Features

Recession Pays an Unwelcome Visit to Dallas Multifamily Sector

by Sarah Daniels June 10, 2020

Some places in America are painfully accustomed to economic setbacks. Dallas isn’t among them. This growth market prototype has elevated expansion to an art form and won’t suffer recession gladly. But happily or not, Dallas must share with the rest of the nation the unanticipated discomfort of our pandemic disaster. How is it likely to respond, and what are the ramifications for multifamily investors? It is said that everything is bigger in Texas, and Dallas job losses in the first months of the COVID-19 lockdown definitely were “on brand.” Payroll employment declined nearly 300,000 jobs in March and April, and the unemployment rate, which never before surpassed 9 percent, soared to 12.8 percent in April. The night is darkest before the dawn, however, and the latest national job numbers suggest the sun is near the eastern horizon. If recent history is any guide Dallas will be one of the first to recover and among the quickest to return to pre-coronavirus strength. Indeed, the metro labor market recovered about six months before the nation following both the 1992 and 2009 recessions, and job growth returned to pre-recession levels about 12 months later, a process that took the nation nearly two years …

June 10, 2020

Features Office

Outdoor Amenities Will Drive Tenant Experience in Post-COVID-19 Office Market, Says ULI Panel

by Taylor Williams June 9, 2020

Outdoor amenity spaces will be central to enhancing the experiences of office users in a post-COVID-19 world in which requirements for fresh air, distancing and minimal contact of shared surfaces will all be elevated. A trio of real estate professionals addressed the shift in the functionality of common areas in office buildings as part of a webinar titled “Why Experience is the Next Big Office Amenity.” Urban Land Institute (ULI), a research and advocacy organization for the commercial real estate industry, hosted the event on Monday, June 8. Demand for various outdoor amenities in office properties — food courts, water features, hiking trails — was certainly strong before the pandemic began. With the nation’s economy experiencing 128 months of consecutive job growth through February and unemployment levels at historic lows, office-using firms were engaged in fierce battles for talent recruitment and retention. Being able to offer a range of amenities — both indoor and outdoor — that made the average workday more enjoyable was a key part of winning those battles. In the post-pandemic era, the presence of useful outdoor spaces can also deliver the added health benefits of access to fresh air and sunlight, which can improve respiratory function …

June 9, 2020

Features Multifamily Student Housing

Student Housing Survey: Development Remains Underway Despite Slowdowns Due to COVID-19

by Alex Tostado June 4, 2020

The COVID-19 pandemic has had a major impact on all aspects of on- and off-campus student housing. In an attempt to better assess that impact and the sector’s outlook for the future, Student Housing Business, sister publication to REBusinessOnline, conducted a survey of industry professionals over the course of several weeks in May. The survey was separated by industry function for specific elements of the business, allowing SHB to better understand the pandemic’s distinct influence on each segment of the industry. Of the survey’s 569 respondents, 39 defined their company’s role in the industry as that of a developer or contractor. In this segment of the industry, 17 percent of companies let go of or furloughed employees at the corporate level and instituted pay cuts. Student housing development has continued to move forward throughout the pandemic, with 83 percent of respondents indicating that construction is still continuing on their projects. Of those with projects still underway, 63 percent indicated that they had faced slowdowns due to COVID-19. When asked if any of the companies’ development projects had been halted, 53 percent of respondents indicated that they had not. Of the 37 percent that have had a project halted, most indicated that construction …

