Features

By Sharon DiPaolo, Esq. Pittsburgh-area commercial property owners who received dramatic increases in their 2013 real estate assessments may see those taxable values go even higher. This wave reflects the growing nationwide issue of changes in property values and how they are assessed. In the case of the Steel City, Allegheny County’s first revaluation in 10 years dramatically increased assessments, which had remained static even during market highs in the mid-2000s and the crash in 2008 and 2009. While the overall increase in county assessments was 35 percent, commercial owners bore the brunt of the increase, seeing their assessments rise 54 percent overall. More recently, however, local legislators enacted an unusual deadline extension that has effectively put property owners — especially commercial owners — at risk for even higher assessments. Note that, rather than rely upon a central tax authority, each of Pennsylvania’s 67 counties sets its own assessment. Because the state lacks a mandate for periodic revaluation, counties normally only undertake revaluation when a taxpayer files suit but will occasionally do so on the county’s own initiative. Historically, reassessments are so infrequent in Pennsylvania (sometimes a decade or more passes between reassessments) that property values spike when a county …

By Matt Valley The latest monthly jobs report released last Friday by the Bureau of Labor Statistics (BLS) is well below expectations, but veteran real estate economists say there is nothing to be alarmed about. The net gain in nonfarm payroll employment was 113,000 in January. Economists had expected an increase of 190,000. Upon closer inspection, the private sector added 142,000 jobs in January while the public sector shed 29,000 jobs. The underwhelming net gain marks the second straight month that job gains failed to meet expectations. Employers added 75,000 jobs in December. “The poor data is predominantly due to the cold weather,” says Ryan Severino, senior economist and associate director of research for New York-based Reis. “Nothing fundamental has changed in the economy over the last two months to think that job growth is migrating to a slower vector. We will have to wait until things warm up to get a clearer reading on the economy.” Economists looking for upward revisions to previously released nonfarm payroll data got what they were looking for in November 2013, but the revised figure for December reflected little change. The BLS revised the job gains in November from 241,000 to 274,000, and from …

By Matt Valley After what economist Bob Bach describes as a “clunker” of a nonfarm payroll employment report for December 2013, Wall Street and business executives everywhere are holding their collective breath in anticipation of this Friday’s jobs report to be released by the Bureau of Labor Statistics (BLS) at 8:30 a.m. EST. Bach, national director of market analytics at Newmark Grubb Knight Frank, will be looking closely for possible upward revisions by the BLS to the 74,000 net new payroll jobs created in December, which fell below expectations of approximately 200,000. Private sector growth of 87,000 in December was partially offset by a loss of 13,000 government jobs. Many analysts say the brutal cold and snowy weather, particularly in parts of the Midwest and Northeast, negatively skewed the employment picture in December. The extremely harsh weather continued into the new year, which could bode ill for the January employment report. Detroit Metropolitan Airport recorded 39.1 inches of snow in January 2014, trouncing the old record of 29.6 inches set in January 1978. In fact, it was Detroit’s snowiest month ever, eclipsing the old record of 38.4 inches set in February 1908. The unemployment rate plunged from 7 percent in …

WASHINGTON, D.C. — Fannie Mae has provided $28.8 billion in financing to the multifamily market in 2013. The agency worked with its lender partners to finance 507,000 units of multifamily housing, and approximately 99 percent ($28.5 billion) of the loans were delivered through MBS execution. Fannie Mae met the Federal Housing Finance Agency's goal to reduce multifamily volumes by 10 percent relative to 2012 levels, according to Fannie Mae. “I am proud that Fannie Mae continued to serve the multifamily market in 2013 with $28.8 billion of new acquisitions,” says Jeffery Hayward, senior vice president and head of multifamily mortgage business at Fannie Mae. “The need for quality, affordable rental housing is greater today than it's ever been, and we will continue to do our part by providing liquidity, stability and affordability to the multifamily market and maintaining our credit standards. Over 85 percent of the multifamily units we financed in 2013 were affordable to families earning at or below the median income in their area.” The Delegated Underwriting and Servicing (DUS) lenders delivered 99 percent of Fannie Mae's 2013 multifamily loan acquisitions. The DUS program relies on shared risk with lenders, or “skin in the game,” and provides certainty …

