Features

John Brozovic The U.S. economy is clearly improving, but that doesn’t mean shopping center landlords can relax. As owners strive to improve the financial performance of their retail properties, a key question is this: How much should you help your tenants financially? In our business, we often see this question play out in two ways. First, it arises when tenants tell you they are struggling and need rent concessions. It also comes into play when you consider whether it’s a good investment to support your tenants with marketing dollars. Tenant transparency is crucial The industry is seeing fewer rent concessions — a sign of the improving environment for retailers in general. But that doesn’t mean retailers have stopped asking for them. For us, the key is that a tenant needs to show that it is truly struggling by disclosing its financial situation to the landlord. Then, the tenant needs to show what it is going to do with the money saved if the landlord decides to offer concessions. Will the tenant rev up marketing, or change its inventory to better match demand? Or will the tenant simply pocket the savings and try to keep hanging on? Of course, the need …

Bart Plunkett The industrial real estate sector may not get the attention of some of its more glamorous cousins, such as the office and retail markets, but the sector is in the midst of a healthy recovery. Nationally, vacancies are dropping, rents are rising and — perhaps most strikingly — new construction is taking place. Of course, the emergence of new construction isn’t unique to the industrial market. Inspired by the thriving multifamily sector, developers are breaking ground on new apartment communities. But while concerns about multifamily over-development already have taken hold in some quarters, the construction of new industrial facilities in Atlanta, the Southeast and throughout the nation appears ready to unfold at an appropriate and significant pace for several years to come. Healthy Vital Signs Industrial real estate’s improvement during the past couple of years led Cassidy Turley to conclude the following in its most recent report on the market: “The U.S. industrial sector is moving into robust territory.” The U.S. industrial vacancy rate dropped to 8.5 percent at the end of the first quarter, its lowest mark in four years, according to Cassidy Turley, and 42.7 million square feet of industrial space was under construction when the …

Construction employment increased in a majority of states in May, setting all-time highs in Louisiana and North Dakota, according to the Associated General Contractors of America. The association noted that construction demand remains very uneven and urged policy makers to expedite stalled public and private projects. “The strongest recoveries in construction employment have occurred in states with oil and gas activity, while the steepest construction job losses have occurred in Sunbelt states,” said Ken Simonson, the association’s chief economist. “However, patterns for the past year show that even some lagging states are beginning to add jobs.” Louisiana added 2,100 construction jobs in May and 11,800 (9.4 percent) during the past 12 months, topping the previous peak set in November 2008. North Dakota gained 800 jobs in May and 900 jobs (3 percent) in the past year, exceeding the mark set in September 2012. For May, 27 states experienced a lift in construction employment, while 20 states and the District of Columbia lost construction jobs. South Dakota had the largest one-month percentage gain (4.1 percent, 800), followed by Vermont (3.7 percent, 500), Arizona (3.6 percent, 4,400), Iowa (3.5 percent, 2,200) and Missouri (3.5 percent, 3,600). Arizona added the largest number of …

Matt Valley ATLANTA — U.S. hotels are poised for significant gains in all the major metrics in 2014. PKF Hospitality Research LLC is projecting that U.S. hotels will enjoy a 7.7 percent increase in revenue per available room (RevPAR) in 2014, along with a 15.4 percent boost in net operating income (NOI). “We expect the factors that have inhibited lodging performance during the first half of 2013 will dissipate as the year goes on,” says Mark Woodworth, president of Atlanta-based PKF Hospitality Research. “By 2014, any uncertainty caused by fears of fiscal cliffs and sequestration should be alleviated, thus resulting in improved attitudes among hotel guests, owners and operators.” One lingering concern among hoteliers may be the recent rise in interest rates. “Moody’s Analytics, our source for the economic forecasts that drive our econometric models, has been projecting a 150 basis point increase in interest rates by year-end 2014. Accordingly, our positive lodging forecasts do incorporate any detrimental influence this may have on investments and inflation,” notes Woodworth. Dissecting the forecast For 2014, PKF is forecasting a 3.3 percent growth in lodging demand, along with a projected increase in supply of just 1 percent. The net result is a projected …

WASHINGTON, D.C. — Nonfarm payroll employment in the United States rose by 175,000 in May, a “Goldilocks-caliber report” that the stock market was probably looking for — not too hot and not too cold, says Ryan Severino, senior economist at Reis. The measured recovery also means the Fed’s bond-buying program is likely to stay intact for a while longer. The Dow Jones Industrial Average rose almost 208 points, or 1.38 percent, to close at 15,248, on Friday, June 7, the same day the Bureau of Labor Statistics (BLS) released the May employment report. Net payroll gains in April were revised downward to 149,000 from 165,000 and March was revised upward by 4,000 jobs. Because of the downward revisions to April by the BLS, the three-month moving average of net job gains was 155,000 compared with 207,000 during the first quarter of the year. “Overall, the revisions are less worrisome than the downward trajectory of new job creation,” emphasizes Severino. “We have yet to see the marked slowdown that we have witnessed in the last few calendar years, but there is still a decline in the pace of new job creation.” In the wake of the report, all eyes are on …

ATLANTA — Interest rate risk, healthcare demand and energy and technology changes are among the top issues currently impacting real estate, according to The Counselors of Real Estate. The organization, an invitation-only association of top real estate advisors, released the list of top 10 issues affecting real estate at the National Association of Real Estate Editors annual conference in Atlanta. The list is adjusted annually in response to global economic conditions and domestic priorities. “Many of the issues on this list have strong interrelationships and affect multiple industries,” said Howard Gelbtuch, 2013 chairman of The Counselors of Real Estate and principal of Greenwich Real Estate Advisors Inc. Gelbtuch emphasized the importance of considering each issue in guiding business and investment strategy. “The headlines are filled with reports of events and conditions that often seem unrelated,” Gelbtuch said. “But, taking a broader view and looking at the issues from all sides will lead to more informed decisions.” The top 10 issues identified for 2013 include: 1. Low Interest and Capitalization Rate Risks: Real estate has dramatically benefited from low interest rates, which cannot go much lower. Cap rates continue to decline in primary, secondary and tertiary U.S. markets, but are especially …