Features

NIC: Seniors Housing Occupancy Remained Stable in Third Quarter While Asking Rents Increased

by Jeff Shaw October 6, 2016

ANNAPOLIS, Md. — The occupancy rate for seniors housing properties in the third quarter held steady, even as asking rents increased, according to the National Investment Center for Seniors Housing and Care (NIC), the industry’s main data tracking agency. NIC’s data is gathered from more than 14,000 properties across 140 metro markets nationally. The average occupancy for the quarter was 89.8 percent for seniors housing, which includes independent living, assisted living and memory care. That number was identical to the average occupancy over the last three years, and an increase of 10 basis points from the previous quarter. From a historical perspective, the average occupancy in the third quarter was 290 basis points above the industry’s cyclical low of 86.9 percent during the first quarter of 2010. Independent living properties led the industry in occupancy rate, with an average of 91.1 percent, an increase of 20 basis points over the prior quarter. The average occupancy at assisted living properties trailed at 88 percent, the same as the previous quarter but a drop of 20 basis points from the year prior. Healthy Tenant Demand Although occupancy was largely unmoved, absorption stayed positive as the market successfully took on new supply. Annual …

October 6, 2016

Features Heartland Feature Archive Retail Top Stories

Turnaround Artists Share Ideas for Re-Energizing Shopping Centers

by Jeff Shaw October 4, 2016

Unlike fine wine, retail properties don’t necessarily get better with age. In order for a shopping center to remain attractive and inviting, it periodically needs to be renovated or even repositioned. Since 2010, the U.S. shopping center industry has completed an average of 198 renovation projects annually, according to JLL in a research report released early this year titled “Remaking Retail: A Tricky Proposition.” Seventy percent of shopping centers renovated after 1999 were originally built between 1960 and 1989. Centers built during the 1980s have been the most popular targets for remodeling almost every year since 2003. So-called “meat and potatoes” retail real estate underwent the most renovation work from 1999 through 2015, according to JLL. Eighty-six percent of shopping center renovations during that period took place at neighborhood, strip and community centers. In order for a redevelopment, an even bigger undertaking, to be worth the effort, an owner would expect the project to add 200 basis points to a center’s capitalization rate as a general rule of thumb, JLL points out. What follows are two case studies of shopping center makeovers, one in Kansas City, Mo., and the other in West Des Moines, Iowa, that illustrate the challenges and …

October 4, 2016

Features Top Stories

AIA’s Latest Architecture Billings Index Slips for First Time Since January

by John Nelson September 29, 2016

WASHINGTON, D.C. — Following six months of increasing demand for design services, the Architecture Billings Index (ABI) slipped below the positive mark for August, reflecting a decline in demand for design activity at architecture firms. The American Institute of Architects (AIA) reported the August ABI score was 49.7, down from the mark of 51.5 in July. The score reflects a decrease in design activity, with any score above 50 indicating an increase in billings. “This is only the second month this year where demand for architectural services has declined and it is only by a fraction of a point,” said Kermit Baker, AIA’s chief economist. The new projects inquiry index was 61.8, up from a reading of 57.5 the previous month. The design contracts index also jumped from the previous month, from 51.8 in July to 52.7 in August. The design contracts metric tracks trends in the dollar volume of signed design contracts, with any score above 50 reflecting a growing value of the design contracts signed by AIA member-owned firms. Because the design contracts index functions as an early indicator of construction contract awards, Baker is assured that the decline in the ABI for August isn’t a harbinger of …

September 29, 2016

Features Florida Office Southeast Top Stories

Steps Every Landlord Should Take to Prevent Liens by its Tenant’s Contractors

by John Nelson September 27, 2016

Defending claims of lien recorded by tenant improvement contractors can be costly, time consuming and lead to protracted litigation. However, with a little planning and the right contract language, landlords can protect their properties from such liability. Below is a summary of various strategies a landlord can implement to avoid liens from its tenant’s improvements. Include No-Lien Language in all Leases and Record A Notice Thereof Under Florida law, when a lease between a landlord and a tenant requires the tenant to make improvements to the tenant’s premises, if the tenant ends up failing to pay its contractor for the tenant improvement work, then the contractor can file a claim of lien (and eventually foreclose) against both the tenant’s leasehold interest and the landlord’s fee simple interest in the property in an attempt to recover payment. However, under Section 713.10, Florida Statutes, the landlord can prevent such claims of lien and foreclosure actions, even if the improvements are the “pith of the lease,” by taking a few proactive steps. First, the landlord must include express “no-lien language” in its lease that states that the interest of the landlord shall not be subject to liens for improvements performed in the premises …

September 27, 2016

Features Top Stories

Reforms to FIRPTA Affecting Real Estate Investment Opportunities

by Katie Sloan September 22, 2016

For 35 years, the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) has provided a pathway for foreign investment into American real estate development. Changes are coming from the implementation of the Protecting Americans From Tax Hikes Act of 2015, which are the first reforms in more than three decades that affect the status of foreign investment. FIRPTA reforms are designed to spur investment from foreign investors by modernizing some exemptions of the law, making foreign investment into American real estate more appealing. On December 18, 2015, President Obama signed into the law the Act to extend certain tax relief provisions that were expiring at the end of 2014. The Bill was written to create legislative reforms to FIRPTA designed to bring in additional investment into a struggling marketplace. There are a few major changes provided for in the reforms. The new Act exempts certain foreign pension funds and their subsidiaries from FIRPTA taxation. This will hopefully spur on more participation from these groups. It also increases the amount of Real Estate Investment Trust (REIT) stock participation available to foreign investors from 5 percent to 10 percent. The new rule creates a FIRPTA tax exemption for foreign investors …

