Features

InterFace Panel: Seniors Housing Must Become ‘Sexier’ to Millennial Workforce

by Taylor Williams August 30, 2018

ATLANTA — The seniors housing business is beset with labor concerns, and developers and operators are convinced that the solution lies in upping the number of millennials on staff. According to recent data from Pew Research Center and the U.S. Census Bureau, approximately 56 million American workers are between the ages of 21 and 36. That means more than one-third of all labor force participants are millennials, a generation that industry experts say generally wants emotionally meaningful careers with fast-tracked advancement. There are challenges in creating and marketing a positive perception of the seniors housing industry to prospective millennial workers, as well as in retaining them. This subject was broached during the “State of the Industry” panel at the InterFace Seniors Housing Southeast conference on Wednesday, Aug. 29. Held at the Westin Buckhead hotel in Atlanta, the event drew nearly 520 developers, lenders, investors and operators in the senior living space. “There’s a lot of talent that’s drawn to hospitality, but it can be hard selling them on seniors housing,” said panelist Eric Mendelsohn, president and CEO of Tennessee-based REIT National Health Investors (NYSE: NHI). “We have to show people that there’s so much more to this business than serving Jell-O …

August 30, 2018

Conference Coverage Features Industrial

Flexibility is Key to Staying Relevant in Today’s Industrial Market, Say InterFace Panelists

by Taylor Williams August 28, 2018

ATLANTA — The industrial sector is busy riding the e-commerce wave, pushing demand for warehouse space to new heights. But land scarcity and changing investor preferences are forcing developers to get creative with their projects, making flexibility a top priority in today’s market. “The industry is changing so quickly, and Amazon is driving that,” said David Welch, president of Robinson Weeks Partners, an industrial real estate development and investment firm based in Atlanta. “We’ve had to be as flexible as possible because the large users aren’t waiting for build-to-suits — they want it now.” Welch’s comments were made during the industrial development panel at the first annual Intersection of Industrial and Retail in the Southeast conference, held Thursday, Aug. 23 at the Westin Buckhead in Atlanta. Sponsored by InterFace Conference Group and Southeast Real Estate Business, the half-day event drew more than 170 industrial and retail professionals from across the region. Joining Welch on the panel were Todd Carter, partner at Exeter Property Group; Mike Demperio, partner and vice president of CRG; Brian Cardoza, senior vice president of Rooker; John Barker, president and chief operating officer of Red Rock Developments; and Alfredo Gutierrez, president of SparrowHawk, who moderated the panel. …

August 28, 2018

Features Loans

Three Steps Real Estate Owners Should Take Before Deciding to Refinance

by Camren Skelton August 23, 2018

Commercial real estate owners allocate a significant portion of their time to property management. Whether they carry out the work themselves or rely on the services of a professional, property owners clearly understand that successfully managing aspects like rent collection and building maintenance plays an important role in the long-term success of their investment. Unfortunately, many real estate owners and investors fail to place a similar level of importance on the management of their mortgage. When it comes time to refinance, a lack of foresight can have a serious impact on the amount of revenue a company can expect to generate in both the near and long term. Borrowers looking to refinance their commercial property and secure a more attractive loan should take the following three initial steps to effectively “manage” their mortgage and create more of an opportunity to achieve their financial goals. Step 1: Set Goals Borrowers refinance their commercial properties for a number of reasons. Many take out a new loan to avoid making the balloon payment that may loom at the conclusion of their current term. Others refinance to take advantage of a more favorable interest rate environment. Borrowers also have an opportunity to tap into …

August 23, 2018

Features Georgia Multifamily Southeast

2018 Multifamily Investment Volume to Surpass Last Year, Say Apartment Association Panelists

by Camren Skelton August 21, 2018

ATLANTA — Multifamily investors are anticipating another solid year for U.S. apartment sales. Annual transaction volume is robust, price per unit is increasing and fundamentals like rent growth and occupancy are strong, leaving buyers confident that apartment properties remain a safe investment. “Investors are so sophisticated now, and they have the option of going into whatever sector, whatever geography, with whatever strategy they want, and they are scanning it all,” said Malcolm McComb, vice chairman of CBRE. “But what’s coming out again and again for many years in a row now is multifamily and industrial are stealing the show.” McComb’s comments were made during the opening presentation at the Atlanta Apartment Association’s (AAA) “2018 Apartment Market Outlook: Disruption in the Apartment Industry.” The conference was held on Friday, Aug. 10, at the Cobb Galleria Centre in Atlanta. Back on the Upswing After a slight decrease in total transaction volume in 2017 — the first time since 2009 that U.S. multifamily annual sales volume didn’t surpass the preceding year — 2018 transaction volume is on track to match or slightly surpass last year’s output. Through the first half of 2018, apartment investment sales totaled $69.9 billion, a 7.9 percent increase compared to …

