Features

Willy Walker, CEO of Walker & Dunlop, Outlines Capital Flow Issues, Market Pressures with Economist Dr. Peter Linneman

by Sarah Daniels April 27, 2023

On the April 12 episode of “The Most Insightful Hour in CRE” webcast, Willy Walker, CEO of Walker & Dunlop, spoke to renowned economist Dr. Peter Linneman, founding principal of Linneman Associates, about pressing issues facing the economy, pandemic repercussions, market predictions and much more. The discussion began by diving into the economy and real estate market in its current state of flux, with many challenges facing both investors and developers. Walker outlines the unease created by the recent Silicon Valley Bank and Signature Bank crises. “One of the data points announced by the Fed is that since the crisis, bank lending in the United States has gone down by $110 billion over the two weeks since the Silicon Valley Bank collapse. Banks borrowed $160 billion in the two-week window prior. There’s a big drive toward liquidity; and yet there’s no new liquidity going out into the market.” “There’s 4.4 trillion dollars of commercial real estate (CRE) loans outstanding across all lending sources — CMBS, life insurance companies, banks, etc.,” continues Walker. “About half of that is non-multifamily properties. Banks hold about 40 percent of total outstanding loans on commercial properties.” If banks were to pull back from holding 40 percent …

April 27, 2023

Features Single-Family Rental

Amid Institutional Inertia, New Opportunities Arise for Smaller SFR Investors — If They Can Access Capital

by Taylor Williams April 26, 2023

By Marcia Kaufman, CEO of Bayport Funding Heightened real estate investment activity in the single-family rental (SFR) market in recent years has resulted in limited supply and commensurate pricing elevations across the country. Today, institutional investors with portfolios exceeding 1,000 units own approximately 3 percent of the 14 million SFR properties nationwide, or roughly 420,000 homes. Per a recent analysis conducted by Stateline, the nonprofit news service of Pew Charitable Trusts, as of 2022, both institutional and non-institutional investors own approximately 25 percent of all single-family homes (SFHs). Statistics provided by Redfin shed further light on these figures. A record-breaking 80 percent increase in SFH investment activity occurred between 2020 and 2021 in conjunction with lower mortgage rates at that time. By contrast, 2023’s combination of a cooling market, high interest rates, increasing prices and recession fears are leading many of the nation’s larger institutional investors — many of whom purchased during the pandemic — to offload their inventory with an urgency not seen in decades. This is resulting in opportunities for individual investors to build their SFR portfolios at a time in which demand is particularly high. The climate for growing an SFR portfolio is made more auspicious when …

April 26, 2023

Content Partner Features Midwest Multifamily Northeast Pavlov Media Southeast Student Housing Texas Western

Pavlov Media Ramps Up Multifamily, Student Housing Fiber Expansion with Equity Partner

by Sarah Daniels April 25, 2023

Pavlov Media is accelerating the expansion of its fiber network and fiber-to-the-home initiatives with a key investment from the world’s largest infrastructure investor, Macquarie Asset Management. The funding will help Pavlov Media augment its coverage of student and multifamily housing, developing and broadening resident access to high-speed Internet across a variety of property types. “We are ramping up our growth plans with a combination of building municipal fiber networks in college towns and extending service to underserved areas adjacent to our core markets,” says Glenn Meyer, board member and president of Pavlov Media. “It’s basically more of what we have already been doing but on a larger scale.” Pavlov Media is already the nation’s largest private provider of fiber-based Internet and video services to off-campus student housing, connecting properties in more than 150 U.S. markets and Canada to its national backbone via its own last-mile, municipal fiber networks and third-party circuits. The Champaign, Illinois-based company serves approximately 1,000 multifamily and student buildings encompassing more than 285,000 beds, and in recent years has begun extending fiber to customers in areas adjacent to its core student-housing markets. Now the broadband service provider is poised to quicken the pace of its growth with …

