western

Walker & Dunlop: U.S. Economy Displays Long-Term Signals for Recovery, Growth

by Sarah Daniels April 27, 2021

Back to Normal? The U.S. economy has improved significantly since April 2020, the peak of the pandemic-induced recession. The national unemployment rate stood at 6.0 percent in March of this year, well below the peak of 14.8 percent in April 2020. Companies were effective in implementing work-from-home technology, keeping unemployment rates for office-based service sectors relatively low. For those with a bachelor’s degree or higher, unemployment rates were only 3.7 percent as of March 2021. In 2020, third-quarter GDP growth made up much of the second-quarter losses, followed by 4 percent annualized economic growth in the fourth quarter. Retail sales also rebounded quickly, returning to pre-pandemic levels by June and continuing to increase through the beginning of 2021. However, the U.S. economy is still far from “normal.” Of the 22 million people who lost jobs in March and April 2020, only 57.8 percent had regained employment by March 2021. Stronger growth should return jobs to industries hit hardest during the pandemic. In March of this year, restaurants and bars added 176,000 jobs; arts, entertainment and recreation venues added 64,000 jobs and accommodations added 40,000 jobs. Still, employment in the overall leisure and hospitality sector is down by 3.1 million, or 18.5 …

April 27, 2021

Build-to-Rent Content Partner Features Loans Midwest Multifamily Northeast Single-Family Rental Southeast Texas Walker & Dunlop Western

Build-for-Rent Space May Outperform Conventional Multifamily on Occupancy, Rents

by Sarah Daniels April 19, 2021

The past few years have seen a surge in interest in single-family rental (SFR) and build-for-rent (BFR) spaces in commercial real estate. Traditionally the domain of small- and medium-sized investors, the SFR/BFR space has begun to attract institutional investors. BFR, in particular, can often offer higher occupancy levels and rents while promising lower capital and operating costs than traditional multifamily housing. Keaton Merrell, managing director, Capital Markets, Walker & Dunlop, spoke to REBusinessOnline about debt and equity in BFR, as well what to know when it comes to agency involvement. First, Merrell briefly clarifies the terminology: “Oftentimes, people use SFR and BFR interchangeably. They are two totally separate asset classes and are looked at differently by capital. SFR is defined as a cluster of homes in various geographies that are pooled together for investment purposes. BFR is purpose-built housing within contiguous rental communities, much like traditional multifamily properties.” For a more in-depth look at the SFR and BFR in general, read more on the asset class here. REBusinessOnline: What is the current state of debt and equity capital in the market when it comes to BFR? Merrell: I will start with equity and then move on to debt. The equity that is coming into the …

April 19, 2021

Content Partner Features Hospitality Midwest NAI Northeast Office Southeast Texas Western

Evaluating the Volume of Distressed Properties in the Wake of COVID

by Sarah Daniels March 31, 2021

Many in commercial real estate expected a tsunami of COVID-related distressed properties in 2020 and 2021. So far, the wave hasn’t materialized, says Jay Olshonsky, president and CEO of NAI Global. Businesses have been sustained by exogenous factors that may or may not keep them from foreclosure or receivership in the long term. In many cases, lender forbearances or flexible plans have simply extended the window in which distressed properties may eventually revert to receivership. Olshonsky spoke to REBusinessOnline about receivership activity and what the industry expects over the next 12 months. Delays: Lessons from the Global Financial Crisis, Plus Current Factors As court-appointed receivers, NAI’s representatives act as the owner and operator of properties in foreclosure on behalf of the court. A receivership needs to have the capability to lease the property, pay taxes and handle accounting — basically, taking over all aspects of managing a property and keeping it functioning, Olshonsky says. Much of how NAI Global has chosen to approach the current receivership landscape originated in the lessons of the 2007-2008 financial crisis. During the early stages of the pandemic, NAI knew there would be fallout that would force some businesses into foreclosure, servicing, note sales or similar …

March 31, 2021

Build-to-Rent Content Partner Features Finance Insight Midwest Multifamily Northeast Single-Family Rental Southeast Texas Walker & Dunlop Western

Walker & Dunlop: Single-Family Rental and Build-for-Rent in High Demand

by Sarah Daniels March 2, 2021

A number of factors are driving an increase in demand for single-family rental assets. Declines in home ownership rates, increasing demand/short supply for multifamily options and baby boomer renting preferences have made renting these single-family properties an increasingly popular choice. Meanwhile, COVID-19 spurred increases in teleworking that created a desire for additional space in the home and allowed more people to move to suburban locations — accelerating demand for single-family rental properties. Seeing the growing demand and increasing rents in the single-family rental (SFR) and build-for-rent (BFR) sector, Walker & Dunlop has created a new team — Walker & Dunlop SFR & BFR Practice Group — to provide investors information on construction, bridge lending, permanent financing, equity structuring and property sales, for a market estimated at $3.4 trillion (compared to $3.5 trillion for the multifamily market).1 Popularity, high occupancy and increasing rent rates have drawn the attention of larger investors to SFR and BFR assets, according to Kris Mikkelsen, executive vice president of investment sales with Walker & Dunlop. “Currently, larger investors make up less than 2 percent of the SFR market, which has been traditionally governed by individuals or small-scale parties. But that number will increase as investors recognize …

