Features

Ten-X: Office, Apartment, Retail Sectors Drive Acquisition Prices Higher in July

by Haisten Willis August 2, 2016

IRVINE and SILICON VALLEY, CALIF. — Commercial real estate valuations increased by 1.1 percent in July, marking the strongest monthly increase this year and a 5.2 gain over last year, according to the latest Ten-X Nowcast. Ten-X, an online real estate transaction marketplace, uses Google Trends data, its own proprietary transaction data and investor surveys to forecast commercial real estate pricing trends. “The recent string of monthly increases confirms that overall pricing of commercial real estate remains on the upswing following the weakness seen earlier this year,” says Ten-X chief economist Peter Muoio. “That said, we are noticing distinct differences across the five major property sectors, with each telling its own story.” The office, apartment and retail sectors all saw monthly increases in July. The office sector posted the strongest gain for the second consecutive month, rising 4.8 percent from June and 7.6 percent above its level from one year ago. This was the best year-over-year gain for any of the commercial sectors since January. The multifamily sector, which has posted steady gains this year, increased 1.1 percent in July from the previous month and is 6.8 percent above last year’s level. “The apartment sector is unencumbered by technology-driven shifts …

August 2, 2016

Features Retail Top Stories

Four Tips for Ensuring Your Retail Center Remains Relevant

by Christina Cannon July 28, 2016

Several years after a punishing recessionary cycle, Michigan’s retail marketplace finds itself at somewhat of a crossroads. Steady and sustained economic growth and a robust retail recovery have things moving in the right direction. With few new large shopping centers opening in the last five to six years, these positive trends have led to the absorption of a great deal of available space. Consequently, demand for quality space has been picking up and retail rents have recently begun rising quite rapidly. At the same time, the relative lack of new construction presents its own challenges. It has prompted more tenants to commit to long-term renewals. In addition, with quality space in prime locations at a premium, more developers and retailers are electing to enhance or expand their existing stores. Fundamentally, the state’s evolving retail marketplace looks quite different than it did in the mid to late 2000s. The 2009 economic crash delivered a real blow to the lifestyle centers that were a big part of the pre-recession expansion, and those developments have had to scramble to adapt. Many have had to convert from a traditional lifestyle center model to more of a hybrid concept, integrating more middle-market and service-oriented tenants. …

July 28, 2016

Features Retail Top Stories

Need for Customer Engagement, Sense of Belonging Turns Traditional Shopping Center Paradigm on Its Head

by Christina Cannon July 26, 2016

Gathering spaces and food are changing the format of the physical shopping environment, say retail architects and designers who are being tasked with creating new designs for older shopping centers and new retail-oriented projects. “Retail projects are requiring a different approach as far as what they mean to the customer anymore,” says Sy Perkowitz, principal with KTGY in Irvine, Calif. “What we want is something that is an attraction; something that brings you out to the retail center as opposed to Internet shopping or other activities that you may be involved in,” explains Perkowitz, “The need to be physically present at a retail project has changed. It used to be out of necessity, and today it’s more about wanting to be there because you’re interested in communicating with other people face-to-face.” As a result, retail developers are incorporating more places for people to socialize in shopping centers, whether that is restaurants, outdoor dining areas or public gathering spaces at shopping centers, something that used to be taboo in retail design. In former times, gathering spaces were thought to disengage shoppers from spending time in stores. Today, the opposite is true: the longer visitors spend at the center, and the more …

