Features

Seniors Housing Draws Customers to Mixed-Use Centers

by Jeff Shaw May 11, 2017

Generally, when one thinks about the massive, new mixed-use projects under development, a few images come to mind. Apartments, offices, hotels and retail mixed together, with some green walking trails and open spaces. Seniors housing, however, is probably not among those first impressions. This idea is changing, though, as mixed-use developers and seniors housing owners and operators begin to see the mutual benefits that senior living can bring to a project. The demographic wave of Baby Boomers hitting retirement age will nearly double the 65-plus population in the United States by 2050, from 43.1 million to 83.7 million, according to projections by the U.S. Census Bureau. The tactic of integrating seniors living into mixed-use developments is becoming more common throughout the country. Usually in high-end developments, the target market is seniors with disposable income. While the projects are a one-off concept for most seniors housing developers, some are making it a cornerstone of their development philosophies. For example, Georgia-based Formation Development Group, a subsidiary of private equity group Formation Capital, has opened four communities in mixed-use developments in Texas and Illinois since 2009. The company has a fifth currently under construction in Pennsylvania. “That’s an intentional strategy on our part,” …

May 11, 2017

Features Multifamily Top Stories

Multifamily Rents Climb in 81 Percent of U.S. Markets in April, RENTCafé Report Shows

by Jeff Shaw May 9, 2017

Average U.S. apartment rents saw a modest increase of 0.2 percent from March to April 2017, but rents increased in 81 percent of markets nationwide, according to a report from RENTCafé. The report uses data from the apartment listing service’s parent company, software provider Yardi. The RENTCafé research team analyzed data across the 250 largest cities in the United States for buildings containing 50 or more units. Based on the data, the average U.S. apartment saw a $2 increase in rent between March and April 2017. Rents increased in April in 203 of the 250 cities tracked by Yardi, while they decreased in 13 cities and stayed flat in 34. Year-over-year, rents went up 2 percent nationwide, which is “a significant reduction in regard to historical performance at this time of the year and is the lowest annual growth rate we’ve seen in more than three years,” according to the report’s author, Ama Otet. By comparison, average rents increased at triple that rate — 6 percent — from April 2015 to April 2016. California cities make up the bulk of the April rent-growth list, with 11 of the top 20 growth cities located in the state. Stockton, Calif., took the …

May 9, 2017

Features Retail Top Stories

M&M: Positive Economic Forces Buoy Net-Leased Retail Sector, Despite Rising Interest Rates

by Kristin Harlow May 4, 2017

Steady growth of the U.S. economy will likely continue through 2017, benefitting a wide range of single-tenant, net-lease retail concepts that will dominate the development pipeline over the coming year, according to Marcus & Millichap’s latest Net-Leased Retail Research Report. The report details three aspects of the U.S. economy that are proving to be positive forces for the net-leased retail sector: job growth, consumer sentiment and core retail sales. Job growth gains averaged 195,000 positions per month over the last year, and the unemployment rate has fallen to 4.7 percent, the lowest level since 2007. The report also references an annual increase in average hourly earnings of 2.8 percent. Consumer sentiment posted its highest level since 2000, with expectations also elevated. The U.S. consumer confidence index is 11.9 percent above the average reading since the survey began in 1967. Core retail sales, defined as aggregate sales excluding automobile and gasoline sales, vaulted 5.7 percent year-over-year in February. Lead growth categories within the retail sector include e-commerce, food and drink establishments and health and personal care stores. As For Rising Interest Rates The postelection surge of the 10-year Treasury yield, as well as the Federal Reserve’s decision to increase the federal funds …

