Features

Student Housing Lenders Experiencing a Particularly Busy 2018

by David Cohen June 21, 2018

Lending intermediaries are not seeing any slowdown in the availability of capital for the student housing sector in 2018. Many report that the sector is a favorite and a well-known quantity among lenders, one that they want to count among their specialties. “Historically, student housing was viewed only as a subset of multifamily, but we have seen a distinct departure from that mindset throughout the current cycle,” says Benjamin Roelke, senior vice president, debt and structured finance, CBRE Capital Markets. “Lenders are getting smarter about student housing and are asking the right questions more often than not.” “Our high volume construction lending relationships view student housing as a stand-alone product type and understand that each market should be evaluated on its own merits, but in uncertain times there are macro forces that can alter risk evaluation standards generally, with the effects trickling down to specialized product types,” says Tim Bradley, founder and CEO of TSB Capital Advisors. Student Housing — On Its Own Lenders increasingly view student housing as an attractive stand-alone asset class. Its strong performance during the Great Recession prompted many lenders to closely study and understand the sector, with many growing their lending platforms alongside strong developer …

June 21, 2018

California Features Industrial Retail Western Western Feature Archive

Retail Drives Industrial Growth Through Much of the Western U.S.

by David Cohen June 19, 2018

The industrial market is enjoying a moment in the sun throughout the West. Much of this is due to the retail sector’s continued technological advances, which have placed increasing demand on speedy delivery as manufacturing, distribution and warehousing needs are more important now than ever. “The market fundamentals for industrial properties are the best they have ever been,” says Bob O’Neill, senior vice president of acquisitions at CapRock Partners in Newport Beach, Calif. “Industrial absorption, lease rates and sales prices are at all-time highs, while market vacancies are at historic lows and construction in the Western United States remains in check.” Michael Collins, vice chairman of DAUM Commercial Real Estate Services in Los Angeles, has witnessed a similar trend in his market. He notes industrial assets in LA typically sell for $140 per square foot to $200 per square foot, with a vacancy rate of less than 2 percent in Southern California. “Developable land is becoming more scarce and the Los Angeles County industrial marketplace remains very vibrant,” he notes. “Lease rates throughout Southern California have reached an all-time high and sales values are at unprecedented highs, with actual prices based on building age, location, functionality and amenities.” Those looking …

June 19, 2018

Features Seniors Housing

Margaret Wylde’s Message to Seniors Housing: Do a Better Job of Understanding Customers

by Jeff Shaw June 15, 2018

CHICAGO — There is one surefire way to make sales hum in seniors housing, says Margaret Wylde, an industry consultant who has conducted research in this niche property sector for 34 years. Know who your customer is, the product they want and how much they will pay to get what they want. “If you deliver what they actually want, they actually pay more and feel there is value for the dollar spent,” says Wylde, CEO of Oxford, Miss.-based ProMatura Group. The problem is the industry’s knowledge of customers is “not good,” Wylde is quick to add. “We know them in a generic manner. We know their age, we know how many of them there are, and we know how much money [they have]. But we don’t know who they are. And once they get to that golden age, we think they want seniors housing, and that everybody who wants seniors housing is exactly the same because we are giving them a list of stuff.” What’s worse, she believes, is that the industry is by and large chasing the luxury market, which is less than 10 percent of the potential market. “The middle market is 320 percent larger than the market …

June 15, 2018

Features

Economist: Trade Disruption, Not Rate Hikes, Is Real Concern for Commercial Real Estate

by Taylor Williams June 14, 2018

WASHINGTON, D.C. — The Federal Reserve opted Wednesday to raise the federal funds rate by a quarter of a percentage point. The overnight rate that banks charge one another for loans now stands at an even 2 percent, with two more rate hikes expected to occur before year’s end. According to one economist, however, the nation’s central bank could abandon its pursuit of a tighter monetary policy if the capital markets experience a major disruption. Rajeev Dhawan, director of the economic forecasting center at Georgia State University in Atlanta, believes there is no more plausible and imminent economic disruptor than President Donald Trump’s trade policies. “The commercial real estate industry shouldn’t be worried about rate hikes, which are happening in baby steps,” says Dhawan. “If the cash flows on your properties are there, who cares about the rate hikes? The real thing to worry about is what happens in the interest rate market as a result of trade developments.” Rate Hikes Foreseen Most borrowers in commercial real estate anticipated an increase in short-term interest rates. After all, these figures had nowhere to go but up after hovering around zero for several years in the post-recession era. Borrowers generally responded by …

