Features

Deploying Capital in 2019

by Jaime Lackey January 28, 2019

Todd Harrop, executive vice president and national director of capital markets at Bellwether Enterprise in Columbus, Ohio, believes 2019 will be another opportunistic year for lenders and intermediaries. REBusinessOnline discussed with Harrop the abundance of capital in this market – and how discipline and changes in capital providers’ programs have put these funds to work. What is the biggest challenge you anticipate in 2019 as an intermediary in commercial real estate? Much like 2018, we continue to be optimistic about the commercial real estate finance market in 2019. In 2018, we were challenged with a variety of market disruptors including rising interest rates, market volatility, geopolitical risks, and signs of an overall slowing global economy. In 2019, we expect these disruptors to continue. Furthermore, the debt space remains very crowded as capital flows continue to rise and opportunities have declined due to fewer refinance opportunities. The good news is capital is far from complacent and underwriting remains very disciplined, which should enable the markets to continue to function well. Where do you see the biggest opportunity for your company in 2019? In general, I believe there is an increased opportunity for mortgage bankers/intermediaries in 2019. This is due to the fact …

January 28, 2019

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Commercial Real Estate Lending Had a Banner Year in 2018

by Jaime Lackey January 28, 2019

Records were meant to be broken. That’s a phrase commercial lenders have become fairly familiar with over the past few years. Multifamily lending, in particular, has enjoyed a good run. In the fourth quarter of 2018, the Mortgage Bankers Association released the MBA Annual Report on Multifamily Lending. According to the report, strong market conditions helped fuel a 6 percent increase in multifamily lending in 2017. Lenders provided a record high of $285 billion in new mortgages for apartment buildings with five or more units. Jamie Woodwell, vice president of commercial real estate research for MBA, cited a few reasons for this uptick in activity. “The multifamily lending market in 2017 benefited from improving fundamentals, rising property values and low interest rates,” he says. “The result was larger loan sizes and record levels of overall borrowing and lending…Demand came from borrowers and lenders of all sizes, with loan amounts ranging from thousands of dollars to hundreds of millions.” This breakneck pace continued last year as low unemployment, job growth and overall economic strength gave investors and lenders confidence in the market. Freddie Mac had its best year ever in terms of multifamily production in 2018. The government-sponsored enterprise (GSE) closed …

January 28, 2019

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How to Reach the Right Retail Audience

by Jaime Lackey January 27, 2019

It’s no secret that pop-up and experiential retail are hot topics. But it can be hard to figure out how best to engage audiences with an individual activation before, during and after the event. To help marketers solve this conundrum, Brandon Chesnutt, vice president and director of digital & development at Identity, hosted a session titled “Six Winning Pop-Up Retail Marketing Ideas Property Managers Can’t Ignore” during the 2019 Ancillary Retail Expo, a two-day conference produced by InterFace Conference Group and Ancillary Retail magazine. At issue during the session, which took place in mid-January at the Hilton Daytona Beach hotel, were a host of key topics for retailers looking to decide which pop-up retail marketing strategies generate the most attention, excitement and foot traffic. Chesnutt introduced the property owners and managers in attendance to tactics and campaign ideas that have the attention of retail marketers, including targeted social media advertising and tailored group activations. The Detroit native acknowledged that it’s an exciting time for marketers of all stripes, but said that excitement and energy comes with a host of questions about best practices in a rapidly changing industry. “The expectations of what is considered marketing are shifting,” said Chesnutt. “If …

January 27, 2019

Features Retail

Robust Holiday Retail Sales Bring Glad Tidings to U.S. Shopping Center Industry

by Alex Tostado January 25, 2019

As 2018 wound to an end, the national unemployment rate hovered just under 4 percent, consumer confidence hit an 18-year high and wage growth reached a nine-year high. Those positive economic signs helped set the table for a robust holiday shopping season, according to Cushman & Wakefield’s fourth-quarter snapshot of the U.S. shopping center market. These three factors led to consumers spending more during the holiday season than in the previous six years. According to MasterCard Spending Pulse, U.S. consumers spent $850 billion during the 2018 holiday season, up 5.1 percent over the prior year. Online holiday sales from Nov. 1 through Dec. 19, 2018 totaled $110.6 billion, a 17.8 percent increase year-over-year, reports Adobe Analytics. According to Cushman & Wakefield, the convenience factor known as “buy online, pick-up in store” was more widely adopted this holiday season, growing at a year-over-year rate of 47 percent. The report also found that the performance of non-mall shopping centers trended upward in the fourth quarter in the 66 markets Cushman & Wakefield tracks across the country. The vacancy rate for such properties finished at 6.3 percent, compared with 6.7 percent at the end of 2017. The average asking rent per square foot …

