Features

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 …

NEW YORK —The retail vacancy rate for Madison Avenue in New York City has made some big moves in the past two years, dropping from double digits to below 2.5 percent as luxury and fashion brands move into the market. This high-street retail location has long been known for stiff competition, not only among consumers vying for the latest haute couture, but also among retailers competing for prime space and limited consumer dollars. With a record-low retail vacancy rate on New York’s prime streets like Fifth Avenue, retailers are now expanding throughout the city as stronger growth prospects become increasingly attractive and obtainable. New York City contains nearly 57 million squarefeet of retail space, the slimmest inventory of any major market in the United States. Currently, there are only 670,000 squarefeet of new supply under construction, leaving retailers looking for the “next” neighborhood. “Retailers are growing in a calculated and cost-effective way by getting creative with store footprints and locations,” says Michael Hirschfeld, senior vice president of retail tenant service for Jones Lang LaSalle (JLL). “While their appetite for the best sites remains strong, the sought-after high-street space in the city will be limited through 2017, pushing retailers into new …

By Ann Hambly The success of a mall depends on the performance of the many different retailers in that mall — especially the anchor tenant. The owner of any mall that has a JC Penney, a Sears or some of the large Furniture Brand stores is probably keenly aware of some of the latest news: JC Penney Co. Inc. has been in trouble for some time with decreasing revenues and higher than expected losses. Fitch has downgraded JC Penney, including downgrading the issuer default ratings to junk status. Sears Holdings Corp. is bleeding substantial cash each quarter and has declining store sales. Mired in years of declining sales, Sears has closed 68 of its stores since 2009 and 125 of its Kmart stores. Furniture Brands International, which makes Thomasville, Broyhill, Land and Drexel Heritage, filed for Chapter 11 bankruptcy protection in September 2013. The reason retail is so dependent on an anchor tenant is that many leases on smaller spaces contain a “co-tenancy clause” that gives that retailer the right to a rental reduction if key tenants or a certain number of tenants leave the space. When a JC Penney or Sears is forced to close a store, owners of …

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 …