March 2, 2021

Content Partner Features Midwest Northeast Southeast Texas Western

Valbridge: Automation Can Assist Valuation Process, But Not Replace It

by Sarah Daniels February 23, 2021

The pandemic has forced the appraisal business into a surreal experience: many valuation professionals had their physical connections to the market severed or diminished. The question became: how best to assign value to the properties that appraisers are tasked with assessing especially while the demand for valuation has grown. Where does the rise of automatic valuation systems (AVSs) fit in with the valuation process? Karl Finkelstein, vice president of Business Development and senior managing director for Valbridge Property Advisors, spoke recently to REBusinessOnline. He explains, “The appraisal business is still all about reporting on what we see in the marketplace. That hasn’t changed. What has changed is our physical connection to the market — talking with market participants and attempting to read the tea leaves.” As for many companies, the past few months have been a time of reassessment and reengagement with the technology and tools at hand. “We’ve had to rethink how we do inspections; we’ve had to rethink how we physically interact. Technology has given us a big hand with that, and it has changed some of the some of the ways we do business and enhanced others,” says Finkelstein. A Hands-On Business, Socially Distanced Physical inspections remain …

February 23, 2021

Single family rental SFR build for rent BFR space Walker Dunlop

Build-to-Rent Content Partner Features Multifamily Single-Family Rental Walker & Dunlop

Walker & Dunlop Predicts Growth for Single-Family Rental, Build-for-Rent Asset Class

by Sarah Daniels February 9, 2021

The single-family rental (SFR) and build-for-rent (BFR) space is emerging as one of the strongest growth sectors in commercial real estate. While the SFR market has made up a portion of the rental market for many years, historically individual and small-scale investors have dominated the market. Institutional investors have only invested in the space for the last 10 to 12 years since the end of the Great Recession. Demand for SFR has been steadily increasing due to current demographic trends related to Gen Y and baby boomers; however, migration patterns related to COVID-19 have accelerated that demand. SFR growth is expected to outpace multifamily, office, retail, storage and hospitality growth by 2022. As the demand for more SFR properties grows, an increasing number of larger investors are expanding their investment strategy to include the product. With the SFR asset class gaining more attention, the BFR sub-segment is playing an emerging role in large-scale investors’ portfolios. The SFR market is estimated at $3.4 trillion, compared to $3.5 trillion for the multifamily market.1 Institutional investors make up less than 2 percent of the SFR market compared to 55 percent for the multifamily market. As more young families, families with children and retirees …

February 9, 2021

Brickhouse Walker Dunlop Multifamily Washington D.C.

Content Partner District of Columbia Multifamily Southeast Southeast Feature Archive Walker & Dunlop

Spotlight on D.C.: Apartment Assets Resist Economic Turbulence

by Sarah Daniels January 28, 2021

The Washington, D.C. metropolitan area has been a perennial favorite for multifamily capital, particularly pension funds, life companies, family offices and other institutional investors and is often regarded as “recession-proof.” However, as we all know, 2020 was a year like no other. What impacts have COVID-19 and recent economic turmoil had on this market’s luster, and what do the prospects look like for investors, owners and operators in the long term? An Economy Buffered by Government and Technology The D.C. Metro’s response to the crisis has been one of the most robust, with local the economy currently 90 percent + open for business and no signs of a dip back into lockdown. From the initial shutdowns in March 2020 to the continued uncertainty of today, cities with heavy representation in retail, tourism and service sectors have experienced significant economic repercussions from COVID-19. In Washington, D.C., by contrast, having the federal government as the city’s largest employer has served as a major buffer. D.C. experienced a particularly acute government-mandated economic shutdown from March to May. While payroll performance in the District of Columbia’s leisure and hospitality sector declined nearly 60 percent from May 2019 to May 2020, jobs in this sector …

January 28, 2021

Content Partner Features Multifamily Walker & Dunlop

Multifamily Market Offers Resilience in the Face of Economic Pressures

by Sarah Daniels January 14, 2021

A Tale of Two Cities “It was the best of times, it was the worst of times…” More than 150 years later, the iconic Dickens quote still strikes a chord. While every recession is different, the pandemic-induced shelter-in-place rules quickly sent the U.S. economy into the deepest recession on record in the second quarter. Fortunately, economic recovery, at least thus far, is proving to be just as swift — in certain areas. While unemployment rates dropped quickly from 14.7 percent in April to 6.7 percent in December, a more detailed look shows widening inequality that has yet to be resolved. For those with a bachelor’s degree or higher, unemployment peaked at only 8.4 percent in April and has since fallen to 3.8 percent — a rate that was once thought to be near the point of equilibrium for the economy. Unemployment rates for those with less than a high school education peaked at 21.2 percent and for those with a high school education, at 17.7 percent. To add to the current volatile environment, the contentious U.S. presidential election kept investors on edge, assessing political as well as economic uncertainty, at least in the near-term. Volatility indices remain somewhat elevated, although …

January 14, 2021

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