Features

Beware of RevPAR in Property Tax Valuations

by Haisten Willis November 3, 2016

When comparing hotels for valuation purposes, a common method of making adjustments for the difference between properties is to examine revenue per available room (RevPAR), a measurement of hotel performance. If executed poorly, these calculations can distort property value and lead to unfairly heavy tax burdens on hospitality owners. There are two different ways to calculate RevPAR. The first is to multiply the average rental income per room by the number of rooms occupied, then divide by the number of days in the period. The other method is to divide total guestroom revenue by the number of available rooms and divide that figure by the number of days in the period. In an article titled “Using RevPAR as a Basis for Adjusting Comparable Sales,” published in February 2002 by HospitalityNet.org, appraiser Erich Baum voiced a common argument shared by appraisers who advocate for RevPAR adjustments. Baum contends that the adjustments are appropriate because the revenue a hotel generates is tied to its location and the quality of its product. The question in valuation for property taxation is whether or not RevPAR incorporates additional, non-real estate values such as quality of brand, management, goodwill, etc., and whether or not the RevPAR …

November 3, 2016

Features Retail Top Stories

Finding the Right Strategies and Tactics is Key for Repositioning Retail

by Haisten Willis November 1, 2016

For real estate developers and investors, a time of transition and evolution within the retail world presents abundant opportunities to capitalize by acquiring and investing in underperforming spaces. With an infusion of capital, some strategic restructuring and re-tenanting with regional and national brands, a moribund center or underwhelming site can be transformed. Understanding the strategies deployed to effectively identify, acquire, reposition and re-tenant retail is an essential prerequisite for any commercial real estate professional looking to get involved in the process. The big picture The most critical step in the process is selecting the right opportunities to pursue in the first place. Identifying existing retail assets that are underperforming is one thing. Finding those that can be successfully reinvigorated and repositioned through an infusion of capital and the application of some expertise is a little trickier. It is a best practice to confine your search to well-established trade areas because you generally do not want a project on the fringe. The overall goal is to identify markets and trade areas where there is more demand than quality supply, and then work to find a creative and cost-effective way to deliver that supply. Once you identify those areas, familiarize yourself with …

November 1, 2016

Features Retail Top Stories

Shopping Center Rents Decline for First Time in Five Years, Says Cushman & Wakefield

by John Nelson October 27, 2016

The retail marketplace continues to undergo a period of retrenchment and reinvention, the likes of which we have not seen since the rise of the suburbs starting in the late 1950s. The new period of disruption has been fueled by the rise of e-commerce, in particular Amazon, with the emergence of smartphones and tablets acting as a major accelerator since 2010. Combined with a consumer base that downshifted into frugality mode during the Great Recession, the current marketplace is one of the most challenging retail landscapes of the past 50 years. In spite of these challenges, overall shopping center vacancy has actually continued to trend downward. Despite a significant increase in retail closures (through the third quarter Cushman & Wakefield has tracked over 4,000 major chain closures for 2016, surpassing 2010’s record of 3,600), as well as multiple notable bankruptcies, the disruption has not equally impacted all retail sectors. Digital media has effectively wiped out the video and record store sectors while creating major challenges for the remaining major bookstore chains. The consumer electronics and office supplies categories continue to face major headwinds from e-commerce, as do a number of other retail categories ranging from gifts to home furnishings. The …

October 27, 2016

Alabama Features Southeast Top Stories

Purchase Price Doesn’t Always Equal Property Tax Value

by John Nelson October 25, 2016

Don’t worry about challenging a property tax value that is less than the taxpayer’s purchase price, right? Wrong! There are numerous factors that distinguish a purchase price from a taxable assessed value, and the failure to closely review an assessment can cost a property owner dearly. The legal standard for determining property tax values can differ from state to state, but it is generally equivalent to fair market value. That is the probable price that the property would bring in a voluntary, arms-length transaction between a willing and knowledgeable buyer and seller, in an open and competitive market, with neither party being under undue duress, as of the valuation date. While it is possible for a purchase price to be the same or similar to market value, there are many instances where the two deviate. Here are some common examples: Related Parties Sales A sale is not an arms-length market transaction if it occurs between related parties and isn’t exposed to the open market. A sale between a company and its subsidiary, for example, may not reflect fair market value. Fee Simple vs. Leased Fee For property tax purposes, fair market value is most often based on the fee simple …