By J.C. Pelusi It’s no secret that the millennial generation is becoming an integral piece of our nation’s workforce. Millennials will dominate the workforce by 2015 and will comprise 75 percent of the workforce by 2030, according to the U.S. Bureau of Labor Statistics. Consequently, millennial lifestyle preferences and work habits will continue to transform economic activity and, more specifically, shape commercial real estate demand. This up-and-coming generation is the primary driver behind workforce urbanization. Following a recent influx to U.S. urban cores, it’s clear that young professionals (born between 1980 and 1997) prefer downtown living, working and shopping. We’re already seeing the economic impact in major metros and in our secondary markets. In fact, space availability is low across the region as a whole, and The Atlantic magazine recently featured Cleveland and Pittsburgh among the top nine U.S. cities “Where Millennials Can Make It Now.” The Atlantic noted that Detroit was already established among those “deemed magnets for young, creative people.” The commercial real estate implications are unique to the young generation of professionals, including the evolution of the collaborative office space, new retail structures that cater to online shopping and, subsequently, more demand for downtown residential space. But, …

FALLS CHURCH, VA. — Corporate Facility Advisors (CORFAC International) is celebrating its 25-year anniversary. CORFAC International was incorporated in 1989 as a not-for-profit association with the goal of becoming an affiliation of commercial real estate service companies. Affiliation for CORFAC is dues-based and a board representing the member firms governs the organization. The initial concept for CORFAC International came from Charlie King Jr., principal with King Industrial Realty/CORFAC International in Atlanta. According to the organization, the idea for CORFAC started in November 1986 in the coffee shop of the Grand Hyatt Hotel in Manhattan during an SIOR convention. The founding members were interested in starting a new kind of referral network — one built on personal relationships and with invitation-only membership. “We wanted to have the ability to compete for business on a national basis and yet remain true to our roots as local service providers foremost — more Main Street than Wall Street,” says King. “We knew we were never going to be like one of the big national companies, but then we didn’t want to be like them. We intentionally established a network of companies in which the principals are closely involved in running their businesses and personally …

NEW YORK CITY — New office product across the United States totaled 13.2 million square feet during the fourth quarter of 2013, outpacing absorption of 9.8 million square feet during the same period, according to Newmark Grubb Knight Frank (NGKF). This broke a string of 10 quarters in which demand exceeded new supply. New York, Washington, D.C., and Houston accounted for half of the new space added in the fourth quarter of 2013. For the full year, absorption outpaced deliveries 44.2 million square feet to 29.9 million square feet. Annual absorption was strongest in Dallas, Houston, San Jose/Silicon Valley, Orange County, Calif., Manhattan and Atlanta, each absorbing more than 2 million square feet. As a percentage of occupied space, absorption was strongest in San Jose/Silicon Valley at 4.9 percent, followed by Orange County, Calif., Detroit, Westchester County, N.Y., and Columbus, Ohio. The surge in new deliveries did not reverse the downward trend in overall vacancy, which ended the fourth quarter at 15 percent, tighter by 10 basis points from the third quarter and by 50 basis points from the fourth quarter of 2012. As a result, asking rental rates reached their highest level since the first quarter of 2009, ending …

WASHINGTON, D.C. — Office vacancy rates continued to decline in most metropolitan areas in the fourth quarter of 2013, according to Cassidy Turley. The brokerage also reports that rents are rising in more than 50 percent of the 80 U.S. markets tracked by the firm. The U.S. office market absorbed 14.3 million square feet of office space in the fourth quarter, down from 15.3 million square feet in the third quarter. Despite the slight deceleration, the U.S. has now recorded occupancy gains for 14 consecutive quarters. The vacancy rate in the third quarter fell 20 basis points to 15.1 percent, and vacancy is now 220 basis points lower than its recessionary peak of 17.3 percent. “Office vacancy is clearly tightening, but at a rate that is much slower than past recoveries,” says Kevin Thorpe, chief economist at Cassidy Turley. “Steady job growth and lack of new development has vacancy falling in 70 percent of the country, but the office sector is still adjusting to the new era of tenant downsizing and space efficiency.” There was 55.2 million square feet under construction as the fourth quarter came to a close, down from 56.9 million square feet recorded in the prior quarter …

The Bureau of Labor Statistics will ring in the new year this Friday with the December nonfarm payroll report. Expectations are high, as this comes on the heels of solid job gains in October (+200,000) and November (+203,000) and the traditionally active holiday season. Several major resources — including Moody’s Analytics and CNBC.com — have projected the gain to be at least on par with those of the past two months. As the nation awaits the report, REBusinessOnline.com speaks with two economists to analyze trends unfolding in the labor sector. Improvement Despite Fluctuation Gains in monthly nonfarm payroll employment averaged 189,000 through the first 11 months of 2013. It would appear that the market has adapted to the moderate increase in interest rates seen during the summer months. “From May through August — a period of rising rates — job growth averaged 169,000 per month,” notes Bob Bach, director of research at Newmark Grubb Knight Frank. “But from September through November — a period of stable, if fluctuating, rates — job growth averaged 193,000 per month. Thus, rising rates can be accommodated by, and are in fact a byproduct of, a growing economy.” Besides interest rates, the other main concern …