June 4, 2020

Features Office

How Office Spaces Will be Designed Differently in a Post-COVID-19 World

by Alex Tostado June 2, 2020

With several states reopening in the midst of the COVID-19 outbreak, JBG Smith has released its “Healthy Workplace Blueprint,” a new design for the company’s offices as tenants return to work. The Healthy Workplace Blueprint focuses on health and safety measures related to cleaning and sanitation, indoor air quality, social distancing and tenant communications. JBG Smith, which owns and operates several properties in and around Washington, D.C., has been working with federal, state and local health authorities to design this blueprint. Upon arrival at a JBG Smith-owned office building, employees can expect to see doors for entrances and exits clearly marked, a two-person maximum for elevator cabs, decals on the floors of the elevators for where they should stand, staircases labeled whether they are for ascending or descending, and signage throughout the lobby reminding people to stay six feet apart. “The health and well-being of our tenants, employees, vendors and building visitors has been one of JBG Smith’s top priorities,” says Matt Kelly, CEO of JBG Smith. “Our goal in producing and publishing Healthy Workplace Blueprint is to create an even safer environment, ensure that all stakeholders are informed about what we are doing from an operational standpoint, and educate …

June 2, 2020

Content Partner Features Florida Lument Multifamily RED Capital Group Southeast

How Will Tampa’s Multifamily Market Compare to Other Growth Markets Post-COVID-19?

by Sarah Daniels May 28, 2020

It may be premature for multifamily investors to come off the sidelines and back into the acquisition fray. Still, the outlines of the post-pandemic landscape are growing clearer, and the hour draws near when owners and buyers must consider the buy/sell/hold mathematics of the future. Tampa presents a model for the unique economic factors likely to influence the nationwide multifamily sector. The initial phase of the post-pandemic analysis is likely to focus on the anticipated performance of “growth markets.” This category of metropolitan areas is characterized by a relative dearth of spatial and regulatory barriers to entry, lower land costs and lower business operating costs than the primary markets, as well as a demonstrated ability to support faster sustained employment and population growth than the national average. Historically, growth markets (e.g., Atlanta, Dallas, Phoenix, Tampa) have facilitated volatile real estate cycles, featuring rapid growth during boom times, followed by often painful supply-driven corrections during periods of economic weakness. Apartment capitalization rates discounted the relative riskiness of their NOI streams accordingly, pricing growth market assets to going-in yields 75 basis points or more above comparable assets in the primary markets. The long multifamily bull market of the passing decade altered this …

May 28, 2020

Alabama Features Loans Multifamily Seniors Housing Southeast Southeast Feature Archive Student Housing

Three Months of Forbearance? Better Think Twice

by John Nelson May 26, 2020

By Chad Thomas Hagwood, Hunt Real Estate Capital Thanks to the Federal Housing Finance Agency (FHFA), forbearance is now one of the biggest buzzwords in multifamily finance. When the FHFA announced at the end of March that Fannie Mae and Freddie Mac would offer mortgage forbearance to multifamily properties facing hardship as a result of COVID-19, many multifamily owners adopted a wait-and-see attitude. That was the right decision. As April went on, the NMHC Rent Payment Tracker steadily trended higher. By May 13, full or partial rent for the month of May was 87.7 percent collected. But with unemployment spiking to record levels, rent collections through the spring and into the summer will most certainly decline at many properties, causing owners to give those forbearance offers a second look. My advice: if there is anything owners can do to avoid forbearance, they should. While tempting, mortgage forbearance should be considered a last resort. Forbearance could take a reputational toll It’s generally implied that entering into a forbearance agreement will not impact a borrower’s ability to secure financing in the future. In an age that obsessively collects and retrieves data of all sorts, experience — and common sense — suggests that …

May 26, 2020

Features

Commercial Rent Collection Holds Steady from April to May, Industrial Leads Pack, Says Nareit

by Taylor Williams May 21, 2020

WASHINGTON, D.C. — A survey of U.S. REITs representing six different asset classes found that across the board, rent collection rates for the months of April and May displayed minimal variance. Washington, D.C.-based Nareit, which provides research and data for these institutional firms, conducted the survey. The survey highlighted rent collection data for 43 REITs in the industrial, multifamily, office, healthcare and retail sectors, with separate data for two sub-categories of retail. The sample represents 63 percent of total equity market capitalization of all publicly traded REITs for those property sectors, based on the FTSE Nareit All REITs Index. “The survey results suggest that while REIT tenants in some hard-hit sectors continue to struggle, their ability to pay May rents didn’t appreciably worsen despite the widespread business closings in April,” said John Worth, Nareit’s executive vice president of research and investor outreach. Industrial REITs posted the strongest rent collection rates for both April and May, respectively receiving 98.6 percent and 95.7 percent of rents owed in those months. Growth in e-commerce sales during the COVID-19 outbreak lies at the heart of industrial sector’s pack-leading performance. Total U.S. e-commerce sales rose by 49 percent from March of this year to April, …

