Features

Demand for Value-Add Multifamily Acquisitions Outpaces Supply

by Kristin Harlow June 24, 2021

Earlier this year, national real estate investor and operator Waterton closed fundraising activity for a multifamily value-add fund with $1.5 billion in equity commitments from global institutional investors. Waterton launched the fund, known as Waterton Residential Property Venture XIV, in May 2020. The first deployment from the fund was a four-property, 1,824-unit portfolio in metro Atlanta followed by a two-property portfolio in Hawaii and three assets in California. The largest-ever fund from Waterton will continue to target both urban and suburban assets in major U.S. markets. The value-add investment strategy is nothing new for Waterton. The Chicago-based company has taken this approach for the last 25 years. But today there is strong demand among investors to be in the multifamily sector, says Rick Hurd, chief investment officer. As a result of the COVID-19 pandemic, some acquisitions are what Hurd calls “urban distress.” In other words, Waterton is making investments in areas like downtown Los Angeles and San Francisco in anticipation that demand will come back to the urban core over the next couple years. Many renters have migrated to the suburbs during the pandemic to be away from densely populated areas. According to Hurd, there is currently significant demand for …

June 24, 2021

Features Heartland Feature Archive Office

Office Buildings Get Wellness Makeovers

by Kristin Harlow June 22, 2021

The work-from-home model that became the “new normal” for most office workers in 2020 as a result of the COVID-19 pandemic has stymied leasing activity and altered tenant strategies. Many space users have opted for short-term leases in response to the uncertainty triggered by the virus. According to JLL, U.S. office leasing volume in 2020 totaled 125.6 million square feet, down 47 percent from the prior year. Of the lease renewals inked in the fourth quarter, 43 percent were for five years or less. As a result, the average deal term dropped to 6.7 years for leases larger than 20,000 square feet, well below the pre-COVID average of 8.5 years. While office owners remain bullish on the idea that the workforce will return to physical buildings, many questions remain regarding timelines and capacities. In the meantime, landlords are steadfast in their attempt to keep the lines of communication open with tenants and ensure their properties are as safe and welcoming as possible. REBusinessOnline spoke with owners across the Midwest to gauge their pandemic responses and outlook on what’s to come. Health, safety protocols Daniel Cooper, partner with real estate investment manager 90 North Real Estate Partners LLP in Chicago, says …

June 22, 2021

Features Student Housing

On-Campus Housing Prepares for a Better Year

by Katie Sloan June 17, 2021

It was a rough year for everyone, but certain industries absorbed more of the brunt than others in 2020. This would include hospitality, airlines, restaurants and on-campus student housing. There was no clear map for navigating the COVID-19 pandemic, and while campuses and on-campus housing officials tried their best to keep everyone safe and healthy, everyone experienced a turbulent year. Some on-campus housing communities closed for parts of the school year. Others issued lockdowns that required students to stay in their rooms for up to two weeks at a time. Many tried to stay open, only to find that off-campus gatherings spread COVID like wildfire once it reached housing facilities. Now that a return to normalcy is imminent — thanks to vaccines and a promising reduction in the number of COVID deaths and cases — on-campus housing executives are tasked with welcoming students back safely while planning for an uncertain future. “The next six months will be dominated by testing, vaccinations, mitigation requirements, class delivery modalities, planning for fall opening, and occupancy and budget projections,” says Ana Hernandez, assistant vice president of housing and residential education at the University of South Florida in Tampa. “Many campuses are taking a strategic pause …

June 17, 2021

Features Mixed-Use Retail

Mixed-Use at the Core of Mall Reinvention

by Katie Sloan June 15, 2021

When it comes to mall redevelopment, one of the biggest hurdles is changing the business community’s perception that enclosed malls are only for retail use, says Sean Garrett, president of acquisitions and director of community relations for East Peoria, Illinois-based Cullinan Properties Ltd. “There is no reason an insurance office can’t be right next to a retailer and a neighbor of a dentist,” states Garrett. “Downtowns and Main Streets have been developed this way for generations.” Cullinan recently followed this approach when it rebranded its Quincy Mall in Quincy, Illinois, to Quincy Town Center. One of the anchor tenants is now Quincy Medical Group, which backfilled a former Bergner’s department store. For Garrett, merging retail and medical uses today is a “natural fit.” In addition to enclosed space, Quincy Town Center features more than 88,000 square feet of retail and additional uses on 42 acres of land. Cullinan is currently discussing plans for a hotel and the potential for multifamily units. “The opportunities that lie ahead for this mixed-use property, as opposed to a one-note shopping center, are endless and will help ensure its survival,” says Garrett. “Our experience has shown that a diverse tenant mix and uses that complement …