July 26, 2016

U.S. Bureau of Labor Statistics June Jobs Report

Features Top Stories

Was May or June the Outlier on the Jobs Front? Economists Weigh In

by Jeff Shaw July 21, 2016

What a difference a month makes when it comes to U.S. job growth and the near-term economic outlook. After the Bureau of Labor Statistics (BLS) released a disappointing nonfarm payroll employment report for May, showing a net gain of only 38,000 jobs — a figure that was later revised downward to 11,000 — June rebounded in a big way. Employers added 287,000 net new payroll jobs in June, blowing past the 180,000 jobs forecasted by Bloomberg based on its survey of economists. In a research note titled “Employment Whiplash,” Robert Bach, director of research for the Americas at real estate services firm Newmark Grubb Knight Frank, wrote that both the May and June job growth data are “outliers” in his view. Noise in the Numbers Bach pointed out that a strike by Verizon workers subtracted about 35,000 jobs from the information sector in May, but when that crisis passed those jobs were subsequently added to the BLS report for June. Bach believes those events exaggerated the volatility over the past two months. “The three-month average of 147,000 is a better indication of the underlying strength of the labor market. Although growth declined in the first half of 2016, it remains …

July 21, 2016

Features Top Stories

Tax Attorney Daniel Smith: When Law Firms Collaborate, Property Owners Reap the Benefits on Their Bottom Line

by Katie Sloan July 19, 2016

Traditionally, a commercial real estate owner would retain several law firms, each with its own area of expertise. One firm might handle development, construction, acquisition and leasing issues, while another firm would oversee contract disputes and litigation. Although it may have become conventional, this service model is losing its appeal. Law firms with mutual clients often fail to communicate with each other, sending mixed signals to the client and leading to inconsistent advice. As owners become more astute and the market for legal services grows increasingly competitive, owners can now demand that law firms seeking their business distinguish themselves from the competition. One-stop shop One of those distinguishing attributes is the ability of the firm or its real estate practice group to address an owner’s overall real estate needs, not just a specific function. This approach better enables the law firm or practice group to demonstrate their understanding of the owner’s business and commitment to achieving the owner’s goals. Some service-oriented law firms recognize this and have learned to provide value in practice areas beyond those for which they were hired. They are now looking to bring in additional professionals to ensure that their client-service teams have the expertise to …

July 19, 2016

Features Office Top Stories

San Francisco Remains Top Tech Market, But Cost of Living Boosts Other Metros, Says CBRE

by John Nelson July 14, 2016

LOS ANGELES — The San Francisco Bay Area remains the nation’s leading tech market, but the competition for talent is getting tougher as more highly skilled tech workers — especially Millennials — are flocking to cities where the cost of living is lower and tech jobs are plentiful, according to CBRE Group Inc.’s (NYSE: CBG) research report, “Scoring Tech Talent.” The annual report ranks 50 U.S. and Canadian markets according to their ability to attract and grow tech talent. To appeal to skilled talent at a lower cost of doing business, both new and expanding companies are establishing footprints in more affordable markets — including Nashville, Charlotte, Tampa, Seattle and Phoenix — leading to a rise in demand for office space and a decrease in office vacancy. “Tech talent markets share several distinct characteristics, including high concentrations of college-educated workers, major universities producing tech graduates and large Millennial populations,” said Colin Yasukochi, who authored the report on behalf of CBRE Research. “The robust entrance of Millennials into the labor pool contributed greatly to the growth in tech talent across all 50 downtown markets in our ranking this year.” Tech Talent Scorecard Established tech markets, namely the San Francisco Bay Area, …

July 14, 2016

Features Industrial Top Stories

Record Absorption Leads to Lowest U.S. Industrial Vacancy Rate of Past 30 Years, Says Cushman & Wakefield

by John Nelson July 12, 2016

NEW YORK — The U.S. industrial market has absorbed a record-setting 70.1 million square feet of space in the second quarter, up 6 percent from the same period a year ago, according to Cushman & Wakefield. Year-to-date, the industrial sector has absorbed 132.2 million square feet. The second-quarter figure marks 25 consecutive quarters of net occupancy gains for the industrial sector, with the current quarter’s absorption reaching a new cyclical high. Nationally, the industrial vacancy rate is currently tracking at 5.8 percent, the lowest level of the past 30 years and 270 basis points below the 10-year historical average. Additionally, 38 U.S. markets reported more than 1 million square feet of absorption during the second quarter, with 11 markets recording more than 2 million square feet of absorption. Kevin Thorpe, Cushman & Wakefield’s chief economist, says that despite a series of shocks to the U.S. economy this year and heightened uncertainty emanating from Europe, economic fundamentals remain mostly solid, which ultimately benefits the U.S. industrial sector. “We expect to see some headwinds form in manufacturing and exporting created by the stronger U.S. dollar, but other important industrial-related indicators, such as containerized traffic flows, transportation indices, and business inventories, demonstrate that …

