Features

Texas has the two most active development markets in the country in San Antonio and Austin, but other metros aren’t far behind, according to senior living consulting firm Plante Moran and the National Investment Center for Seniors Housing and Care (NIC). During the first quarter of 2014, there were 5,349 assisted living, independent or memory care units under construction in Austin, Dallas, El Paso, Houston and San Antonio, NIC data shows. By the first quarter of 2015, that number had risen to 6,525 total units, a 22 percent increase. In San Antonio, there were 1,781 seniors housing units under construction in the first quarter of this year, representing 23.5 percent of existing inventory. Austin’s 920 units under construction accounted for 15.4 percent of that market’s existing inventory. Those were the highest two percentages of any major market in the United States. Seniors housing construction in Knoxville, Tenn., represents 14.9 percent of that metro area’s existing inventory, according to Plante Moran. That puts Knoxville in third place behind Austin. Columbus, Ohio, follows close behind at 14.5 percent, after which there’s a drop to approximately 12 percent in Houston, Texas, and Sarasota, Fla. “Knoxville has shown an increase in occupancy from last …

WASHINGTON, D.C. — Riding on the strength of Fannie Mae and Freddie Mac, new mortgage originations for commercial real estate properties increased 29 percent in the second quarter compared with the same period a year ago, according to the Mortgage Bankers Association (MBA). What’s more, new mortgage originations in the second quarter were up 16 percent from the first quarter of 2015 The MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows year-over-year increases in mortgage originations every year since 2009. Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac led the commercial real estate lending market with a 113 percent increase in deal volume from second-quarter 2014 to second-quarter 2015. “Driven by increasing property values, improving property fundamentals and still-low interest rates, commercial and multifamily lending and borrowing continued its strong pace in the second quarter,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Mortgage bankers’ originations for Fannie Mae and Freddie Mac are near record quarterly levels.” Of all property sectors, multifamily posted the strongest increase at 58 percent, followed by industrial properties at 32 percent. Office, retail and hotel properties saw more modest increases of 22 percent, 17 percent and 16 percent, respectively. The only …

SANTA BARBARA, CALIF. — Apartment rents in the United States rose 6.5 percent year-over-year in July to a record $1,155, according to the July 2015 edition of Matrix Monthly, a report on U.S. multifamily market trends from real estate software developer Yardi. Technology-fueled markets in the Western U.S. continued to spearhead rent growth, led by Portland (14.6 percent), Denver (13 percent) and San Francisco (9.8 percent). Growth is strong across the board in all 30 of the markets featured in the Matrix Monthly, with only five metros experiencing less than a 4 percent increase year-over-year and three below the national long-term average of 2.8 percent. San Diego (fifth with 9.1 percent rent growth year-over-year), Orlando (seventh at 8.4 percent) and Tampa (eighth at 8.1 percent) jumped into the report’s top 10 in year-over-year growth, replacing Dallas, Phoenix and Jacksonville. The report has tracked a strong correlation between rent growth and employment gains. Metros with job growth above the national average tend to be among the leaders in rent growth, even if supply growth is above-trend. San Francisco (3.9 percent job growth year-over-year on a six-month moving average), Atlanta (4.1 percent), Inland Empire (4.1 percent), Denver (3.5 percent) and Seattle (3.4 …

CHICAGO — The number of new construction projects increased in several markets across the country in the second quarter, according to Chicago-based BidClerk, which tracks construction activity in the United States and Canada. The BidClerk Construction Index (BCI), which is compiled quarterly, reported more than 75,000 new projects valued at over $188 billion nationally in the second quarter, an increase of 15,000 projects and $40 billion compared with the same period a year ago. (The BCI data represents projects that actively bid in 2015 and is not a full representation of BidClerk’s full project database.) Particularly hot markets and regions for construction — showing growth rates above 15 percent compared with the second quarter of 2014 — were Washington, D.C., Ohio, Texas, the greater Atlanta region and major metros in the Southwest. Washington, D.C., and the surrounding region recorded a 17 percent uptick in construction projects out for bid in the second quarter. Over 500 of the 1,600 projects charted were valued at more than $1 million, including the $70 million Banner Hill Apartments in Baltimore and the $35 million Archer Park Apartment Building designed by SK+I Architectural Design Group. In the second quarter, Ohio recorded an 18 percent increase …

NEW YORK CITY — The U.S. office sector is poised for continued growth in the second half of 2015, though stagnant vacancy has slightly tempered previously high expectations, according to the latest Reis analysis based on second-quarter data. “Occupied stock rose by 8.4 million square feet, outpacing new completions of 8.3 million square feet in the second quarter,” reports Victor Calanog, chief economist and senior vice president at New York-based Reis. “While this was not sufficient to nudge vacancies downward, it still does provide evidence of a slow simmer in terms of leasing activity. Employers are hiring, albeit slowly, and are leasing up space at the same plodding pace.” Vacancy rates in the office sector, which remained at 16.6 percent in the first and second quarters of 2015, vary by location. In central business districts (CBDs), the vacancy rate stood at 13.3 percent in the second quarter as opposed to 18.3 percent in suburban areas. The report notes that this is a reversal from the 1990s, when CBD vacancy rates were higher than those in suburbs as employers sought lower crime rates and better school systems. Another struggle for suburban areas is large inventory. From 1990 to 2010, more than …