June 15, 2021

Features Retail

Green Rush: Cannabis Creates Opportunities for Retail Architects, Contractors

by Taylor Williams June 10, 2021

By Kristin Hiller The design and construction of cannabis dispensaries and cultivation facilities are generating lucrative business opportunities for architects and contractors as more states legalize recreational marijuana. Recreational use is now permissible in 17 states plus Washington, D.C. About 55 million, or 16.9 percent, of Americans currently use marijuana, according to the National Center for Drug Abuse Statistics. One contractor, Northbrook, Illinois-based Mosaic Construction, has created an entire division devoted to cannabis design-build services named Cannabis Facility Construction (CFC). “We continue to see the impact of the Green Rush in our pipeline,” states Andy Poticha, principal of CFC, which builds dispensaries, cultivation facilities and processing centers. “As the cannabis industry expands nationwide, it is headed toward a legal market worth $41.5 billion annually by 2025.” Cannabis accounts for approximately 65 percent of CFC’s total revenue and 47 percent of its project pipeline, according to Poticha. Virginia Maggiore, vice president of store planning for architecture firm RDC, says she has noticed an uptick in cannabis projects in the last two years, as a growing number of municipalities have begun awarding licenses or raising their number of licenses available. Long Beach, California-based RDC currently works with eight cannabis brands, each with …

June 10, 2021

Features Retail

A New Form of Experiential Retail Is Coming to A Storefront Near You

by Taylor Williams June 8, 2021

By Matt Silvers, vice president, Project Management Advisors Inc. From regional malls to small-town shopping districts, the United States has over 1 billion square feet of excess retail space, according to analysis from CoStar Group, with roughly 23 square feet of retail space for every person in the country. For reference, France, Germany, the United Kingdom and Japan all have less than 5 square feet per capita. This surplus is not a new problem, though it has been brought into sharp focus by COVID-19. Retailers closed or cut back their offerings throughout the pandemic while people doubled down on e-commerce, relying on digital solutions for everything from grocery delivery to streaming home entertainment. A recent McKinsey & Co. analysis shows online commerce grew 10 years’ time in just three months, fueled by stay-at-home orders. That study assessed data from the U.S. Census Bureau, which estimated that e-commerce sales accounted for 14 percent of retail sales in 2020, totaling $215 billion versus 11 percent in 2019. While these rapid changes caught some retailers flat-footed, an opportunity now exists to take advantage of available space — and relatively inexpensive rents — to open new stores and try new concepts. For the first …

June 8, 2021

Features Restaurant Retail

Now that the Dust is Settling – The Future of Retail in a Post-Pandemic World

by Jeff Shaw June 4, 2021

By Carlos Lopez, Executive Vice President, Hanley Investment Group Real Estate Advisors The fears from the COVID-19 pandemic and the accompanying government-mandated shutdowns and social distancing measures transformed the way Americans, lived, worked, shopped, ate, exercised and watched movies. In many ways, the habits formed during the shutdowns have opened up opportunities to radically change many aspects of life. For the retail industry, the impact of COVID-19 in 2020 was profoundly devastating. For small businesses and restaurants forced to shut down for extended periods of time or quickly modify their business model to accommodate the mandated closures, they were unable to operate and many were forced to close permanently. On the chain retail front, already struggling from the changing consumer preferences and the forces of e-commerce, the lockdowns and mandated closures by governmental agencies was the final nail in the coffin for many. In 2020 alone, an unprecedented number of retailers declared bankruptcy and by November of 2020, nearly 49 chain and national retailers had declared bankruptcy. The amount was greater than retail bankruptcies occurring in 2009 during the financial crisis. Some of the popular retailers and household names of these retailers included: JC Penney, Neiman Marcus, GNC, Brooks Brothers, Sur la …

