Features

Senior Housing Occupancy Hits Eight-Year Low as New Supply Continues to Outpace Demand

by David Cohen August 2, 2018

ANNAPOLIS, Md. — Average occupancy for seniors housing properties throughout the United States has fallen to 87.9 percent in the second quarter of 2018, according to the National Investment Center for Seniors Housing & Care (NIC). The rate is the lowest since first-quarter 2010, when it hit 86.9 percent. Assisted living occupancy, already at record lows, also fell further to 85.2 percent. The industry-wide occupancy slide represents a 40 basis-point drop over the previous quarter, an 80 basis-point drop over the year prior, and a 230 basis-point drop from its recent high of 90.2 percent in fourth-quarter 2014. NIC, an Annapolis-based, nonprofit data and analytics firm serving the seniors housing industry, tracks occupancy data using the top 31 primary metropolitan U.S. markets. Transaction data is representative of all U.S. seniors housing property transactions of $2.5 million and above. The silver lining of the low occupancy numbers, according to NIC’s data, is that absorption and rent growth are still positive — 2.4 percent and 2.7 percent, respectively. However, inventory growth was 3.3 percent in the quarter, meaning supply continues to outpace the demand. “The occupancy rate for assisted living was the lowest since NIC began to report the data in late …

August 2, 2018

Features Industrial Northeast Northeast Feature Archive

Industrial Rents Reach New Heights in Northeast

by David Cohen August 1, 2018

The industrial real estate sector across the Northeast continues to exhibit strong rent growth due to a number of factors: increased tenant demand, decreased supply and the ever-growing presence of e-commerce companies. In the five largest metro areas, rent growth over the 12-month period that ended June 4 averaged 6.2 percent, according to CoStar Group. The vacancy rates in those same markets were all at or below 6 percent as of June 4. The Northern New Jersey industrial market led the way with rent growth climbing 8.2 percent over the 12-month period, followed by New York (+7 percent), Boston (+ 6.3 percent), Philadelphia (+ 5.3 percent), and Pittsburgh (+ 4.6 percent). In each case, the spike in rent was more than double the historical average. “Supply is really struggling to keep pace with demand,” says Alex Previdi, managing director of Transwestern’s New Jersey office. “There’s an abundance of large tenants that are looking for industrial space and there’s just not a lot of options out there.” On the demand side, the New York market led the way with a 12-month net absorption of 7.6 million square feet, followed by Philadelphia (6.6 million square feet), New Jersey (3.4 million) square feet, …

August 1, 2018

Features Retail

How to Secure Financing for Retail in Today’s Climate

by David Cohen July 31, 2018

Retail financing, both debt and equity, has become a challenge for many owners, developers and investors throughout the U.S. based on negative press about retail, a perception that the internet will take down many tenants and the weak financial condition of a number of large retailers. Though capital markets are strong, many property owners and investors are finding it difficult to identify lenders willing to provide the type of financing they need for their retail developments, acquisitions and redevelopments. Some lenders are not providing enough money. In other cases, borrowers are finding that the cost of capital is not feasible. Often, lenders and investors aren’t saying no —they are simply offering capital at too high a rate. This squeeze could not come at a more pivotal moment for retail investors. The fact is, now is a very good time to invest in retail. With so many players exiting the market, an overcorrection is underway. This creates a huge opportunity for others to invest in retail, which can be a great value if you find the right deal at the right basis. So why is retail harder to finance? Because of the herd mentality, the majority of investors and lenders are …