April 25, 2023

Features Student Housing

Rental, Occupancy Rate Growth Bring Benefits and Potential Pitfalls for Student Housing Sector

by Katie Sloan April 21, 2023

From a leasing and rental rate perspective, the outlook couldn’t be brighter in the student housing space. Yardi’s National Student Housing Report saw 96.6 percent of beds leased and an annual rent growth of 4.1 percent for the fall 2022 preleasing season at its ‘Yardi 200’ universities. These numbers are, for obvious reasons, a boon for the industry at large — particularly following several abnormal years surrounding the COVID-19 pandemic. But it isn’t all sunshine and roses where higher rental rates are concerned. Raising the price to live in your properties is a delicate balance, and while there are many inherent benefits to owners and operators, there are also a number of issues that need to be considered — chiefly as it relates to a higher level of expectations from both students and parents. Levels On The Rise The industry’s performance ahead of the fall 2022 semester was nothing short of robust, and Casey Petersen, chief operating officer of PeakMade Real Estate, anticipates rent growth going into the 2023-2024 academic year to be even stronger. “We’ve budgeted for higher rent growth this year, and based on current velocity, we expect to significantly outperform,” he says. This experience is not unique to PeakMade; …

April 21, 2023

Acquisitions Content Partner Features Industrial Midwest Multifamily NAI Northeast Office Retail Southeast Texas Western

Tax-Efficient Investment Strategies Open New Opportunities Despite High Interest Rates

by Sarah Daniels April 20, 2023

The recent Silicon Valley Bank and Signature Bank collapses — and the takeover of First Republic Bank — have revived regulatory scrutiny on bank risk to a degree that is reminiscent of the financial crisis 15 years ago. Suddenly, it seems, everyone is concerned about the trillions of dollars in commercial real estate debt held at banks — and regional and community banks in particular — and whether it can be refinanced at higher interest rates as it matures over the next couple of years. The same holds for hundreds of billions of dollars of commercial mortgage-backed securities. The conditions are exacerbating a pullback in credit that started last year, which, along with the elevated interest rate environment, has depressed commercial real estate investment sales. In February, property sales dropped 51 percent, from $54.9 billion to $26.9 billion from a year earlier, according to MSCI Real Assets. Taken together, the wall of maturities, higher interest rates, bank collapses and a slumping economy have largely spooked the investment market, suggests Spencer Lund, chief investment officer with NAI Legacy in Minneapolis, Minn. (which also serves Chicago, Denver and Scottsdale, Ariz.) Still, it’s also the type of environment that breeds opportunity as prices …

April 20, 2023

Conference Coverage Features Student Housing

InterFace Student Housing ‘Power Panel’ Highlights Positive Outlook for Sector

by Katie Sloan April 19, 2023

AUSTIN, TEXAS — Experts in the student housing industry are bullish on the outlook for the upcoming academic year, citing the strong performance and outstanding fundamentals of the sector. At the recent 15th annual InterFace Student Housing conference in Austin, industry professionals from around the country convened at the JW Marriott downtown to share insights and discuss industry trends. The first full day of the conference kicked off with the ‘Power Panel’ session, where a consortium of high-level executives provided their outlook for the year ahead. “Evidenced once again by a packed house in this room, the sector is popping,” began moderator Peter Katz, executive director of Institutional Property Advisors. “As we continued to experience unprecedented, off-the-charts asset operations in 2022 and through the first quarter of this year, while simultaneously seeing the most mercurial capital markets we’ve seen in years, we have now statistically proven that the industry is not only recession resilient but pandemic resilient.” The real estate industry has been under a lot of pressure since the summer of 2022 as a result of the rapid rise in the cost of debt, which has created challenges as it pertains to valuing assets. “The recent quarter-point rise has …

April 19, 2023

Cliff McDaniel Lument Affordable Housing

Acquisitions Affordable Housing Content Partner Features Lument Midwest Northeast Southeast Texas Video Western

Higher Interest Rates Cause Affordable Housing Values to Return to Old Norms

by Sarah Daniels April 18, 2023

Rising interest rates dinging commercial real estate and multifamily assets have plunged low-income housing tax credit (LIHTC) properties back into reality, especially those coming to the end of their 15-year compliance periods. “There were some huge profits made in the affordable housing space over the last two or three years,” says Cliff McDaniel, a managing director with Lument, which is representing Harmony Housing in the $1.4 billion sale of its affordable housing portfolio to the Michaels Organization. “We sold a lot of properties for $60,000 a unit or even $120,000 a unit, and the debt was $40,000 a unit. But the mania over that type of profitability is over, and values are going back to where they were before.” Up until about five years ago, the phrase “huge profits” and “affordable housing” would rarely if ever have occurred in the same sentence. Or even in the same story. Prior to that, affordable housing properties typically had very little value at the end of their initial 15-year compliance periods, and limited partners who provided equity to the project by buying tax credits routinely agreed to sell their interest to the general partner for a nominal fee. At that point, the …