October 25, 2016

Affordable Housing Features Multifamily Top Stories

Survey: 76 Percent of Millennials Struggle to Find Affordable Housing

by Haisten Willis October 20, 2016

WASHINGTON, D.C. — A survey of 1,000 Americans aged 18-34 — commonly known as Millennials — has found that a majority of them have had to delay or rethink traditional ideas of home ownership, according to The NHP Foundation, which conducted the survey. The NHP Foundation is a nonprofit provider of affordable housing. The survey found that 76 percent of Millennials have made compromises in order to find affordable housing, which NHP defines as housing that costs no more than 30 percent of the respondent’s income. Of those who admit compromises, 46 percent live with parents or family, 43 percent have put off saving for the future, 41 percent live with a roommate and 36 percent had to move further away from school or work to find something affordable. “Millennials, America’s largest generation, are already saddled with record-breaking student loan debt and no longer think homeownership is in their future,” says Richard Burns, CEO of The NHP Foundation. “This group mirrors much of society, which is also frustrated by the lack of affordable housing and is seeking rental options.” Cost Burden Those who spend more than 30 percent of their income on rent or a mortgage are considered cost-burdened. The survey found …

October 20, 2016

mark-zandi-chief-economist-moodys-analytics

Features Top Stories

Zandi: Brexit Timing Will Determine Effect on U.S., European Real Estate

by Haisten Willis October 18, 2016

WASHINGTON, D.C. — Mark Zandi, chief economist at Moody’s Analytics, believes that despite bank and analyst predictions of a world recession if the United Kingdom voted to leave the European Union, the global economy is actually “OK for now.” He adds that the timing of the Brexit completion would likely determine stability of economies throughout Europe as well as the United States over the next three to five years. Zandi’s comments came at The Counselors of Real Estate annual convention, held Sept. 25-28 in Washington, D.C. Zandi led discussion about Brexit, when British voters decided on June 23 to leave the E.U., and its economic impact with a panel of real estate advisors representing France, Germany, Turkey, the U.S. and the U.K. He said the overall economy is “amazingly resilient,” because very little negative effect has been felt so far in Europe or the U.S. as a result of the vote. He noted that the European economy is actually growing and the U.S. is stable. Long-Term Process But, Zandi said, it’s too early to know the full effect Brexit will have until the process officially begins, which could potentially be longer than the timing called for in the Lisbon Treaty …

October 18, 2016

Features Louisiana Multifamily Southeast Student Housing Top Stories

NMHC 2016 Conference: Student Housing Remains Robust, Transaction Volume and Investor Interest High

by Katie Sloan October 13, 2016

NEW ORLEANS — The 14th annual National Multifamily Housing Council (NMHC) Student Housing Conference & Exposition was held Sept. 28-30 at the New Orleans Marriott in Louisiana, with over 700 leaders from all facets of the sector convening to network, discuss and dine over a range of industry topics. The outlook throughout the conference was overwhelmingly bright. Each panel and session showed the sector to be robust, with reports of rising rental rates, a record year in asset sales in the sector, and increasing investor interest and capital entering the student housing market. The conference began on Wednesday, Sept. 28, with opening remarks by NMHC president Doug Bibby, followed by a panel titled “Keeping Count: The Public Company Perspective.” Led by CEO of Peak Campus Bob Clark, the panel went in-depth with the CEOs of the two public REITs in the industry — Bill Bayless, president and CEO of American Campus Communities (ACC), and Randy Churchey, chairman and CEO of Education Realty Trust (EdR). Clark began the panel with a variety of statistics on the sector today, as reported by Axiometrics. New supply deliveries for the last five years have been 61,000-beds in 2013; 62,000-beds in 2014; 47,000-beds in 2015; 48,000-beds in 2016; and 36,000 …