July 12, 2016

Features Multifamily Seniors Housing Top Stories

NIC: Seniors Housing Occupancy, New Construction Sag Slightly in Second Quarter

by Jeff Shaw July 7, 2016

ANNAPOLIS, Md. — The average occupancy rate for independent living and assisted living properties in the second quarter of 2016 dropped to 89.7 percent, as new inventory outpaced absorption of units, according to a quarterly report from the National Investment Center for Seniors Housing & Care (NIC). The occupancy rate represents a decrease of 30 basis points from the prior quarter, and brings average occupancy back down to where it was a year ago. During the past three years, occupancy has averaged 89.8 percent. As of the second quarter of 2016, occupancy was 2.8 percentage points above its cyclical low of 86.9 percent during the first quarter of 2010. The skilled nursing sector saw the same drop of 30 basis points to 87.1 percent. Despite the lower occupancy rate the second quarter, annual asking rents for independent living and assisted living continued to grow, increasing 3.2 percent. This is an increase of 10 basis points over the first-quarter growth rate and 80 basis points over the previous year. It’s the highest rate since the second quarter of 2008, NIC reports. In skilled nursing, the asking rent growth stayed flat at 2.8 percent. Annual absorption for independent living and assisted living …

July 7, 2016

Features Multifamily Top Stories

Wanted: Tech-Savvy Apartment Managers to Boost Revenue

by Jeff Shaw July 5, 2016

Today’s apartment property managers wear a lot of hats. In addition to being responsible for leasing up residential buildings or knowing how to calculate a property’s return on investment, they must also maintain healthy relationships with their workers, owners and residents. Figuring out how to leverage technology is key to achieving this delicate balancing act. According to a 2015 survey by the National Multifamily Housing Council (NMHC), 37 percent of households within the United States rent versus own. That’s up from 32 percent in 2010. Approximately 26 percent of those who rent are under the age of 30. This shift from owning to renting by younger residents has changed the way the industry reacts to them. “It’s one of the interesting dynamics of the 21st century and has changed the way we and other management firms do business,” says Mark Zettl, chief operating officer of Chicago-based Waterton, an owner and operator of multifamily and hospitality assets across the United States. “While customer service and satisfaction have always been priorities, today’s managers are constantly being held to a higher standard — one that measures response times in minutes and hours rather than days,” says Zettl. “We’ve embraced the change because the …

July 5, 2016

Conference Coverage Features Top Stories

Seniors Housing Operators Share Their Secrets to Smart Growth at InterFace Conference in Chicago

by Katie Sloan June 30, 2016

CHICAGO — The U.S. economy may be stuck in low gear, but tactical and targeted growth strategies can produce outsized returns in the seniors housing space, according to a panel of property owners and operators who spoke during France Media’s InterFace Seniors Housing Midwest conference. The event, which took place June 21 at The Westin Chicago River North hotel, attracted 265 attendees from the seniors housing industry. Close attention to rental rates and occupancies boosts top-line revenue growth, said panelist Joe Solari, vice president of corporate development at Capital Senior Living. The Dallas-based company owns and operates 126 independent and assisted living properties. “We focus on buildings that are less than 90 percent occupied,” said Solari. Other successful growth strategies at Capital Senior Living include converting independent living units to those designed for a higher level of care, and the acquisition of stabilized communities in locales where the company already operates. “We can absorb these properties without almost any increase in corporate overhead,” said Solari. Moderated by Adam Heavenrich, managing director of Chicago-based Heavenrich & Co., the panel shared other effective corporate growth strategies. Participants included Bob Karn, executive vice president and CFO, Allegro Senior Living; Isaac Scott, principal, Anthem …

June 30, 2016

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