Features

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 …

By Benjamin Blair, Esq. Shopping center owners often find that factors beyond their control detract from the marketability and profitability of their investments, particularly in the current depressed market. Economic change and evolving technology, for example, have altered the way retailers and property owners transact business. While lenders keep a tight grip on potential financing, brick-and-mortar retailers must compete against an increasingly global, virtual marketplace. Despite — and indeed because of — this bleak picture, property owners have reason for optimism. Several states and localities, including Chicago and Indiana, are in the midst of systematic property reassessments. Because this cycle of reassessments falls during a time when retailers are still struggling under the effects of the recession, property owners have an opportunity to reap tax savings from this market turbulence and increase the property’s bottom line. The goal of a property tax assessment is to apply the tax rate to an accurate property value. This value is generally set at either market value or at the property’s value-in-use. A property’s value, however it is set, can be affected by any number of factors, the most important of which for retail properties is the property’s ability to earn rental income. Real-life …

By Brad Weiner CHICAGO — Over the past few years, market analysts, brokers and investors have been anxious to see the industrial real estate market rally in the wake of an unsteady economy. Unstable conditions have led to a significant slowdown in the buying and selling of buildings and delayed tenant expansions and renewals. The volume of construction projects, including build-to-suit properties and speculative developments, also slipped dramatically in recent years. Fortunately, it seems that this period is coming to a close. For the first time in five years, the Chicago industrial market has seen four consecutive quarters of positive absorption. The third quarter saw 2.6 million square feet of positive absorption, with 4.9 million leased in the Chicago industrial market. Despite this positive trend, the market has still been bumpy, considering the second quarter showed 7 million square feet of positive absorption with 4 million square feet leased. Overall, the numbers suggest the market is moving in the right direction. Bright spots Specifically, Chicago's O'Hare market and the I-55 corridor were incredibly active in the third quarter. Our findings indicate that a generous portion of this activity was made up of existing tenant expansions and renewals. Noteworthy deals included …

REBusinessOnline.com is conducting a brief online survey of brokers, lenders and the owner/developer/manager community to gauge market expectations for 2013, and we need your help. 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 2013 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. Heartland Real Estate Business Surveys For professionals located in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio and Wisconsin. Midwest Brokers, click here. Midwest Lenders, click here. Developers/Owners/Managers, click here. Northeast Real Estate Business Surveys For professionals located in Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Northeast Brokers, click here. Northeast Lenders, click here. Northeast Developers/Owners/Managers, click here. Southeast Real Estate Business Surveys For professionals located in Arkansas; Alabama; Florida; Georgia; Kentucky; Louisiana; Maryland; Mississippi; North Carolina; South Carolina; Tennessee; …

NORTH PLAINFIELD, N.J. — Holiday shopping won't be as robust as it was last year, but that doesn't mean retailers shouldn't expect sales gains. The 2012 holiday forecast from Deloitte calls for a retail sales increase of 3.5 to 4 percent over last season. Total holiday sales are expected to reach up to $925 billion. However, the anticipated increase won't be as strong as that of 2011, when holiday sales rose 5.9 percent over the prior holiday season. The firm blamed the tepid outlook on high gas prices and weak housing and job markets. The report added that while consumers may have paused in advance of the election, retailers may benefit from a post-election “spending boost.” Additional analysts and trade groups also posted a tempered forecast for the holiday shopping season this year. The National Retail Federation (NRF) predicts that holiday sales will increase 4.1 percent, which would be a drop from the 5.6 percent growth in 2011. It is, however, the highest forecast NRF has issued since the recession and beats the 10-year average holiday sales growth of 3.5 percent. The federation's forecast is also more optimistic than the International Council of Shopping Centers (ICSC), which predicts a 3 …