June 4, 2021

Features Retail Southeast Feature Archive

Vaccines, Stimulus Checks are Giving US Retail Sector a ‘Shot in the Arm,’ Says NRF Chief Economist

by John Nelson June 3, 2021

The U.S. federal government is playing an active role in consumer spending with three stimulus packages passed in the past 12 months, which is helping support the economy during this pandemic-induced recession. Americans have received thousands of dollars from the government and are opting to spend their newfound discretionary income on more goods and services, not to mention savings and paying bills. “It helped a lot of individuals get by,” says Jack Kleinhenz, chief economist for the National Retail Federation (NRF), a trade organization for the retail industry. “It was also a good shot in the arm for holiday sales. We had a very good holiday season, a much stronger one than what we forecasted. It was up 8.3 percent year-over-year for November and December combined.” Similarly the widespread implementation of the COVID-19 vaccines manufactured by Pfizer, Moderna and Johnson & Johnson are helping boost in-store shopping for goods and services around the country as people become more confident in patronizing stores and restaurants. As of this writing, about 50.8 percent of all Americans have received at least one dose of one of the COVID-19 vaccines, according to the Centers for Disease Control and Prevention (CDC). The declining infection rates …

June 3, 2021

Content Partner Development Features Illinois Industrial Midwest Multifamily Ohio Walker & Dunlop Wisconsin

Multifamily Sector Sees Positive Indicators from Healthy Midwest Economy

by Sarah Daniels June 1, 2021

Focus on the Midwest Amid a global pandemic and its economic repercussions, the American Midwest has remained a place of comparative stability — and opportunity. Wide-open spaces and lower costs of living attract businesses and workers alike. Warehouses, distribution centers and transportation corridors bustle thanks to shifting supply chains and surges in deliveries. Educated workforces and leading universities and research centers nourish hubs in tech and life sciences. In short, there’s a lot in “flyover country” for the multifamily industry to like in 2021. An overview follows of the region stretching from Minnesota to Ohio and from Michigan to Kentucky. Why is the Midwest a good value for multifamily investors today and why is it well positioned for the post-COVID-19 recovery? Read on to learn more. Beneath-the-Radar Metropolitan Areas Blossom Even before COVID-19, Midwestern cities have been attracting people and businesses. Across industries, the Midwest hosts some of America’s largest employers: Kroger (Cincinnati), Salesforce (Indianapolis), Cardinal Health, Nationwide Insurance, Honda of America (Columbus), as well as Target, U.S. Bancorp, General Mills, 3M and Medtronic (all in Minneapolis-St. Paul). Thirteen companies in the Fortune 1000 have set up shop in Milwaukee, and 15 have operations in Columbus. The region has much …

June 1, 2021

California Features Multifamily Western

Yardi Matrix: US Multifamily Rents Increase by 1.6 Percent in April, Biggest Gain During Pandemic

by Julia Sanders May 27, 2021

SANTA BARBARA, CALIF. — Following an unsteady year in 2020, the multifamily sector is taking a leap in the early half of 2021, according to the latest Yardi Matrix National Multifamily Report. In April, multifamily rents rose 1.6 percent year-over-year, which Yardi Matrix says is the highest increase seen since the beginning of the pandemic. The firm reports overall rents increased by $10 in April to $1,417 per month, the biggest single-month gain since June 2015. Rent Growth, Occupancy Levels Across Different Markets Most markets saw month-over-month rent growth. Twenty four of the top 30 markets that Yardi Matrix tracks saw month-over-month rent growth exceeding 0.5 percent, and all gateway markets experienced positive gains from March. All gateway markets had positive rent growth for the trailing three months as well, with Miami’s rent growing 0.8 percent, Chicago 0.5 percent and Boston 0.4 percent. However, some gateway markets are still struggling compared to where they were a year ago, including Washington, D.C., with only a 0.2 percent growth. New York City, San Francisco and Seattle all experienced 0.1 percent rent growth. Yardi Matrix says that these gateway markets that are behind are expected to experience rent growth this summer. One of …

May 27, 2021

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