Features

Marcus & Millichap: Multifamily Fundamentals Regress as Government Assistance Wanes

by Alex Tostado September 8, 2020

Multifamily landlords have largely been able to collect rent through the coronavirus pandemic due to government assistance for those who are unemployed, a report from Marcus & Millichap has found. However, the federal funding of $600 per week for unemployed citizens expired at the end of July, leaving uncertainty surrounding rent collections moving into the third quarter. On Thursday, Sept. 3, the U.S. Commerce Department reported that 881,000 Americans filed for first-time unemployment benefits for the week ending Aug. 29. Continuing claims, for which data is a week behind, totaled 13.3 million for the week ending Aug. 22. On Tuesday, Sept. 1, the Centers for Disease Control & Prevention (CDC) and the Trump Administration halted evictions through the end of the year. Prior to the eviction moratorium, fundamentals in the second quarter were sliding. The nationwide vacancy rate rose 30 basis points to 4.7 percent in the second quarter. Irvine, California-based Marcus & Millichap expects vacancy to continue upward through the end of the year as COVID-19 keeps the jobless rate at historic highs. States are offering unemployment assistance, which could prove more valuable with the absence of federal unemployment funding. Each state, though, offers different benefits, making it harder …

September 8, 2020

Mixed-Use Destinations Must Be Redesigned for Post-Pandemic World

by Taylor Williams September 3, 2020

By J.F. Finn and Duncan Paterson of Gensler Across the globe, people have replaced in-person visits to sports and entertainment venues, retail centers, convention facilities and other mixed-use environments with virtual gatherings and Zoom meetings. Yet the prevailing view in commercial real estate is that virtual engagement is not a long-term solution for authentic human interaction. In fact, the current crisis is only reinforcing the vital role that public spaces play in bringing people together and promoting health and well-being. The question is, “What has to change for mixed-use developments to be both safe and vibrant?” Here are some scenarios and opportunities we believe can help designers and developers transition into the “new normal” requirements for mixed-use environments and public spaces. Modular Building Will Gain Traction COVID-19 has created an acute need for pop-up, flexible and adaptable spaces — facilities that are tailor-made for modular construction. This current surge in demand will both accelerate the removal of many existing barriers to the growth of modular construction and provide some very compelling advantages in the future. These changes should usher in more viable U.S. manufacturers to market as other industries begin to recognize the many benefits of modular construction. Fabricating and …

September 3, 2020

Content Partner Multifamily Texas Texas & Oklahoma Feature Archive Walker & Dunlop

Multifamily Developers in Houston Focus on Affordability

by Sarah Daniels September 2, 2020

With a historic drop in oil prices amid a global pandemic, fate dealt Houston a bad hand in 2020, to put it mildly. But this is not the first time the city has seen bleak conditions — and faced them down. In 2015-2016, the metropolitan area was throttled by a double whammy of an oil bust and the Memorial Day and Tax Day floods, decimating a full 10 percent of its multifamily housing stock. Yet, by 2020, the city’s job growth exceeded the national rate for the 25th consecutive month, and its multifamily market was set to deliver nearly 17,000 units, double the volume from 2019. Before the oil crash and COVID-19 pandemic hit, Houston’s increasingly diverse economy meant that its fundamentals were strong, and demand was growing for multifamily. Through hurricanes, floods, tornados, boom-and-bust cycles in the oil and gas markets and more, Houston persevered. Houston has one of largest metropolitan populations in the U.S. and is growing, adding more than a million people since 2010. This 2-percent-per-year average growth is more than twice the 0.7 percent average for the United States. Of the 10 largest metropolitan areas, only Dallas-Fort Worth and Houston have been able to grow at …

