Features

Robust Apartment Demand Leads to Healthy Occupancy, Stabilizing Rent Growth, Says RealPage

by Kristin Harlow July 11, 2017

RICHARDSON, TEXAS — Apartment demand surged to a near-record volume during second quarter of 2017, according to real estate technology and analytics firm RealPage Inc. With demand topping completions by a wide margin in the quarter, occupancy is essentially full and the annual pace of rent growth has stabilized. Richardson, Texas-based RealPage tracks the 100 markets with the most existing apartment units. Santa Rosa/Petaluma, California is the smallest market RealPage tracks, with 25,144 apartments units. New York City, spanning nearly 2 million units, is the largest market. In order for an apartment building to be tracked, it must consist of at least five units, but the average property size is approximately 200 units. RealPage reports that renters absorbed 175,645 apartments across the United States in the second quarter, up one-third from the performance level seen at the same time a year ago. “Today’s strong demand for apartments reflects the combination of solid job formation, continued limited loss of renters to home purchase and widespread availability of appealing new apartments,” says Greg Willett, chief economist for RealPage. Demand in the second quarter exceeded the 86,431 units completed in the same period, according to RealPage. However, the market is still working through the surplus …

July 11, 2017

Features Top Stories

Regional Malls Live On Through Reimagining, Repurposing, says Transwestern

by Katie Sloan July 6, 2017

We’ve all been subject to the doom and gloom reports surrounding the retail sector. E-commerce is going to be the end of brick-and-mortar retail; retailers are going bankrupt; regional malls are no longer viable. While some of this talk is true — the retail sector is undoubtedly undergoing an evolution — statistics on malls tell a more positive story, according to a recent report by Transwestern. The report — “Why Mall Reuse is Just Beginning” — opens with the fact that regional malls have had a positive net absorption since 2010, and saw a national occupancy rate of 95 percent at the end of 2016. Much of this continued success has been found through reconsidering and repurposing the traditional regional mall to fit the changing desires and needs of the community. According to the International Council of Shopping Centers (ICSC), of the $4.7 trillion in retail spending in 2015, only 8.3 percent occurred online. Furthermore, only 3.3 percent of that spending was transacted with “pure-play” online retailers like Amazon, meaning that 96.7 percent of all retail spending happened in brick-and-mortar stores or on websites affiliated with brick-and-mortar stores. Convenience and the ability for consumers to physically browse, return and interact with …

July 6, 2017

Features Retail Top Stories

Repurposing Malls Among Retail’s Biggest Challenges, Says Coldwell Banker Commercial’s Schmidt

by Taylor Williams June 29, 2017

Given his background in business development, Fred Schmidt, president and chief operating officer of Coldwell Banker Commercial Affiliates, is accustomed to analyzing real estate trends over his 36 years in the industry. Schmidt, who joined Madison, N.J.-based Coldwell Banker Commercial in 2003 as vice president of business development, is not nearly as surprised by the spate of retail store closures as some of his colleagues seem to be. REBusinessOnline.com sat down with Schmidt at the International Council of Shopping Center’s RECon event in Las Vegas in late May. In addition to discussing his firm’s push into retail markets in major cities, Schmidt shared his insights on how to repurpose malls. REBusinessOnline.com: Why are we seeing so many store closures and retail bankruptcies at this time? Fred Schmidt: It’s not a new discussion. It’s common knowledge that Class A malls are doing very well and that the discounters — the top end and bottom end — have been doing well over the years. But there was a prediction four or five years ago that the Class B and C malls were going to suffer because they didn’t have the right merchandising. These changes are now manifesting themselves in terms of the …