The industrial sector is booming nationally and on pace to show even stronger absorption and lower vacancy numbers than 2014’s banner year, according to commercial real estate services firm DTZ, which released its U.S. Industrial Trends Report at the halfway mark of 2015. “Midway through 2015, demand for industrial space is poised to set another record,” according to the report. Absorption in the 60 major metros tracked by DTZ was 46.1 million square feet in the second quarter for a total of 86.5 million square feet through the first half of the year. That’s a 22 percent increase from the first half of 2014, and has driven industrial vacancy to a cyclical low of 7.3 percent. “The industrial boom is occurring in nearly every region in the U.S.,” according to the report. “In fact, only 17 percent of the national market did not absorb industrial space in the second quarter.” The boom isn’t just occurring among large industrial buildings in the sector either. The report notes that smaller industrial buildings between 10,000 and 50,000 square feet “are seeing rental appreciation exceed that of larger buildings in all of the top markets — sometimes by more than double.” With high absorption …

NEW YORK — The U.S. CMBS loan delinquency rate across the five major property types rose by five basis points in June, reports New York-based research firm Trepp LLC. Still, the delinquency rate is 60 basis points lower than it was a year ago. The rate of CMBS loans at least 30 days delinquent inched up to 5.45 percent in June from 5.40 percent in May. By comparison, the delinquency rate registered 6.05 percent in June 2014. The cause for the rise in the delinquency rate in June was $1.4 billion in newly delinquent loans, fueled by several that are each nearly $100 million, according to Trepp research analyst Sean Barrie. The newly delinquent loans include $97.9 million for 390 Park Ave. in New York City and two identical $99.75 million loans for the NGP Rubicon GSA Pool, which covers industrial and office buildings in multiple markets. The $1.4 billion in new delinquencies was partially balanced by $1.1 billion in previously delinquent CMBS loans that were paid off either at par or with a loss, says Barrie. By property type, the multifamily and retail sectors each saw an increase of 11 basis points in the delinquency rate — to 8.73 …

Two compelling trends have emerged on the commercial real estate lending and investment front during the first half of 2015. First, commercial real estate buyers with an abundance of funds and a yearning for yield have poured more capital into the Midwest amid heady prices in major coastal markets. Second, the increase in spending has transpired in an environment marked by two potential market-disrupting forces: interest rate volatility and temporary anxiety over the role Fannie Mae and Freddie Mac will play in the apartment financing market. Investment sales of office, industrial, retail, apartment and hotel properties through the first five months of 2015 in the Midwest totaled $19.6 billion, according to New York-based Real Capital Analytics (RCA), which tracks property and portfolio sales of $2.5 million and above. That $19.6 billion sum has already surpassed the volume of property and portfolio sales in the 10-state region during the first half of 2014 by $3 billion, and it represents 10 percent of national dollar volume year-to-date through May, according to RCA. Over the past 17 months, capitalization rates in the Midwest have generally remained flat or declined by approximately 30 basis points, reports RCA. The cap rates across the region are …

Technological innovation is radically changing how and where people choose to work, live and play, essentially forcing us to rethink the built environment — and our place in it. Elie Finegold, senior vice president of global innovation and business intelligence at CBRE, recently discussed three trends that are reshaping the way people will use real estate in the future with Blueprint, CBRE’s online magazine. According to Finegold, from broad access to WiFi and smartphones to ever-lighter laptops and more powerful tablet devices, technology has created an inextricably connected world. With the virtual barrier between work and home all but gone, the way people think about real estate is fundamentally changing. “This industrial-era concept that there is a separation between work and home is becoming increasingly less relevant,” says Finegold. “Because you can work from anywhere, space has become more fungible.” Finegold believes there are three emerging trends reshaping the way people will use real estate in the future. 1. Radical Mobility The ability of people and machines to work from anywhere is transforming the utilization of traditional spaces. “If you conduct a survey and ask people, ‘Have you worked in a living room, a bedroom, a plane, an office, an …

CHICAGO — Demographic shifts such as the impact of retiring Baby Boomers and the rise of the Millennial generation will likely have the most significant impact on real estate for the long term, according to The Counselors of Real Estate (CRE), which recently released its 2015-16 Top 10 Issues Affecting Real Estate. Many of the issues on the list have strong interrelationships and affect multiple property sectors. Excess capital supply — funds largely flowing into U.S. real estate purchases from foreign institutional and private investors, and rising interest rates — was ranked second and third on the list. “This list reflects a higher degree of economic uncertainty than in years past,” says Noah Shlaes, 2015 CRE chair. “Anticipation of rising interest rates, continued currency devaluation, and excess capital flowing into the United States are all on the minds of our membership. Combine this with a growing wage gap and major changes in demographics, and we’ve got a lot to think about this year.” The CRE 2015-16 Top 10 issues Affecting Real Estate  1. Demographic Shifts: Two key demographics groups, large numbers of retiring “Baby Boomers” (born between 1946-1964) and the next large population wave, the Millennials (born between 1980-2000), will have …