September 2, 2020

Features Healthcare

Healthcare Offices Evolve in Real Time Amid COVID-19

by Taylor Williams September 1, 2020

By Ethan Garner, CCIM, senior vice president & regional lead, JLL As consumers rapidly adapt to technology, the footprint of the standard clinic is likely to adapt with it. Almost all clinics are requiring online check-in right now, and some are even requiring patients to wait in their cars until they are ready to be seen in an exam room. The waiting room has suddenly become an unnecessary place to store chairs and magazines. Contactless check-in and check-out procedures will affect the design of the administrative areas. It’s possible these functions could be reduced dramatically in size or removed entirely and outsourced. We believe we speak for nearly every consumer of healthcare when we say that there is hope on the horizon in terms of not having to fill out 100 forms every time you step foot in an office. Healthcare providers are understandably preoccupied with managing this crisis, fighting rising costs and curbing declining revenues. These trends will all be worth watching as they unfold over the next six to 12 months and as providers look to leverage technology to reverse that trend in a big way. If providers can increase the profit centers within the clinic — the …

September 1, 2020

Content Partner Features Industrial Lee & Associates Life Sciences North Carolina Office Southeast

The Triangle’s Office Sector Slows but Life Sciences, Laboratory Sector Shows Resilience

by Sarah Daniels August 31, 2020

As companies extend their work-from-home policies for many traditional office jobs, office leasing in general is undergoing re-evaluation and leasing is slowing. But one sector of office space continues growing as space remains essential: life sciences office, laboratory and manufacturing space. Nowhere does this hold truer than in the Research Triangle in North Carolina. The Triangle occupies a position of power as one of the top five major life sciences centers in the United States. STEM-oriented institutions including Duke, the University of North Carolina at Chapel Hill and North Carolina State University provide education, research opportunities and employment for the area’s highly educated workforce. Large life sciences companies (including giants such as Glaxo Smith Kline, Biogen, Lilly and Pfizer) have taken advantage of the area’s lower cost of living to set up research labs and manufacturing space to support technology and healthcare work. A tenant and buyer representative for life sciences, technology and healthcare clients, Marlene Spritzer, Vice President of Lee & Associates Raleigh Durham, has witnessed firms from around the country relocate to the Triangle for years. Even before the pandemic, the area was attractive to businesses due to its wealth of resources and mild climate as well as …

August 31, 2020

Features Heartland Feature Archive Michigan Midwest Retail

Pandemic Accelerates Need for Omnichannel Presence, Say Retail Webinar Panelists

by Kristin Harlow August 28, 2020

As the nation’s retailers adapt to more curbside pickup and outdoor offerings as a result of COVID-19, what will happen in cold-weather states like Michigan once winter hits? Panelists pondered this question during “Michigan Retail Outlook,” a webinar hosted by Shopping Center Business and Heartland Real Estate Business that took place Tuesday, Aug. 25. “We have tenants that are expanding their outdoor seating and planning ahead for winter by adding covers, plastic vinyl or outdoor heaters,” said Mike McBride, senior vice president of asset management for RPT Realty, which has an office in Southfield, Mich. “We’re seeing them expand for the long term with outdoor equipment.” Joining McBride on the panel were Deno Bistolarides of Encore Real Estate Investment Services, Thomas Litzler of Schostak Brothers & Co., Cynthia Kratchman of Mid-America Real Estate — Michigan, Nathan Forbes of The Forbes Co. and Eric Larson of Downtown Detroit Partnership. Todd Sachse of Sachse Construction moderated the discussion. “Europe has lived with outdoor seating 12 months per year forever,” noted Forbes, who is managing partner in Southfield, Mich. “There have to be ways to keep that outdoor space open during the winter months through temporary heating or other measures. We have to …

August 28, 2020

Content Partner Features Multifamily Walker & Dunlop

Pandemic Sends Commercial Real Estate on a Roller Coaster Ride

by Sarah Daniels August 26, 2020

While summer fairs and carnivals are mostly on hold, 2020 has taken us on a wild ride as the COVID-19 pandemic whipsawed the global economy in the first half of the year. The U.S. economy crashed downward in March as shelter-in-place rules drove unemployment to record numbers, surpassing peak levels of the 2008 Great Financial Crisis (GFC) in just one month. U.S. unemployment reached 14.7 percent in April, well above the 10.9 percent peak of the GFC. Including part-time workers who wish to work full-time (the U-6 rate), unemployment reached a staggering 22.8 percent in April. Real GDP fell by 5 percent in the first quarter of the year and by 32.9 percent in the second quarter of the year, the worst decline on record. Politicians scrambled to put a social net under the economy, again quickly surpassing levels of the GFC. The Fed balance sheet swelled by $3 trillion from March to May, more than double the amount during the GFC. Interest rates first spiked as lenders underwrote unforeseen risk, then crashed globally as countries began to backstop their economies. U.S. 10-year treasury yields have remained under 1 percent since early March, the lowest rates on record. But the …

