NEW YORK CITY — The delinquency rate on U.S. CMBS loans 30 days or more past due fell 32 basis points in November to 7.66 percent, marking the sixth consecutive month of improvement across the five major property types, according to New York-based Trepp LLC. The delinquency rate has dropped 268 basis points since reaching an all-time high of 10.34 percent in the summer of 2012. The retail sector posted the lowest delinquency rate (6.32 percent) among the five major property types in November, while multifamily had the highest delinquency rate (11.14 percent). The only fly in the ointment in November was that new CMBS loan delinquencies totaled slightly more than $2 billion, up from $1.6 billion in October, which tempered the overall drop in the delinquency rate. Trepp reports that the overall decrease in the CMBS delinquency rate in November can be attributed to a few key factors: • Nearly $1.2 billion in previously delinquent loans were resolved with losses. By removing these delinquent loans from the pool, the rate saw 22 basis points of improvement. • Loans that cured totaled about $2.2 billion in November, which accounted for a drop of 40 basis points in the delinquency rate. …
WASHINGTON, D.C. — An unusual surge in public construction in October pushed total construction spending to its highest level since May 2009 despite a dip in both private residential and non-residential activity, according to an analysis of new U.S. Census Bureau data by the Associated General Contractors of America. Meanwhile, association officials are urging lawmakers in Washington to make water and surface transportation investment a top federal priority. “Nearly every category of public construction increased in October, according to the preliminary census figures, although for the first 10 months of 2013 combined, public spending continues to lag the 2012 year-to-date total,” says Ken Simonson, the association’s chief economist. “Meanwhile, residential spending slipped for the month but still showed strong year-to-date gains, and non-residential spending remained stuck in neutral.” Construction reported in October totaled $908 billion, 0.8 percent higher than in September. But figures for August and July were revised down from the originally published levels, which exceeded the current October estimate. The total for the first 10 months of 2013 was 5 percent above the year-to-date mark for the same months in 2012. Driving Factors Public construction spending jumped 3.9 percent in October but trailed the 2012 year-to-date total by …
REBusinessOnline.com is conducting a brief online survey of brokers, lenders and the owner/developer/manager community to gauge market expectations for 2014, and we welcome your participation. This survey should only take a few minutes to complete. The results will appear as a news feature story in the January issues of our print magazines and we will excerpt findings for an article in this space in as well. Questions cover a variety of topics, ranging from the outlook for investment sales and leasing activity in 2014 to development and lending opportunities to interest rates. Note: We prefer to attribute comments we quote from open-ended responses, however you may respond anonymously if you prefer. SOUTHEAST REAL ESTATE BUSINESS For professionals located in Arkansas; Alabama; Florida; Georgia; Kentucky; Louisiana; Maryland; Mississippi; North Carolina; South Carolina; Tennessee; Virginia; Washington, D.C.; and West Virginia. Southeast brokers survey: click here Southeast developer/owner/manager survey: click here Southeast lender survey: click here NORTHEAST REAL ESTATE BUSINESS For professionals located in Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Northeast brokers survey: click here Northeast developer/owner/manager survey: click here Northeast lender survey: click here TEXAS REAL ESTATE BUSINESS For professionals located in Texas …
CHICAGO — Growth in STEM (science, technology, engineering and mathematics) employment and the continuing recovery in the U.S. housing market are positively impacting commercial real estate, according to a newly released report by Jones Lang LaSalle (JLL). The “Cross Sector Outlook” focuses on the impact of this employment trend on the five main property types. JLL unveiled the report at the Urban Land Institute’s Fall Meeting in Chicago Wednesday. Specifically, the report examines how the housing recovery influences all types of commercial real estate; the ways in which the millennial generation will affect office workplace strategy, retail stores, hotels and apartments; institutional investment patterns; and the indirect impact of growing industries on local real estate. “The U.S. housing market has experienced significant and welcome improvement in recent years, and the release of pent-up demand should continue to accelerate as millennials form new households in an improving job market,” says Jay Koster, president of Americas capital markets business of JLL. “This will, in turn, have a significant impact on commercial real estate, as local economies improve because of the resulting increase in jobs in the construction, real estate, lending, retail and manufacturing industries.” Broadly speaking, property operating fundamentals are improving, largely …
After an underwhelming 148,000 nonfarm payroll jobs were added in September, what should we realistically expect the October numbers to reveal? That's the question many real estate economists are grappling with as the Bureau of Labor Statistics (BLS) prepares to release the latest nonfarm payroll employment report this Friday. The partial government shutdown during the first half of October only adds to the complexity of the situation. “I would say to expect a decline in jobs added versus last month’s report — probably in the 100,000 to 125,000 range,” says Ryan Severino, senior economist and associate director of research at Reis Inc. “Uncertainty surrounding the government shutdown and the debt ceiling debacle likely had some impact on the numbers, but we have generally been seeing weakening in the data as the year has progressed.” According to the BLS, the unemployment rate in September remained flat at 7.2 percent, and the civilian labor force participation rate dipped 30 basis points to 63.2 percent. “[The September jobs report] was another indicator of a slow fourth quarter and sluggishness rolling into 2014,” says Bob Bach, director of research at Newmark Grubb Knight Frank. He added that average monthly job gains in the third …