August 21, 2018

Features Office

How Property Valuation Differs for Corporate Headquarters

by Kristin Harlow August 16, 2018

Corporate headquarters present unique challenges and opportunities in property valuation discussions with tax assessors. Managing taxes on any real estate property requires an understanding of all three traditional approaches to value, but headquarters are unusual in that good data are hard to find. This article highlights common sticking points in value discussions for this unique property set. A collaborative discussion between an advisor and property owner on these few areas can lead to a successful tax reduction. Cost considerations A headquarters defines an enterprise, but many of its defining improvements lack value to potential buyers. Especially with newly constructed or renovated projects, or when lacking comparable data, the assessor will often rely heavily on the cost approach to estimate market value. This can result in a high valuation with room for fruitful discussion about ways to support a value decrease. Under the cost approach, an assessor using reproduction cost will frequently understate depreciation and obsolescence. It is important to also review treatment of the economic age-life method, which is often misapplied. The effective age, rather than the actual age, must be measured against the life expectancy of improvements. Deferred maintenance also requires deductions. Good appraisal practice mandates that short-lived items …

August 16, 2018

Features Office

Despite Booming Jobs Market, Improvement Proves Choppy for Office Sector, Says Ten-X

by Kristin Harlow August 14, 2018

IRVINE, CALIF. — Recovery of the national office sector has failed to gain traction as completions outpaced net absorption for the fifth consecutive quarter, according to the latest U.S. Office Market Outlook report by Ten-X Commercial. “While the national market shows an office segment that is struggling, a closer look at various local markets shows several different reasons underlying this general malaise,” says Peter Muoio, chief economist for Irvine, Calif.-based Ten-X. “Strong markets with fast-growing economies saw significant development and are now grappling with increased supply, while weak markets continue to languish due to their struggling local economies.” Shrinking office space requirements for employees is at the core of market pricing softness, according to Ten-X. Employers are fitting more workers into open floor plans, enabling more employees to work remotely. Cloud computing reduces the need to spend physical space on filing cabinets and servers. These trends have caused the strong correlation between rising employment figures and the strength of the office market to weaken. “In most markets, technological innovation is an additional factor that acts as a headwind for the office sector,” adds Muoio. Top buy/sell markets Naturally, some markets are more promising than others. The top five markets in …

August 14, 2018

Features

Economists: Job Growth Train Rolls On, But Wage Issues Persist

by Taylor Williams August 9, 2018

The U.S. economy not only remains on a positive trajectory, but it is also experiencing accelerated job growth in industries such as construction, transportation and warehousing, as well as professional services, says Ryan Tharp, director of research at Houston-based Transwestern. “There is still significant runway left for the U.S. economy,” he says, pointing out that the economic data suggests positive and robust growth for the next 12 to 18 months. At this stage of the economic expansion, the office, industrial, retail, healthcare and multifamily markets remain quite healthy across most of the country, adds Tharp. Tharp’s comments follow the release of the latest nonfarm payroll employment data from the Bureau of Labor Statistics (BLS), which shows the U.S. economy added 157,000 jobs in July with hiring broad-based. While that figure fell shy of economists’ prediction of 190,000 jobs, July marks the 94th consecutive month of employment gains. Spencer Levy, head of research for the Americas and senior economic advisor for Los Angeles-based CBRE, echoes Tharp’s sentiment. “The economy is moving forward better and more diversely than expected with the continued strength in healthcare and business services now enhanced by construction, manufacturing and yes, retail,” says Spencer. “Despite the Toys ‘R’ …

August 9, 2018

Features Midwest Multifamily Northeast Southeast Texas Western

Yardi: Average U.S. Multifamily Rent Hit All-Time High in July

by Katie Sloan August 7, 2018

The average monthly rent for multifamily communities in the United States rose $3 to an all-time high of $1,409 in July, according to a recent report by Yardi Matrix. The increase is thanks in part to strong second-quarter economic growth and healthy demand. Year-over-year, rents are up 2.8 percent. Yardi is a California-based software company serving the commercial real estate industry. The company’s Yardi Matrix data branch researches and compiles data through a combination of original research studies and references to secondary sources. Numbers are representative of 127 U.S. markets, though the 30 largest metros are highlighted specifically. Average rents have risen $41, or 3 percent, year-to-date. This is in line with growth figures during the same period in recent years. This statistic is encouraging, according to Yardi, because it exemplifies the fact that the expansion of multifamily has not run out of steam, despite headwinds of increased supply and affordability issues. Rent increases are healthy across the board, led by growing secondary markets. At the top of the list is Orlando, which saw year-over-year rent increase of 6.9 percent, followed by Las Vegas, which saw a growth of 5.8 percent. On the West Coast, the Inland Empire saw an increase …

August 7, 2018

Features Multifamily Seniors Housing

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

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