Features

WASHINGTON — Office rents in the second quarter of 2015 increased in more than 70 percent of markets in the United States, according to a soon-to-be-released report by global commercial real estate services firm DTZ. U.S. office rents increased 2.7 percent in the second quarter of this year compared to a year ago, the strongest quarterly gain since peaking in 2008, the report found. Office rents rose in 59 out of the 80 metros tracked, and the construction pipeline continued to expand. U.S. markets absorbed 20.1 million square feet of office space in the second quarter of 2015, up 15.3 percent from the same quarter one year ago, DTZ has discovered. Demand for office space continues to outpace new development, which pushed vacancy rates down 20 basis points from the first quarter of 2015 to 14.2 percent in the second quarter of 2015. In the second quarter of 2015, there was 107.7 million square feet of new office construction, up 36 percent compared to the same quarter one year ago. Of the 80 metropolitan areas tracked by DTZ, 68 of them reported occupancy gains. “Net absorption is solid and picking up steam, which links directly to office-using job growth and …

After lending at a furious pace during the first quarter, Fannie Mae and Freddie Mac’s multifamily business divisions were in serious jeopardy of exceeding annual loan production of $30 billion apiece — the mandated cap for the agencies in 2015. Fannie Mae provided $10.4 billion of multifamily loans in the first quarter alone, while Freddie Mac nearly matched that total with $10 billion. Compared to the first quarter of 2014 when Fannie’s multifamily loan volume was $3.5 billion and Freddie’s was $3 billion, the agencies have posted a year-over-year growth of 197 percent and 233 percent, respectively. Due to the heavy deal volume already generated by the two government-sponsored enterprises (GSEs) this year, the consensus among capital markets experts was that the Federal Housing Finance Agency (FHFA) — which regulates their activity — would raise the cap. Instead, in early May the FHFA revised its list of exclusions, thereby expanding the types of multifamily properties that don’t count against the lending cap. The FHFA’s newly revised exclusions now include properties with units affordable to renters at 60 percent of area median income (AMI) in all markets, 80 percent of AMI in “high-cost” markets, 100 percent of AMI in “very high-cost” …

Don’t look now, but there could be a land rush taking place as fast casual restaurant chains expand across the United States. Fast casual restaurants, a blend of quick service and casual dining, are quickly growing in popularity as consumers gravitate toward higher-quality foods when grabbing a quick lunch or dinner. The fast casual concept offers customization in menu choices and freshly prepared dishes. Fast casual restaurants usually do not include a drive-thru window or table service. While there is no standard definition for fast casual, most in the industry agree on certain aspects of the category. “Fast casual is typically a non drive-thru restaurant where customers order at the counter and seat themselves,” says Michael Walters, vice president of Falcon Restaurant Advisors, a Dallas-based company that represents restaurant concepts and landlords on a national basis. “Fast casual restaurants also source most of their products locally, and avoid frozen foods wherever possible.” Walters says the restaurants are growing so fast because there is a high demand for them and, for now, a lack of supply of space for them to locate. The combined sales of fast casual restaurants in the United States grew by 10.5 percent in 2014, compared with …

WASHINGTON, D.C. — The Architecture Billings Index (ABI) has increased in May following its second monthly drop this year. The ABI posted a score of 51.9, up from a mark of 48.8 in April. The score reflects an increase in design activity, with any score above 50 indicating an increase in billings. The increase in design activity was led by a growing demand for new schools, hospitals, cultural facilities and municipal buildings. A barometer of future non-residential construction activity, the ABI reflects the roughly nine- to 12-month lead time between architecture billings and construction spending. The index is produced by The American Institute of Architects (AIA) Economics & Market Research Group. The score is tabulated based on a monthly survey sent to a panel of AIA member-owned architecture firms. “As has been the case for the past several years, while the design and construction industry has been in a recovery phase, we continue to receive mixed signals on business conditions in the marketplace,” says Kermit Baker, AIA’s chief economist. “Generally, the business climate is favorable, but there are still construction sectors and regions of the country that are struggling, producing the occasional backslide in the midst of what seems to …

The “first-quarter blues” are over for the U.S. economy, which bodes well for commercial real estate during the reminder of 2015, according to real estate services firm DTZ. The report, titled U.S. Macro Forecast June 2015, written by the company’s chief economist Kevin Thorpe and economist Rebecca Rockey, suggests the disappointing GDP figure recorded during the first quarter (GDP contracted 0.7 percent on an annualized basis) has been a recurring issue in recent years. “This has been such a pronounced post-recession trend — weak first-quarter figures followed by solid growth in the remaining three quarters — that the U.S. Department of Commerce is actually revisiting how it calculates seasonal factors, which may be missing important features of the economy’s performance during the winter months,” according to the report. One reason for DTZ’s optimism is that low oil and gas prices haven’t yet stimulated increased consumer spending up to this point — a trend the report says “will soon change.” Additionally, U.S. consumers have been very conservative, increasing the personal savings rate from 4.6 percent to 5 percent from November 2014 to April 2015. “In other words, consumers are choosing to hold on to any extra savings from the gas pump …

CHICAGO — There are many aspects to consider during development of a seniors housing project, ranging from amenities to technology to demographics. However, the biggest key to whether a seniors housing project can succeed over a long period of time is the quality of the operator, according to several expert panelists at the InterFace Seniors Housing Midwest conference held last Thursday, June 11 at The Westin Chicago River North. The seniors housing industry is booming right now, with record sales volume and all-time-low capitalization rates reached in 2014. Development is robust as well, as investors see a low penetration rate at 10 percent as a sign that there is still great need for seniors housing, according to Randal Richardson, president of Chicago-based developer and operator Vi and a speaker on a “State of the Industry” conference panel. “The industry is poised for an incredible period of growth,” said Richardson. “There are a lot of new investors coming into the space, but the operators are the most important part.” The fact that investors and developers from other property types are considering an entry into seniors housing “is an indicator of a frothy market,” said Richardson. Although he warned that the highly …