August 26, 2020

California Content Partner Features Lument Multifamily RED Capital Group Western Western Feature Archive

Rumors of the Death of Silicon Valley’s Apartment Market are Greatly Exaggerated

by Sarah Daniels August 24, 2020

Some stories are just too good not to be true. This may explain in part the outpouring of reports regarding population outflows from the San Francisco Bay Area. Multiple mid-August articles in national newspapers took up the ongoing Silicon Valley exodus. These articles make a convincing case that the COVID-19 pandemic and increased opportunities to work remotely — particularly in the high-tech industry — are prompting many Bay Area residents to consider relocating to more affordable areas, even if remote work causes their incomes to decline. The evidence supporting the theory is by no means entirely anecdotal. The number of owners listing homes for sale has increased significantly, the pace of home price appreciation has decelerated materially (less than 5 percent in May) and apartment rents and occupancy have eroded since winter. It is hard to deny that Peak Northern California is fading in the rearview mirror. This should be no surprise. The Bay Area is not only the most expensive real estate market in the country, it also is one of the most congested. Its many virtues come with a steep price tag, not only in terms of cost of living but also in aspects lumped in the quality …

August 24, 2020

Development Features Multifamily Student Housing

Student Housing Construction on Pace Despite Challenges Related to COVID-19

by Jeff Shaw August 19, 2020

Construction has been one of the lucky few segments of the economy that has continued humming along during the pandemic. Student housing projects are still going on as planned, as construction has mostly fallen into the “essential” category of business during the shutdown. While builders report there have been few supply-chain issues, there were some initial slowdowns related to delivery. “The only significant supply side issue we have had was on a project that we have under construction serving UMass Amherst,” says Brent Little, president of Fountain Residential Partners. The project, North 116 Flats, is under construction for delivery for fall of this year. “When the outbreak hit fever pitch, we had all of our cabinets and countertops for the project on a ship coming from China in the middle of the ocean. We were very puckered up until those six containers hit the port in Connecticut, and we received pictures of them on the dock. We are now installing those cabinets in the fourth building of five buildings, so that issue has been mitigated. We were worried about some other items, such as laminate flooring, that were coming from overseas as well, but it has all arrived. If it …

August 19, 2020

Features Multifamily

Multifamily Specialists Remain Optimistic, Predict a Return to Normalcy in 2021

by Jeff Shaw August 18, 2020

NEW YORK CITY — While the COVID-19 pandemic has certainly had a major influence on the commercial real estate industry, brokers and mortgage bankers say the initial concerns about a collapse in the multifamily sector were overestimated. That’s according to Berkadia’s 2020 Mid-Year Powerhouse Poll, which collected insights from nearly 150 investment sales brokers and mortgage bankers across 60 offices of the New York City-based brokerage, banking and loan-servicing firm. Despite the early concerns at the outset of the pandemic, 55 percent of respondents said that current market activity is better than expected compared to how they initially thought COVID-19 would impact the industry overall. Thirty-four percent say the current market is in line with their expectations. “COVID-19 continues to have a profound impact on our economy,” says Ernie Katai, executive vice president and head of production at Berkadia. “While no industry is immune, we have been buoyed by the resiliency of commercial real estate, including steady rent collections and continued deal activity.” While investment sales transaction volume is lower than pre-pandemic projections for the year, 69 percent of respondents are confident that capital conditions will return to normal in 2021. Residents, meanwhile, are largely still paying their rent. The …

August 18, 2020

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