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Rachel Goff WASHINGTON, D.C. — The January nonfarm payroll report bolsters the argument that the U.S. economy is slowly improving, and the upward revisions to the 2012 data may encourage commercial real estate investors to take more risk, says Bob Bach, national director of market analytics for Newmark Grubb Knight Frank. Employers added 157,000 net new jobs in January, including 166,000 in the private sector. What’s more, the nation added 335,000 more workers to the employment rolls in 2012 than initially reported. “This report emboldens the risk takers moving into secondary markets and Class A-/B+ assets in primary markets, a trend that is already in place,” says Bach. “If investors believe the economy, specifically the labor market, is improving faster than previously thought, it means the outlook for net operating income at the property level also has improved.” The job gains were healthy across many sectors including retail (+32,600); construction (+28,000); education and health services sector (+25,000); leisure and hospitality (+23,000); and manufacturing (+4,000). For all of 2012, the manufacturing sector added 149,000 jobs, or a monthly average of 12,417 jobs. Two notable areas of contraction were in the transportation and warehousing sector (-14,000), and government (-9,000). REBusinessOnline.com asked Bach …

SAN DIEGO — The Washington, D.C.-based Mortgage Bankers Association (MBA) is predicting originations of commercial and multifamily mortgages to grow to $254 billion in 2013, an 11 percent spike from 2012. MBA previewed its second annual forecast at its Commercial Real Estate Finance (CREF)/Multifamily Housing Convention & Expo in San Diego. Approximately 2,600 real estate finance professionals have registered for the show, which runs through mid-day Wednesday. “2012 was a strong year for the commercial and multifamily mortgage markets, and 2013 is shaping up to continue the growth,” says Jamie Woodwell, MBA’s vice president of commercial real estate research. Multifamily originations will take the lion’s share of the 2013 activity, according to the forecast. Originations of multifamily mortgages are forecast to reach $100 billion in 2013. Additionally, mortgage debt outstanding for commercial and multifamily properties is anticipated to grow in 2013 by more than 2 percent. The forecast calls for 2013 to end the year above $2.4 trillion. The forecast extends beyond 2013. MBA is also predicting that originations will keep its upward trajectory and close 2015 at $289 billion. Jay Brinkmann, MBA’s chief economist and senior vice president of research and education, explains that the commercial real estate finance …

WASHINGTON, D.C.— The U.S. industrial market is poised for significant growth with annual net absorption forecast to reach 150 million square feet in 2013 and 175 million square feet in 2014, according to the NAIOP Industrial Space Demand Forecast. These levels of demand are 50 and 75 percent above the net absorption figure of roughly 100 million square feet notched in 2012. The reduced risk of a double-dip recession and stronger economic and job growth have given the industrial sector a boost, points out NAIOP (formerly known as the National Association of Industrial and Office Properties). “Industrial has heated up,” says Dr. Randy Anderson of the University of Central Florida, one of the authors of the forecast. “The industrial segment will experience strong and continuous growth through the fourth quarter of 2014 due to clarity post-election and post-fiscal cliff, easing in the credit markets, and improvement in both consumer and business confidence.”?? Many economists were jolted earlier this week, however, to learn that the U.S. economy contracted at an annualized rate of 0.1 percent in the fourth quarter of 2012, according to the federal government’s initial estimate. But as The Wall Street Journal reported, the surprise drop was driven by …

By Duke Realty Healthcare Team The healthcare industry and healthcare real estate have changed dramatically during the past several years. Healthcare reform, the Great Recession, lower reimbursements and other issues should continue to drive changes, including new uses of medical office space, creative new partnerships and an increase in monetization of outpatient facilities, according to Indianapolis-based Duke Realty Corp. (NYSE: DRE) Hospitals and health systems should see the following trends over the course of the next five years: 1. Higher-acuity care will increasingly move to medical office buildings (MOBs): The 2010 Patient Protection and Affordable Care Act requires hospitals to invest in, and implement, many costly new systems and procedures. Hospitals also face a continued downward pressure on both Medicare payments and private insurance, all of which is forcing them to look for possible ways to cut costs. MOBs offering higher-acuity care and/or non-acute care are an attractive solution because they cost less to build, operate and maintain than hospitals and inpatient facilities, for both physical and regulatory reasons. North Fulton Hospital’s new North Fulton Medical Plaza in Roswell, Ga., is a good example of an MOB that provides higher-acuity care. Also, outpatient facilities in suburban areas can be a …

By Bob White The headline numbers will show a plunge in sales of seniors housing properties in 2012 compared to 2011 when all is said and done. The drop is magnitudes greater than any other property type in a commercial real estate investment market that, overall, was up more than 10 percent in 2012. The expected 70 percent drop in seniors housing acquisitions from 2011, or about $18 billion fewer deals, looks very bad and is typically associated with severe and negative influences. For example, investment sales in Spain and Portugal were similarly down in 2012. However, the seniors housing sector is nothing like Spain or Portugal. In fact, the investment trends for seniors housing properties are quite healthy, and the prospects are bright. Prices are holding steady, if not slightly improving. The composition of investors is becoming more diverse with new buyers, particularly foreign ones. Mortgage capital is more plentiful and much cheaper. Demand is outstripping development. Make no mistake, the investment fundamentals in the seniors housing sector are favorable, even though the headline investment sales numbers indicate otherwise. Appearances can be deceiving For 2012, U.S. sales of seniors housing properties greater than $2.5 million was approximately $9 billion, …