September 22, 2016

Features Retail Top Stories

The Great ‘Mall Is Dead’ Myth

by Katie Sloan September 20, 2016

It actually has become clockwork at every major retail event, be it Back to School, Christmas/Hanukkah, even July 4th. We see the inevitable “Mall is Dead” story in some newspaper or television report. Twenty years ago, catalogs and big box power centers were the killers; today, it’s e-commerce, market saturation and debt-laden millennials who will kill the mall. Only the most famous, highest-end centers in the major markets will survive, according to the doomsayers, with the remainder to be turned into any other use you can think of, from warehouses to office buildings to hotels to, yes, prisons. Except the statistics — and our experience at 30 mid-market malls and lifestyle centers at Starwood Retail Partners — don’t support that argument at all. Industry research shows that mall visitation has bounced back well after the Great Recession, that customers are shopping, eating and enjoying the growing number of experiences our centers can offer, and that our industry is finding new life at all economic tiers. This article will dispel some myths with solid fact. We’re not all just sitting at home ordering from Amazon. Myth: No one shops at malls any more. Fact: If that were so, it would only …

September 20, 2016

Features Multifamily Seniors Housing Top Stories

How Baby Boomers Will Transform Our Stereotypes of Retirement and Aging

by Jeff Shaw September 16, 2016

WASHINGTON, D.C. — An age wave is coming that will be the most extraordinary demographic disruption in history, and one which will create both winners and losers in the seniors housing space, predicts Ken Dychtwald, a noted psychologist, gerontologist and author. The number of people 65 and older in this country is projected to increase 81 percent between 2010 and 2030, according to the U.S. Census Bureau. The first of the Baby Boomers will turn 80 in 2026. That demographic tsunami presents great opportunities and risks for owners and operators of seniors housing. “You will win if you can imagine this generation, understand what’s in their hearts and souls and minds and bodies, and then project them into a stage of life that itself is morphing as they migrate into it,” said Dychtwald, founder and CEO of Emeryville, Calif.-based Age Wave, a thought leader on issues relating to an aging population, including the business and social implications. The comments from Dychtwald came during the 2016 NIC Fall Conference at the Marriott Marquis in Washington, D.C. The three-day event attracted a record turnout of more than 2,500 attendees, largely owners, operators, developers and lenders. Dychtwald was the first of three speakers …

September 16, 2016

Features Office Top Stories

JLL: Tech Dominates U.S. Office Leasing, Creates Resilient Economies

by Haisten Willis September 15, 2016

CHICAGO — Even as the technology industry begins to normalize after two years of major growth, the nation’s tech markets remain winners in the race for talent and, by extension, office leasing. This according to JLL’s recently released Tech Office Outlook report. From the second quarter of 2015 to the second quarter of 2016, tech office leasing volume fell 9.6 percent. However, despite tech industry growth hitting a relative plateau, it will continue to outpace the national economy and is creating strong real estate conditions across the country, according to the report. “The technology sector is the leading industry for real estate expansion in the U.S. and is driving nearly 25 percent of office leasing activity across the nation over the past two years for leases of 20,000 square feet or more,” states the report. “Also, 63 percent of these tech companies are in growth mode. And this demand is driving office rents up. The most expensive rents can be found in San Francisco Peninsula’s Menlo Park, at $102.16 per square foot, followed by Palo Alto in Silicon Valley ($100.79); San Francisco’s Mission Bay/China Basin ($84.70) and Hudson Square in New York ($83.11).” The 9.6 percent year-over-year dip in second-quarter leasing …

September 15, 2016

Conference Coverage Features Multifamily Seniors Housing Southeast Feature Archive Top Stories

More Flexibility, Consumer Choice Will Be Key to Future Seniors Housing Development, Say InterFace Panelists

by Jeff Shaw September 13, 2016

ATLANTA — With so many new facilities and operational models altering the seniors housing landscape, what will be the key to a successful seniors housing development in the future? According to panelists at the InterFace Seniors Housing Southeast Conference, the answer is flexibility. Colleen Blumenthal, managing director with Florida-based seniors housing advisory firm HealthTrust, moderated the “State of the Industry” panel at the event, which drew approximately 315 industry professionals to the Westin Buckhead in Atlanta on Aug. 25. The panelists included Richard Hutchinson, president and CFO of Florida-based owner-operator Discovery Senior Living; Joe Weisenburger, vice president of seniors housing for Ohio-based REIT Welltower; Kevin Pascoe, executive vice president of investments for Tennessee-based REIT National Health Investors (NHI); Charles Turner, president of Texas-based developer PinPoint Senior Living; and Mark Spiegel, president of Georgia-based developer Formation Development Group. Flexible Spaces Create Agile Buildings When asked about the successful seniors housing communities of the future, several panelists cited flexibility as a top consideration — including everything from room sizes to price point to use of common spaces. “As we’re building new product, we’re trying not to have common areas that guess what the future trends are going to be,” said Spiegel. Formation …

September 13, 2016

Tomball Four Corners Shopping Center in Tomball, Texas

Features Retail Top Stories

Finding the Right Tactics is Key for Repositioning Retail

by Jeff Shaw September 8, 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 …

September 8, 2016

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