May 4, 2017

Features Multifamily Top Stories

MBA: First-Quarter Mortgage Originations Up 9 Percent Year Over Year

by Taylor Williams May 4, 2017

WASHINGTON, D.C. — Commercial and multifamily mortgage originations increased by 9 percent during the first quarter of 2017 on a year-over-year basis, according to the Mortgage Bankers Association (MBA). The results are based on the MBA’s Commercial/Multifamily Mortgage Bankers Originations index, which has tracked quarterly activity since 2002. The first quarter saw the dollar volume of loans for industrial properties increase by 40 percent compared with the first quarter of 2016. The volume of loans for healthcare and multifamily properties rose by 22 percent and 14 percent, respectively, during the same time frame. Loan production for all property classes was down 27 percent relative to the fourth quarter of 2016, but that was to be expected, says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Commercial real estate borrowing and lending started 2017 on much the same footing it ended 2016,” says Woodwell. “Multifamily properties remain the key force behind overall origination trends. Matching, broader investment themes, financing for industrial properties also picked up while retail declined.” The dollar volume of loans originated by Fannie Mae and Freddie Mac during the first quarter represented a 33 percent increase from the same period a year ago. On the flip …

May 4, 2017

Features Retail Texas Texas & Oklahoma Feature Archive Top Stories

InterFace Panel: Parking Spaces Present New Opportunities for Developers

by Taylor Williams May 3, 2017

HOUSTON — As e-commerce continues its siege of brick-and-mortar retail, shopping center developers in Houston are re-evaluating and repurposing the space currently allotted for parking. Virtually all centers are seeing reduced need for parking space, which creates opportunities to reclaim that space for more efficient uses, like adding another in-line store. At the InterFace Houston Retail conference on April 18, moderated by David Luther of Marcus & Millichap, industry experts spoke at length about how retail developers are cutting their parking allotments in strip centers and power centers alike, largely because of convenience-oriented technologies. Apps like Postmates and TaskRabbit have made it possible to outsource running errands to other people. Online grocery delivery services like Instacart and Shipt allow customers to do their shopping with a few quick clicks. Even Uber has gotten into the game with delivery features like UberRUSH for errands and UberEATS for meals. According to Tom Lile, president of retail development firm Gulf Coast Commercial Group and a conference panelist, such products and services have already begun to influence Houston developers’ thoughts on parking. “Fifteen years ago, if you were building a power center, you absolutely had to have five parking spaces per 1,000 square feet …

May 3, 2017

Features Multifamily Top Stories

Low Turnover, Higher Rental Prices Lead to Attractive Apartment Market for Landlords

by Kristin Harlow May 2, 2017

CHICAGO — Six in 10 apartment landlords say it is more profitable and attractive to be a landlord than it was five years ago, according to a new survey from TransUnion SmartMove, a tenant screening service for owners. The survey was conducted in March 2017 and included responses from 689 landlords across the country. At the close of the first quarter of 2017, property owners indicated it was easier to find qualified renters and that resident turnover had declined compared with the same time last year. Only 21 percent of respondents found it more difficult to find qualified renters. Data also shows that landlords utilized rent screening solutions to evaluate prospective tenants during the past year. “Our survey clearly shows it is a landlord’s market as the number of renters rises and these renters are remaining in units longer,” says Jason Norton, vice president of TransUnion SmartMove. “As a result, landlords are using sophisticated tools and screening solutions to evaluate potential long-term renters with greater certainty.” Six in 10 landlords reported that renters are remaining in their units for longer than they were a year ago. To ensure these residents are good prospects, the majority of owners (90 percent) conduct …

May 2, 2017

Conference Coverage Features Top Stories

Food, Fitness, Entertainment Firms Will Save Houston Shopping Centers, Says InterFace Panel

by Katie Sloan April 27, 2017

HOUSTON — As brick-and-mortar retailers such as Sears, Macy’s and hhgregg continue to shutter stores throughout the country at a furious pace, Houston developers are rapidly warming to the idea of anchoring their shopping centers with restaurants, fitness centers and entertainment-based businesses. Retail executives throughout the Houston area convened at the InterFace Houston Retail conference on April 18 to discuss the impact of this trend and others on the metro’s retail real estate market. David Luther, first vice president and district manager at Marcus & Millichap moderated a panel of five industry experts who addressed everything from the threat of e-commerce to parking wars between tenants. In Houston, the rampant growth of e-commerce contributed to 1.3 million square feet of big-box space being returned to the market in 2016, according to CBRE. In addition, the first quarter of 2017 saw net absorption of only 182,000 square feet. The end result is that developers are being forced to repurpose shopping centers anchored by traditional big-box retailers. As such, they are increasingly turning to businesses that offer a lifestyle product or service to fill the void. Larry Levine, president of Houston-based development firm Levcor Inc. and a conference panelist, noted that big-box …