June 14, 2018

Features Retail

Redevelopment Defines CBL’s Strategy, Says CEO

by Kristin Harlow June 14, 2018

LAS VEGAS — Over the past five years, CBL Properties (NYSE: CBL) has been disposing of “lower-productivity properties” and redeveloping several others. These moves reflect efforts to boost performance and upgrade the overall portfolio, which is largely concentrated in the Southeast and Midwest. Since 2013, the Chattanooga, Tenn.-based REIT has disposed of 21 mall assets and a number of other non-mall properties. In 2017 alone, CBL sold an outlet center, three malls, two office buildings and outparcel locations for a total of more than $180 million in proceeds. During the first quarter of 2018, $40 million in disposition activity was either completed or in process, including a binding contract for the sale of Janesville Mall, a tier-three shopping center located in Janesville, Wisconsin. Due to a combination of factors — including the threat of e-commerce and slipping occupancy for a period of time — the company’s stock price has taken a tumble during the past few years. Shares of CBL, which traded at $14.20 per share on Aug. 26, 2016, had fallen to $5.43 per share by the close of business on Wednesday, June 13. The key to righting the ship lies in redeveloping existing properties rather than conducting a …

June 14, 2018

Conference Coverage Features Healthcare North Carolina Property Type South Carolina Southeast Southeast Feature Archive

Healthcare Systems, Physicians are ‘More Sophisticated’ When it Comes to Real Estate, Says InterFace Healthcare Panel

by John Nelson June 13, 2018

CHARLOTTE, N.C. — Healthcare systems and physicians groups once viewed their real estate operations as a line item on a ledger and not as high a priority as staffing, education or equipment. In the years since reimbursements from Medicare began tightening as it went from a fee-for-service model to an outcome-based one, healthcare systems and physicians are getting more savvy when it comes to their real estate strategies. “With respect to real estate, healthcare systems used to be naïve,” said Mark Curtis, director of Greenville Health System, a not-for-profit system serving the Upstate South Carolina area. “Now they’re far more sophisticated than they were five years ago.” Curtis was one of five healthcare real estate experts on stage at a panel entitled “What Do Hospitals & Systems See Coming in 2018?” Rex Noble, senior vice president of asset management at Flagship Healthcare Properties, moderated the discussion. The panel was the closing act at the eighth annual InterFace Healthcare Real Estate Carolinas show, which took place on May 31 at the Hilton City Center hotel in Uptown Charlotte. The event drew 160 attendees in the healthcare real estate space from across North and South Carolina. Operations are Under the Microscope Spurred …

June 13, 2018

Features Heartland Feature Archive Midwest Multifamily

Midwest Apartment Demand Isn’t Dropping Anytime Soon, Says JVM Realty CEO

by Kristin Harlow June 12, 2018

Apartment rents in Detroit are now the fastest rising in the United States among the nation’s largest cities, growing at an annual rate of 5.3 percent as of May 2018, according to Yardi Matrix and RENTCafé. Across the Midwest, the apartment market remains very strong with high demand and therefore increasing rents. Jay Madary, president and CEO of Oak Brook, Ill.-based JVM Realty, spoke with REBusinessOnline to discuss the state of the market, including the pace of investment sales. JVM owns and operates Class A and B apartment communities in Midwest markets such as Cleveland, Indianapolis, Kansas City and suburban Chicago. REBusinessOnline: How would you assess the overall state of the apartment market in the Midwest? Jay Madary: I think it’s really strong. In general, supply and demand remain balanced. We’ve certainly seen a surge of new construction in most Midwestern markets, and those new units coming online have cooled rent growth a bit. Whereas we were seeing growth of 5 to 6 percent a couple of years ago, now 2 to 4 percent is more typical. But the robust job growth in the region and the historically low unemployment rates have kept demand high, and those new units are largely being …