Moderate price swings for several construction materials last year gave contractors some breathing room, but future price spikes could push many firms into the red, says Ken Simonson, chief economist for the Associated General Contractors of America, a trade association based in Arlington, Va. “Contractors still have not recovered from the cost increases they had to absorb in 2010 and 2011.” Association officials note that 90 percent of contractors surveyed for the group’s “2013 Construction Hiring and Business Outlook” predict that materials prices will increase in 2013. They add that an increasing number of contractors will try to pass on some of those price increases to customers this year, noting that 29 percent report they will try to raise bid prices this year, compared to only 15 percent that raised prices in 2012. “The days of low bids and relatively inexpensive construction costs are clearly numbered,” says Stephen Sandherr, CEO of the association. “While the construction industry is still facing some difficult headwinds, there is a clear sense that the industry is slowly turning a corner.” Prices for construction materials inched down in December, closing out a year of relatively subdued changes in both materials costs and bid prices, according …

EAST RUTHERFORD, N.J. — On paper and on the street, New Jersey’s commercial real estate market looks to be on an upward trajectory, albeit a slow upward trajectory, with improving fundamentals in a climate of continued uncertainty. Four female brokers from commercial real estate services firm Cushman & Wakefield Inc. — including Dawn Arrabito (office), Bonni Heller (industrial), Rachel Pittard (industrial) and Nancy Erickson (retail) — recently weighed in on what they are seeing in their respective sectors. In the following Q&A interview, they discuss key Garden State drivers, shifts and projections for 2013. From left: Bonni Heller, Nancy Erickson, Rachel Pittard and Dawn Arrabito What top drivers are impacting the state’s commercial real estate sectors today? Heller (industrial):The market definitely is improving, but the economy — and its impact on employment and housing, especially — continues to hamper a true industrial recovery. People need incomes and homes in order to buy goods and furnishings. Until the economy picks up, consumer demand for the products contained in New Jersey’s warehouses will remain lackluster. Arrabito (office):For the office market, state incentives are playing a major role in attracting tenants to New Jersey. This is particularly true in our cities, where the …

Figures from the latest U.S. nonfarm payroll report show modest gains across all employment sectors, but the overall payroll number is nothing to write home about, according to Ryan Severino, senior economist for New York-based Reis. “The overall figures are still pretty disappointing,” says Severino. “I wouldn’t say that the bar is too low per se, but the fact that the bar is low and we are having trouble clearing it at this stage of economic recovery is a rather inauspicious sign.” His analysis is based on the latest nonfarm payroll employment report for December released by the Bureau of Labor Statistics (BLS) last Friday. Overall, employers added 155,000 net new payroll jobs in December, down from 161,000 in November. The biggest gain came from the education and health services sector with 65,000 net new jobs, up from 24,000 in November. Of that 65,000, health care accounted for 44,500 jobs, a sign of sustained demand from tenants and investors of medical office buildings and related properties, says Bob Bach, national director of market analytics for Newmark Grubb Knight Frank. (To view larger image of chart, click here.) The leisure and hospitality sector added 31,000 jobs, up from 29,000 in November. …

By Sharon DiPaolo, Esq. Someone buys a commercial property after months of research and negotiation, and soon afterward the property’s real estate taxes skyrocket. The pattern — or at least the degree of the tax increase — often catches even sophisticated buyers unaware because rules that govern real estate assessments vary from state to state and town to town. Investors who blindly assume that real estate taxes will remain flat after a sale risk disastrous consequences. Tax increases of 50 percent or more are not uncommon following a sale. A clear understanding of how the taxes could change can significantly influence what a buyer is willing to pay for real estate. “It happens every day,” says J. Kieran Jennings, managing partner of Cleveland-based law firm Siegel Jennings, which specializes in commercial property tax. “The phone rings and it’s the new owner of a property who has just been hit with a huge tax increase, wanting to know what happened. Sometimes we can fight the tax increase after the fact, but it’s always better to know what to expect before you buy. We prefer to get the phone call before the purchase, when we can help plan.” Know the market Real …

By Wayne M. Wudyka It wasn't long ago that the biggest attractions for apartment dwellers were a friendly concierge or cheap rent. As the economy continues to shake off its recessionary slumber and gradually pick up steam, and as more and more young adults are getting out of their parents’ basements and flocking to multifamily properties, a range of new and different preferences — and higher expectations — are beginning to emerge. The millennial generation is all about technology, efficiency and customization. High-tech has become highly personal in recent years and notions of personal service, flexibility and conveniences have evolved rapidly. Today’s generation of young professionals is accustomed to having the “world in their pocket,” in other words, running their lives and accessing information and services through the use of a smart phone. This culture shift has and will continue to effect retail and residential property management and development. Tenants from this generation do not want packages to be delivered to a concierge who may or may not be available on their schedule; they want and increasingly, they expect, to be notified about the arrival of their package immediately, and pick it up on their terms. Similarly, laundry and dry-cleaning …