May 21, 2020

Arizona Content Partner Development Features Multifamily Walker & Dunlop

Focus on Phoenix: Multifamily Sector Shows Promise Despite Turbulence

by Sarah Daniels May 20, 2020

Just over a decade ago, a booming Phoenix market experienced a confluence of trends — rampant overbuilding, followed by a national economic crisis that meant a spike in unemployment and a near halt in population growth. One of the biggest commercial real estate downturns in the region’s history soon followed. Ten years later, however, the picture was quite different. Prior to the COVID-19 outbreak, Phoenix multifamily metrics were solid through the first quarter of 2020 and supported by some of the strongest employment and household growth in the nation. In 2019, Phoenix added more than 82,000 new jobs — a 3.3 percent increase, the second highest job growth in the country.1 The economy today is much more diverse than it was 10 years ago during the last downturn. Workers can now choose among a variety of corporate, financial, education-based and tech employers while enjoying a lower cost of living than their peers in other metropolitan areas. Ultimately, Phoenix is better positioned than it was a decade ago; the Phoenix of today is grounded in a broader and more sustainable mix of favorable long-term market conditions. These characteristics, coupled with the region’s year-round sunshine, have made Phoenix an attractive place to …

May 20, 2020

Features Office

COVID-19 Changes How Office Owners Approach Music Licensing

by Taylor Williams May 19, 2020

By Jeffrey A. Tinker, partner, Bell Nunnally LLP Amenities often play an outsized role in influencing companies’ decision on where to lease office space. In the not-so-distant past before COVID-19 came along, open, spacious common areas were the most desirable. The music played in those common areas could not only increase customer satisfaction, but also accentuate a building’s vibe and environment. However, music from sound systems and televisions in public spaces like lobbies and elevators is subject to copyright licensing requirements. In general, a license from Performing Rights Organizations (PROs) is required for public performances of music from sources other than over-the-air radio (on a limited number of speakers) or subscription music services like Spotify Business, Apple Music for Business or Mood Media. As businesses reopen, common areas are being modified or even removed in order to comply with government mandates and provide peace of mind to their customers. As common areas disappear, the public performance of music in those areas will also disappear. The following is a brief overview of the licensing requirements to keep in mind as you plan ahead. Office Music 101 A PRO is an organization that grants, administers and enforces public performance licenses on behalf …

May 19, 2020

Features

NAIOP Sentiment Index Drops Below 50 for the First Time Since Its Inception

by Katie Sloan May 15, 2020

The NAIOP CRE Sentiment Index — based on a survey of commercial real estate developers, owners, investors and service providers — has come in at 45 for the month of March, dropping from 57 in September 2019 to a number below 50 for the first time since its inception in 2016. The NAIOP Sentiment Survey is conducted semi-annually, in March and September. The survey is sent to roughly 10,500 NAIOP members in the U.S. who are developers, building owners, building managers, brokers, analysts, consultants, lenders and investors in the office, industrial, retail and multifamily sectors. If every participant in the survey selected the most optimistic answer to every question, the index would be 100. Conversely, if all of the participants chose the most pessimistic response to every question, the index would be 0. The survey was conducted against the backdrop of escalating concerns regarding the coronavirus (COVID-19) pandemic in mid-March. While a score below 50 typically indicates unfavorable conditions for commercial real estate over the next 12 months, the association believes that the current ranking of 45 is better understood as a commentary on present-day sentiment in the industry rather than a reliable predictor for future market conditions. Of specific …

May 15, 2020

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