June 29, 2017

Features Office Top Stories

Rethinking Physical Workspace Helps Improve the ‘Human Experience’ for Employees, Says JLL

by John Nelson June 27, 2017

CHICAGO — In its most recent study on the workplace, JLL has found that helping people feel good on the job is more than a ‘box-ticking” exercise in trying to achieve work-life balance. A place of work is far more than a property. It is a living environment that helps individuals and businesses craft and experience a better fusion of life and work. One of the key findings from the report, entitled “Workplace Powered by Human Experience,” is that workplaces must provide a broader range of innovative spaces to meet employee expectations and attract and retain talent. The design and configuration of workplaces will evolve to put human experience at the heart of modern workspaces, and understanding the ecosystem in which employees operate and thrive is critical to business success as aesthetic solutions alone are no longer enough. The report finds that an ideal work environment is a mixture of collaborative space and support services, including coffee and tea shops, lounges, terraces, war rooms, service desks, creative spaces and “incubators” that feature dedicated space for employees and external talent to develop personal projects. The space provided by a company can directly impact employee experience levels. New types of spaces can …

June 27, 2017

Features Loans Multifamily Seniors Housing Top Stories

FHA’s Latest Revisions to Lean 232 Address Owner Issues

by Taylor Williams June 22, 2017

Recent changes to the Federal Housing Administration’s (FHA) Lean 232 program provide owners with more options, all of which a lender offering a full suite of financing options can act upon. Owners who anticipate future cash-out needs are in a good position to benefit. The program was made easier for owners to work with through several additional changes. For owners of residential healthcare facilities that offer services like skilled living or memory care, FHA Lean 232 loans are of exceptionally high value. Because the FHA is committed to ensuring an adequate supply of affordable beds for seniors, nursing home borrowers can secure terms that are unheard of in other CRE markets. Early this year, the FHA made changes in its official Section 232 Handbook that make these loans even more attractive, especially for owners who wish to take cash out of their properties. In order to understand the significance of these changes, it helps to see them in the context of baseline Lean 232 loans. These FHA-insured loans are non-recourse and assumable, offer maturity schedules of up to 35 years and loan parameters of up to 80 percent loan-to-value (LTV), as well as 1.45 debt service ratio coverage. Best of …

June 22, 2017

Features Retail Top Stories

Lease Restructuring Increasingly Common in Today’s Retail Market, Says Gordon Brothers’ Mark Dufton

by Taylor Williams June 20, 2017

LAS VEGAS — As a specialist in lease mitigation and restructuring for retailers who are closing or relocating their stores, Gordon Brothers’ CEO of Real Estate Mark Dufton has represented dozens of retailers in the market for new or smaller spaces. In his 25-plus years in the business, Dufton has mitigated or restructured more than 1,500 leases, saving his clients more than $100 million. Northeast Real Estate Business sat down with Dufton of Boston-based Gordon Brothers during the International Council of Shopping Centers’ RECon event in late May in Las Vegas to pick his brain on how brick-and-mortar retailers facing heavy store closures can minimize financial losses. Northeast Real Estate Business: How do you measure success at a conference like this? Mark Dufton: We had a great day yesterday. The retail world is in a fair amount of turmoil, and that’s our space. We do lease valuation, disposition and restructuring work. So it’s been pretty heady times for us in this environment. NREB: DJM Real Estate changed its name about a year ago to Gordon Brothers. Can you walk me through what led to the transition of the company name? Dufton: DJM Real Estate was a stand-alone real estate company. It got bought by …

June 20, 2017

Features Top Stories

Political Polarization, Global Uncertainty Top List of Issues Affecting Real Estate, Says Counselors of Real Estate

by Jeff Shaw June 15, 2017

DENVER — Global uncertainty and political polarization are the issues that will have the most significant impact on the real estate industry in 2017 and 2018, according to The Counselors of Real Estate (CRE). The findings come from the organization’s Top Ten Issues Affecting Real Estate, which it released Wednesday during a keynote address by Scott Muldavin, 2017 chair of CRE, at the annual conference of the National Association of Real Estate Editors in Denver. CRE is a professional association for real estate advisors. Muldavin is president of The Muldavin Company, a real estate advisory firm based in San Rafael, Calif. The list was created from dialogue between CRE’s members, all of which took place under the direction of two CRE members: Peter Burley, a research executive and author, and Victor Calanog, chief economist and senior vice president with Reis New York City. The other issues earning rounding out this years’ Top 10 list include technology, generational disruptions, retail disruptions, infrastructure investment, housing, “Lost Decades of the Middle Class,” real estate’s emerging role in healthcare, immigration and climate change. Below are brief summaries of each issue from the report. For more in-depth analysis, click here to read the full report. …