April 27, 2017

Features Top Stories

The Current and Future State of Class B Regional Malls

by Katie Sloan April 25, 2017

There’s no question that regional malls, especially those outside major metropolitan areas, are feeling the brunt of market disruption. The brick-and-mortar retail environment has long been fighting the battle against e-commerce encroachment, shifting consumer habits and changing demographics. In the last five years, based on CoStar data: Retail rents in general have grown only 1 percent on average annually since 2011 while multifamily and office rents have seen 5 percent increases during that same time period. Class B and C regional malls have experienced a negative annual average growth of -3 percent; rents are down by approximately 19 percent. Also decreasing is the square footage being leased, from approximately 17,000 square feet on average to 11,000 square feet between 2010 and 2015. Currently, one-fifth of all U.S. malls have vacancy rates above 10 percent as department stores retrench. On the flip side, CoStar reports regional mall asset sales volume has risen significantly over the past three years, demonstrating that these properties can still-be attractive investments, particularly among private equity investors and REITs. They are buying Class B malls at relatively high capitalization rates at times approaching 8 percent or 9 percent (compared to a sub-6 percent cap for Class A …

April 25, 2017

Features Hospitality Top Stories

M&M: Job Growth Fuels Bright Outlook for Hotels in 2017

by Taylor Williams April 20, 2017

Hoteliers are poised to see higher revenues in 2017, thanks in large part to the shrinking national unemployment rate, according to a new report from Marcus & Millichap titled “U.S. Hospitality Investment Forecast.” The unemployment rate, which the Bureau of Labor Statistics (BLS) reports fell 20 basis points to 4.5 percent in March, is powering hospitality forecasts in several ways. Most fundamentally, as the economy expands and more jobs are created, wages begin to increase, leaving consumers with more disposable income for leisure and travel. Economic expansion also breeds more interstate commerce between businesses, driving up levels of work-related travel. In March 2017, the country added 56,000 jobs in the professional and business services sector, according to the BLS. Furthermore, since 2011, the U.S. has added between two and three million jobs per year. This growth has enabled workers to hold jobs for longer periods of time, giving them more accrued vacation days. Finally, as the workforce grows, younger employees gradually phase out older ones, leading to a growing segment of retirement-age consumers. These job-growth trends all point to increased consumer traveling and spending in 2017. As such, the hospitality sector is projecting a 1.4 percent growth in room demand …

April 20, 2017

Features Office Top Stories

Growth of U.S. Office Market Continues to ‘Disappoint,’ Says Reis

by Taylor Williams April 18, 2017

One measurement of the health of the U.S. office sector stood out in the first quarter of this year. Net absorption totaled 4.9 million square feet, down from an average of 9.4 million square feet per quarter in 2016 and the lowest since 2014. In short, growth in the office sector “continued to disappoint,” according to Reis. The New York City-based real estate research firm, which tracks 82 markets nationally, recently released its analysis of the property sector’s vital signs in the first quarter. The positive news is that the office vacancy rate held steady at 15.8 percent from the prior quarter, and was down 20 basis points from the first quarter of 2016. The overall asking rent rose 1.8 percent on an annual basis. Construction was also relatively low at 7.9 million square feet in the first quarter of 2017, down from an average of 8.8 million square feet in 2016. Much like retail real estate’s war with e-commerce, office markets are competing with the pressures of using space more efficiently and hiring employees who work from remote locations, says Reis senior economist Barbara Byrne Denham. “Firms have persistently leased less space for their growing workforce,” she says. The …

April 18, 2017

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