ATLANTA — New retail development in the Southeast has trended toward the discount sector, which flourished during the Great Recession, and infill projects in high-traffic markets, according to a panel convened at last week’s ICSC Southeast conference. “Retail activity in the Southeast is back to location, location, location,” said Miles “Budd” Cullom, president of Knoxville, Tenn.-based CHM Development LLC. “The days are gone of being able to expect subdivisions [to be developed]. Retailers want to go where the rooftops are now.” Cullom issued his statements during the panel, “2013: The Re-emergence of Retail Development,” at the Cobb Galleria Centre. The panel, which was moderated Tuesday, Oct. 29, by Bernard Haddigan, principal with Atlanta-based Haddigan Capital, also featured Enrique Anderson, attorney for Sutherland Asbill & Brennan LLP; George Banks, vice president with Paces Properties; and Neal Freeman, president of Watkins Retail Group. A perfect example of a project that combines an experiential component in an urban environment is Krog Street Market, a more than 30,000-square-foot project owned and developed by Paces Properties in Atlanta’s Inman Park. Krog Street Market, which is expected to open during the spring of 2014, is the mixed-use renovation of a historic single-story warehouse. “The challenge with …
Sterling Hale ATLANTA — If attendance at the International Council of Shopping Centers (ICSC) Southeast Conference is any indication of how the retail market is performing, things are looking up. This year’s conference, held Oct. 28 – Oct. 30 in Atlanta, attracted more than 2,500 attendees, up 9 percent from last year. In addition to the seminars offered, meetings with our clients and colleagues enabled us to observe retail trends in the marketplace firsthand. For example, one trend we have examined is that retailers are willing to think outside the box in terms of their space needs. While most national retailers have a preferred footprint or space arrangement, they are now willing to be more flexible than they previously had been in order to get into the right centers or markets. Another trend we have observed in the Southeast is that national retailers are willing to look at secondary or tertiary markets for new stores so as not to cannibalize current store sales. If retailers want multiple stores within the same vicinity, they have to make sure they aren’t taking away from their customer base by adding too many stores too close together. This has led retail tenants to look …
NEW YORK CITY — The renovation of existing properties across all commercial real estate sectors rather than new construction is driving growth and has helped balance supply and demand, according to Peter Linneman, chief economist with NAI Global. “As the U.S. economy continues to improve, we are seeing a return to stability, especially with core properties with investors looking for high-quality assets,” said Jay Olshonsky, president of NAI Global, during a recent webcast focusing on the economic outlook. Linneman noted that there is a strong industrial recovery underway led by increased demand for warehousing for products sold online, resulting in healthy vacancy levels that will continue to fall. Multifamily construction is rebounding, but is still below normal levels, and an upswing in renovations is driving capital expenditures. Underproduction from the past several years resulting in a prolonged shortage will keep rents above average, but below maximum, according to Linneman. In the office sector, construction and renovation projects are at an all-time low, but renovations that were deferred during the recession are back on track, even though jobs have yet to return to pre-recession levels. As a result, vacancy rates have seen a slower decline, but are expected to continue to …
CHICAGO — Nationwide demand for industrial distribution centers larger than 300,000 square feet — known as big-box space — is high and rising, according to the first “Big Box Outlook Report” published by Jones Lang LaSalle (JLL). Improving economic conditions, the continuing growth of e-commerce and a deep bench of tenants seeking space have created competition for warehousing space. Consequently, there is 96.7 million square feet of industrial construction underway, nearly half of it speculative, with an average building size of 360,000 square feet. The JLL Big Box Outlook Report featuring the Velocity Index cites five key trends that are shaping the industrial big box market in 2013 — and creating markets that are winners and losers. 1. WHO: At the top of the list of industries fueling demand is retail, especially e-commerce retail players, followed by the logistics, distribution and manufacturing sectors. Retail (traditional retailers through consumer non-durables) accounts for more than one-third of total demand, with most concentrated in the Northeast — particularly New Jersey and Philadelphia. “With e-commerce sales expected to more than double over the next four years, we anticipate increasing demand for highly specialized facilities,” says Craig Meyer, president of industrial brokerage at JLL. “We …
ATLANTA — Rising construction costs and a shortage of labor are slowing the progress and timeline of new commercial real estate development, despite demand for new space in some property sectors. “There is an increased cost profile of putting new projects in place,” said Kurt Hartman, senior managing director with Hines. “Development costs are way up. The rents required to support new projects are way up, which is more supported in some product types than others.” Hartman delivered his comments during a panel discussion Tuesday, Oct. 8, at the Westin Buckhead Hotel titled “The Outlook for Development in 2014.” The law firm of Morris, Manning & Martin LLP and France Media’s InterFace Conference Group jointly produced the daylong event that attracted hundreds of investors, developers, lenders and financial intermediaries from across the Southeast. Additional panelists included Mark Toro, managing partner with North American Properties; Jim Jacoby, chairman, CEO and founder of Jacoby Development; Hunter Richardson; managing director of development for Oliver McMillan; and Lawrence Callahan, CEO with Pattillo Industrial Real Estate. Because rents are simultaneously increasing with construction costs, the panelists agreed that the only two types of development that will substantiate those rent increases are e-commerce distribution facilities and …