July 31, 2018

Content Partner Features

Don’t Buy into the Hype – Beware of the “Yes” Originator

by Amy Works July 30, 2018

With a strong commercial real estate market nationwide, many originators are under increased pressure to say “yes” to financing terms and conditions that they would shy away from in a less competitive lending environment. “I don’t see the frenzy dying down anytime soon, with at least one to two more years of fairly intense competition,” says Tim Madigan, a commercial loan originator for Alliant Credit Union. With more than 15 years of experience as an underwriter before moving to loan originations, Madigan has first-hand knowledge of the commercial real estate lending market, as well as its fluctuations. “At Alliant, we’re doing our best to maintain discipline, but we are seeing a lot of aggressive terms, which I’m afraid will have unintended consequences for borrowers who jump at the shiniest offer,” Madigan says. “For example, borrowers may get re-traded, which means the financial package’s initial terms may change after the originator’s due diligence, resulting in borrowers getting burned if they’ve already committed to a transaction based on the initial financing terms.” Watch Out for Terms/Pricing Outliers Terms and pricing for any given financing package should be fairly similar – or at least within a range – for the property type, location …

July 30, 2018

Features

Not All Bricks are Created Equal: How Functional Obsolescence Affects Property Taxes

by Jeff Shaw July 26, 2018

Appraisal districts across Texas often use the cost approach to determine market value for property tax purposes. When valuing certain commercial properties via the cost approach, county appraisers frequently use cost-estimating services. These services enable appraisers to estimate the cost of the subject property’s improvements as if they were new, as well as determine the depreciation to apply to the subject. Cost estimators can be a great resource and valuation tool, but the appraiser is likely to reach an incorrect value conclusion using estimates from one of these services without also incorporating proper analysis of functional obsolescence. Functional obsolescence is one of the three types of depreciation that measures a building’s function and utility against current market standards. Given this, placing all weight on a service’s depreciation estimates could lead to incorrect assessments that ignore functional obsolescence within the property’s total depreciation. The trouble with tables Cost-estimating services typically provide depreciation tables that contain data for multiple commercial property types. County appraisers often cite these tables as their main source of depreciation support when using the cost approach. It is important to know that these tables typically assume that all components of the improvements for the various property types depreciate …

July 26, 2018

Kingston Square Affordable Housing, Kokomo, Indiana

Features Heartland Feature Archive Multifamily Student Housing

Student Housing Pushes Out Affordable Living in College Towns

by Jeff Shaw July 24, 2018

For Kyle Bach, CEO of The Annex Group LLC, there’s an affordable housing crisis taking place in large university towns. After extensive research in Bloomington, Indiana, and other similar towns, Bach found that over the past decade or so virtually all new multifamily product added to the market has been either student or luxury housing. This has priced out the workforce or affordable housing residents in those communities, he says. About a year-and-a-half ago, Bach’s Indianapolis-based firm reconfigured its development focus in effort to fill this need by providing affordable housing for the university workforce or married students. In Bloomington, The Annex Group is in the midst of securing final approvals for Union at Crescent, a 146-unit affordable housing development about two miles from Indiana University. The $18 million project has received tax credits from the Indiana Housing Community Development Authority. The project will also be financed with Section 42 of the low-income housing tax credits program (LIHTC). With this type of financing, law regulates that full-time students are not allowed to live in the development unless they are married and their spouse’s income qualifies. The Annex Group hopes to break ground in the fourth quarter of this year with …

July 24, 2018

Company News Features

Avison Young Receives $188.6M Equity Investment from Canadian Fund Manager to Grow Platform

by John Nelson July 19, 2018

TORONTO — Commercial real estate services firm Avison Young is continuing its growth strategy with a new equity investment totaling 250 million Canadian dollars (approximately $188.6 million) from Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ). Toronto-based Avison Young will use the new capital to grow its operating platform in North America. “CDPQ’s investment will provide additional momentum as we accelerate our innovative and technology-based capabilities and market presence to serve clients,” says Mark Rose, chair and CEO of Avison Young. In less than 10 years, Avison Young has grown from 300 real estate professionals in 11 offices in Canada to approximately 2,600 professionals in 84 offices in Canada, the United States, Mexico and Europe. The company’s largest U.S. office in terms of staff size is in Washington, D.C., followed in order by Chicago, New York and Atlanta. Avison Young will use the investment to continue its acquisition strategy of commercial real estate service firms, as well as recruit new talent, open new offices and cover transaction expenses. “Due to the significant size of the equity infusion we won’t be faced with having to make choices between regions for deployment of capital or be limited in …