April 18, 2023

Conference Coverage Features Restaurant Retail

Foodservice Remains Retail Darling as Customers Have Appetite for Experiences

by Jeff Shaw April 14, 2023

LOS ANGELES — Whitney Livingston had a question for those in attendance at the annual Entertainment Experience Evolution conference in Los Angeles: Which user — food halls or restaurants — are more beneficial to driving traffic at retail properties? By show of hands, most attendees said food halls. Livingston, president of Centennial REC, was moderating the event’s “Fireside Chat: What’s Better for Traffic, Food Hall or Restaurants?” panel at the JW Marriott LA Live. Each of the categories was embodied in the form of a panelist. Representing food halls was Michael Morris, CEO of the aptly named Food Hall Co., with Rich Renninger, SVP and chief development officer of Darden Restaurants, weighing in from the perspective of more traditional, full-service restaurants. Despite what the name of the panel might suggest and Livingston’s opening poll, the dialogue that emerged between Renninger and Morris did not take on the shape of a debate so much as a conversation that illustrated that, for all their distinctions, there are many commonalities between the two types of food-and-beverage users. Ultimately, the panelists revealed that though food halls and full-service restaurants may take different paths, there is one shared recipe for success: creating a robust customer …

April 14, 2023

Bohler Content Partner Development Features Midwest Multifamily Northeast Retail Southeast Texas Western

Savvy Developers Stay Active Even When the Easy Sites Are Gone

by Sarah Daniels April 13, 2023

As vacant sites become rare and cost-prohibitive, commercial real estate developers need to be creative when it comes to bringing a new project out of the ground. Unconventional development sites offer cost savings and location advantages, and in-depth due diligence and creativity on the part of developers can make for sites that can allow an elegant union of lower costs and strategy. With limited room for delay, how can developers think critically about available sites and leverage existing conditions to their advantage? Katherine Roberts, senior project manager at Bohler’s Warrenton, VA office, and Gregory Roth, principal at Bohler’s Tampa office, offer their expert advice on threading this needle. Bohler specializes in land development, especially making development work when conventional sites aren’t an option. Prioritizing Development Needs When Assessing Red Flags Certain project factors can be red flags if time or cost are obstacles to a developer, including These points of concern are usually knots that can be untangled if a developer has the time, money and appetite to move forward in spite of these interruptions, but each factor does bear watching. “Developers should understand where their limits are and where they’re willing to negotiate. Ideally, anything you’re developing should be …

April 13, 2023

Conference Coverage Features Retail

Sports-Anchored Entertainment Districts Deliver Experiences Well Beyond Athletics, Say EEE Panelists

by Taylor Williams April 11, 2023

LOS ANGELES — As large-scale entertainment districts that are centered around professional sports teams pop up around the country, operators of these developments are realizing that their ability to draw traffic, generate revenue and deliver meaningful experiences goes well beyond the diamond, arena or gridiron. After all, the average professional sports season only lasts about six months — assuming the team qualifies for the postseason — and only half the games are played at home. Given the scope of these projects, in terms of their vast physical footprints and tremendous manpower needed to operate the wide variety of concepts they house, it follows that sports-anchored entertainment districts cannot rely on athletics alone to be successful. At the Entertainment Experience Evolution that took place in Los Angeles in early March, a panel of developers and operators with extensive experience in sports-anchored entertainment districts provided concrete examples of how to achieve this objective. Hosted by Shopping Center Business, the flagship publication of Atlanta-based France Media, the event drew more than 500 people in its eighth annual iteration. Rob Hunden, president and CEO of Hunden Strategic Advisors, a Chicago-based consulting firm for destination-style commercial projects, moderated the discussion. Pioneering Examples John Moncke, a …

April 11, 2023

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