June 12, 2018

Features Retail

E-Commerce Works Because it Appeals to Human Nature, Says Coldwell Banker Commercial’s Scott McLain

by Jeff Shaw June 7, 2018

LAS VEGAS — After nearly 35 years of developing and brokering commercial real estate, Scott McLain has no doubt about the deep connection between retail and human nature. McLain, principal and managing broker of Huntsville, Ala.-based Coldwell Banker Commercial McLain Real Estate, sees e-commerce and other new forms of delivering retail products and services as mechanisms that hit on the most basic wants and needs of consumers. For all the talk about how e-commerce is putting retailers out of business, McLain’s view is that retailers that don’t offer value, convenience or the ability to delight consumers are the most vulnerable and have been exposed by online competitors. That holds equally true for online-based and brick-and-mortar retailers. REBusinessOnline.com caught up with McLain at the RECon show in Las Vegas in late May for a quick lesson in human psychology and how it applies to Amazon, store closures and retail real estate in the 21st century. His edited responses are as follows: REBusinessOnline.com: In your opinion, have we seen the worst of the store closures yet? How do you see the closures playing out over the next 12 months? Scott McLain: What I’ve discerned recently about this industry is that there’s a …

June 7, 2018

Conference Coverage Features Loans North Carolina South Carolina Southeast Southeast Feature Archive

Competition Intense Among Real Estate Lenders, Says InterFace Carolinas Panel

by John Nelson June 7, 2018

CHARLOTTE, N.C. — Capital One Multifamily Finance’s Chad Thomas Hagwood kicked off with a fastball. When prompted with the often used “what inning are we in?” question, Hagwood’s response was indicative of how competitive commercial real estate lending is today. “I don’t know what inning we are in of the cycle, but I know I want to play ball,” says Hagwood, senior vice president of Capital One Multifamily Finance. “People are after it, and we intend to fight it out tooth and nail.” Hagwood’s commentary came during the closing capital markets panel of the ninth annual InterFace Carolinas, a half-day event that drew 212 attendees from North and South Carolina’s commercial real estate community. Bryson Thomason, senior director of Greenville, S.C.-based PMC Real Estate Capital, moderated the panel. The most intense competition for financing is in the multifamily space because of the proliferation of Fannie Mae and Freddie Mac and their designated lenders. The two government-sponsored enterprises (GSEs) have been competing against each other as well as other lenders. Hagwood describes the competition between the two agencies as a “bloodbath.” “It’s all out brutal warfare competition the two,” says Hagwood. “I do expect Fannie and Freddie to be very competitive …

June 7, 2018

Features Lee & Associates New York Northeast Northeast Feature Archive

Manhattan Sees Major Growth Spurt of Service-Oriented Retailers, Says Lee & Associates’ JP Sutro

by David Cohen June 6, 2018

LAS VEGAS— Since joining Lee & Associates in the New York City office in 2012, JP Sutro has closed over $200 million in retail lease transactions. The executive managing director specializes in representing both retail landlords and tenants throughout Manhattan and Brooklyn. REBusinessOnline caught up with Sutro during the RECon show in late May to get his take on the state of the retail market in New York City. The three-day deal making and networking event is the world’s largest global gathering of retail real estate professionals and typically attracts about 37,000 registrants. REBO:Nordstrom’s first foray into New York City has begun. A three-story, 47,000-square-foot men’s store opened at 57th Street and Broadway in April. How significant is it that Nordstrom has entered the market? Sutro:It’s fantastic. All the owners I know that have property on 57th Street have been waiting for this moment. They really think they are going to see an influx of more shoppers and more retailers playing off the Nordstrom’s idea — especially when you hear of other department stores not doing so well. It’s interesting to see Nordstrom having such confidence in the market, especially 57th Street, which has historically been a very strong shopping district. …

June 6, 2018

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