July 19, 2018

Features Office

Tech, Finance Firms Dominate U.S. Office Leasing, Says Cushman & Wakefield

by John Nelson July 17, 2018

CHICAGO — Tech and financial services firms are the most aggressively expanding office users through the first half of the year, according to a report from Cushman & Wakefield. Of the 144.6 million square feet of absorption closed in the first six months of 2018, the tech industry was responsible for approximately 23 percent. Tech and software firms are investing heavily in their own operations, including expanding in markets they deem necessary to house their staffers. Back in May, Facebook signed a full-building office lease for a 43-story tower under construction in San Francisco. The 764,700-square-foot space will be a much more convenient location for the company’s San Francisco-based employees, who now are shuttling to Facebook headquarters in Menlo Park. Like the Facebook lease, a good portion of the office transactions closed in the first half of the year by tech firms have been larger in scope. Amazon leased 430,000 square feet of office space within W.S. Development’s Seaport project in Boston, and Nokia signed a 350,000-square-foot lease in Dallas within Billingsley Co.’s Cypress Waters mixed-use project. The No. 2 most active office-using industry was the financial services sector, which accounted for roughly 17 percent of all office leasing in …

July 17, 2018

Features

How Will Steel, Aluminum Tariffs Impact Construction Labor?

by Camren Skelton July 12, 2018

WASHINGTON, D.C. — With virtually all construction costs tied to either materials or labor, President Donald Trump’s tariffs on two key building supplies could further exacerbate the construction industry’s longtime worker shortage, according to industry experts. Trump’s tariffs on imported construction materials — 25 percent for steel and 10 percent for aluminum — have enabled American steel and aluminum producers to raise prices to new benchmark levels. But there’s more at stake than short-term increases in materials costs. By forcing construction firms to allocate more operating income toward materials, the tariffs are likely to prevent firms from offering higher wages to attract more labor. Immediate labor impact A recent study from Trade Partnership Worldwide LLC, a Washington, D.C.-based economic consulting firm, estimates that the tariffs will generate an overall net loss of 146,000 jobs. The report also notes that across all impacted sectors there will be five jobs lost for every new job gained. The automobile, fabricated metals and logistics and distribution industries would be among the sectors hit. According to the study, job losses in these three fields alone would exceed 50,000 positions. The American construction industry is poised to lose about 28,000 jobs as a result of the tariffs. …

July 12, 2018

Features

Real Estate Economists: June Jobs Report is Strong, Despite Rise in Unemployment Rate

by Camren Skelton July 10, 2018

WASHINGTON, D.C. — Employers hired at a steady clip last month while beating expectations. The U.S. economy added 213,000 jobs in June, marking the 93rd consecutive month businesses added to payrolls, the Bureau of Labor Statistics said last Friday in its monthly report. Economists surveyed by Reuters had expected a monthly gain of 195,000 in total nonfarm payroll employment. The unemployment rate inched up to 4 percent — the first increase in almost a year — but even that uptick reflected a healthy economy, according to industry experts. More than 600,000 people entered the workforce in June, increasing the unemployment rate, but signaling that previously discouraged Americans are confident in the tight labor market and are starting to hunt for jobs again. Still, the U.S. economy faces potential headwinds. Late last week the U.S. and China began imposing levies on $34 billion of each other’s exports, and tariffs on an additional $16 billion in goods are looming, according to The Wall Street Journal. U.S. President Donald Trump has threatened to raise the levies to include nearly all of China’s imports to the U.S. — approximately $505 billion last year. Trump wants China to cease alleged unfair trade practices it uses …

July 10, 2018

Newer Posts

Older Posts