June 15, 2017

Features Restaurant Retail Top Stories

From Production to Consumption: Architecture is Critical Component of the U.S. Microbrewery Scene

by John Nelson June 13, 2017

For most brick-and-mortar retailers, visibility to remain top-of-mind is at the forefront of operational decisions. Not so for microbreweries. In fact, it’s not as much about where a brewery is located as it is about how it is designed. For this still fairly young industry, brewery architecture and design are nearly as important as the beer itself. Microbreweries are quickly taking the Southeast by storm as places to taste and enjoy a fine beverage, as well as spend an enjoyable afternoon or evening. With so many intricate design components within often-limited budgets, this kind of project can be a perfectly alluring (and appetizing) challenge for an architect. Critical to the success of creating the ideal atmosphere and experience for a microbrewery is partnering with an architectural and design firm that understands the business to ensure the building ultimately supports current and future operations and growth. And, with fermenters and grain rooms in the mix, the design is quite unique to other commercial and even industrial spaces. Microbrewery operators must have space for two (possibly three) components: production, event space and now retail sales, an emerging third element for states like Georgia with new alcohol sales laws. The production space must …

June 13, 2017

Features Retail Top Stories

Avison Young’s Jedd Nero: Today’s Retail Real Estate Market Is a Blank Canvas

by Taylor Williams June 13, 2017

LAS VEGAS — With more than 30 years of experience representing tenants and landlords in retail negotiations, Jedd Nero, principal and executive managing director at Avison Young’s New York office, has worked with household-name retailers such as Hershey’s, Hugo Boss and Verizon Wireless. Nero was one of about 37,000 retail professionals who attended ICSC RECon in Las Vegas in late May. As the crowd jostled through the Las Vegas Convention Center in search of their next networking opportunity, Northeast Real Estate Business found time to chat with Nero. His insights into the rapidly changing landscape of retail real estate are detailed below. Northeast Real Estate Business: Since the beginning of the year, we’ve seen a rash of store closures nationally. In terms of the volume of these closures, what has precipitated that? Is it just online shopping or are there other factors at work? Jedd Nero: I think it’s a combination of several factors. I think we can all agree that the country is over-malled. There are about 1,200 malls in the country. By the time everything is said and done, there will probably be about 900 left. Class C and D malls have been affected the most. Certainly online …

June 13, 2017

Features Retail Western Feature Archive

Retail Is Going Through a Massive Transformation But is Far From Dead, Says Kennedy Wilson’s Fred Cordova

by Taylor Williams June 12, 2017

Throughout his 32-year career, Fred Cordova has purchased, sold, financed, developed and leased more than 6.5 billion square feet of real estate. As the executive vice president of brokerage services at California-based Kennedy Wilson, Cordova currently specializes in the retail sector. Western Real Estate Business caught up with Cordova at ICSC RECon in late May to get his thoughts on how traditional brick-and-mortar retailers can survive the current rash of store closures. Western Real Estate Business: Can you clarify your role in the retail space? Fred Cordova: Our brokerage service really specializes in the retail space, particularly in urban retail. We excel at leasing urban retail centers and properties, including the ground floors — the huge new wave of development of multifamily in an urban environment that has spread across the country like wildfire. We’re the ones who lease the ground-floor space. We also do infill retail shopping centers, many of which need to be repurposed. On the capital side, we do a lot of sales of properties that are going to be repositioned — older properties that need to be taken down completely, or in some cases rehabbed. But in most cases those properties are razed to make room for …

June 12, 2017

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