October 13, 2016

Features Heartland Feature Archive Michigan Midwest Office

With Office Leasing Activity Accelerating in Detroit, New Construction is Imminent

by Jeff Shaw October 13, 2016

It is a fascinating time for the Detroit office market. Downtown neighborhoods and suburban markets alike are being transformed thanks to years of positive economic trends marked by healthy job growth and the desire of several companies to locate in the city. Landlords, tenants and investors are looking to consolidate gains and position themselves for success in an evolving marketplace. On the leasing front, we are still seeing activity in Detroit proper with small to mid-sized firms, punctuated by a handful of larger deals that have taken place. The higher profile moves include Detroit-based auto lender and bank holding company Ally Financial taking approximately 320,0000 square feet on 13 floors at One Detroit Center, now known as the Ally Detroit Center. A number of law firms have inked leasing deals. For example, longtime Detroit tenant Miller, Canfield, Paddock and Stone PLC renewed its lease at 150 W. Jefferson, a 25-story skyscraper formerly known as the Madden Building, where the law firm occupies approximately 97,000 square feet. Southfield, Mich.-based Redico LLC recently acquired the 500,000-square-foot tower, built in 1989, from Piedmont Office Realty Trust for $81.5 million. While leasing activity is strong in the central business district (CBD) — driven in …

October 13, 2016

Conference Coverage Features Multifamily Texas Texas & Oklahoma Feature Archive Top Stories

Highs, Lows of Texas Apartment Market Under Microscope at InterFace Conference

by Jeff Shaw October 11, 2016

DALLAS — The multifamily market in Texas has cooled off on the lending and development front, and even leasing activity isn’t as robust as it once was in some markets. That’s the consensus of panelists at Interface Multifamily Texas, which took place last Thursday, Oct. 6 at the InterContinental Dallas. The conference’s opening panel, “What’s the Big Picture for Multifamily Supply, Demand & Demographics?” featured three economists specializing in the Texas multifamily market, all of whom agreed the sector was slowing from the same time a year ago. “‘Noise’ is a great term to use, and in our company we are using ‘chop’ to describe the market,” said Ryan Davis, senior economist with Witten Advisors. “Apartments are steady, but the economy is slowing from the ramp-up.” That said, the Texas economy is generating plenty of new jobs, which is a positive sign for apartments in certain markets, added Davis. Dallas Metroplex Shines Among individual markets, all agreed that Dallas/Fort Worth displayed the strongest real estate fundamentals. With the area benefiting from some large corporate relocations, demand for apartments is rising. Rents have grown in the market 7.7 percent over the past 12 months, and there are more than 30,000 units …

October 11, 2016

Features Retail Texas Texas & Oklahoma Feature Archive

Millennials Shake Up Retail Game, Says Keynote Speaker at ICSC Texas

by Jeff Shaw October 10, 2016

DALLAS — While retail spending is on the rise overall, companies and brands that appeal to younger shoppers are having by far the most success, according to Dana Telsey, CEO and chief research officer at Telsey Advisory Group in New York City. Shifting consumer trends mean certain retailers — such as off-price apparel chains and “eatertainment” anchors like Topgolf and Main Event Entertainment — are having more success than others catering to the demands of the younger demographic. Telsey was the keynote speaker for the ICSC Texas Conference & Deal Making show that took place Oct. 5-7 at the Kay Bailey Hutchison Convention Center in Dallas. The event drew 4,008 attendees, the most in its history and the first time the conference has ever topped the 4,000 mark. The brokers, lenders, developers and others who listened to Telsey’s speech heard mostly positive news about the state of their industry. One retail subset seeing a lot of growth is off-price retailers, including TJ Maxx, Marshalls and Ross Dress for Less. “The off-pricers are the new department stores of today,” said Telsey. While those retailers are surging, some traditional department stores are struggling. Macy’s plans to close 100 locations, and Kohl’s has …

October 10, 2016

Newer Posts

Older Posts