January 25, 2019

Features Northeast Feature Archive

Driven by Big Portfolio Deals, Foreign Capital Rebounds in 2018

by David Cohen January 22, 2019

Two years ago Chinese regulators restricted capital from leaving its shores, driving down foreign investment in U.S. commercial real estate to well below the record of nearly $100 billion set in 2015. But cross-border inflows in 2018 were on pace to exceed 2017’s total of roughly $52 billion, according to commercial property research firm Real Capital Analytics (RCA). Hurdles threaten to trip up the momentum, however. The Federal Reserve Board’s tightening monetary policy, which has set it apart from most other developed countries in the world, has increased the risk that future currency fluctuations could eat away at returns when foreign investors sell a property and convert the proceeds back into their country’s currency. As a result, the cost to insure, or “hedge,” against adverse currency moves has increased over the last several months. Those factors are also making other global markets like Europe and Asia more attractive. Additionally, trade disagreements and shifting regulations, including heightened efforts to thwart money laundering and to prevent foreign acquisitions of sensitive U.S. assets or properties near them, also are making it harder for some offshore buyers to deploy money in the United States (see sidebar). “Offshore investment is muted at the moment,” says …

January 22, 2019

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NKF Multifamily: Student Housing Sector Outlook for 2019

by Katie Sloan January 17, 2019

To ring in the New Year, Student Housing Business — sister publication to REBusinessOnline — sat down with Ryan Lang, executive managing director and head of Newmark Knight Frank’s student housing division, to discuss his outlook for the year ahead. SHB: What challenges will your market face in 2019? Where are the opportunities within these challenges? Lang: It appears volatility on the capital markets side will continue to be closely monitored heading into 2019 and beyond. There remains great opportunity as the student market, as a whole, is fundamentally sound and viewed as a risk averse asset class within the larger investment community. SHB: Which submarkets will surprise people in 2019? Lang: While average occupancy at major Tier I universities continues to be stable near 95 percent, we believe several markets that have been supply constrained over the past few academic year cycles will begin making noticeable recoveries. Of note, we believe Texas Tech (Lubbock), Ole Miss (Oxford), and Michigan State (Lansing) have the potential to outperform investor expectations. SHB: What market shifts are you noticing that others haven’t? What would you whisper to clients and prospects? Lang: Along with newer construction product, there are clearly more opportunistic assets hitting the market and more yield driven …

January 17, 2019

Affordable Housing Development Features Midwest Multifamily Northeast Southeast Texas Western

Using Technology to Build Support for Affordable Housing

by Katie Sloan January 15, 2019

For developers of affordable housing, a certain amount of NIMBYism is virtually inevitable. But the contentiousness of our times has amplified the rumbling of, “not in my backyard,” into a shout. Time consumed in countering the claims and tactics of affordable housing opponents can damage or derail a developer’s plans — delaying approvals, raising costs and in some cases causing the project to be abandoned altogether. At a time when large segments of the population have been priced out of many neighborhoods, the need to defuse NIMBYism is critical, not simply for preserving individual communities, but also for protecting the greater social fabric. Fortunately, time-tested strategies that have long been used to win over local affordable housing opponents become even more effective when shifted to web-based platforms. Savvy developers are now using their websites and social media to discredit stereotypes about affordable housing communities, demonstrate transparency and promote dialogue. When community members realize that affordable housing is something that can contribute to their neighborhood rather than detract from it, the conversation changes dramatically. Introduce Yourself with a Compelling Website Opponents of affordable housing often couch their objections as an appeal to the greater good, highlighting the potential effect a community …

January 15, 2019

Features

Strong December Jobs Report Delivers ‘Dose of Good News’ In Uncertain Environment, Say Economists

by Jeff Shaw January 10, 2019

U.S. stocks took a beating in the final month of 2018, with the S&P 500 falling 6.2 percent for the year and the Dow Jones Industrial Average down 5.6 percent. There was no Santa Claus rally on Wall Street down the stretch. Instead, the mood was more “bah humbug.” To add insult to injury, the year ended with a partial government shutdown amid a budget impasse in Washington, D.C. Then came along a strong December jobs report, which provided a reassuring sign that the U.S. economy remains on solid footing. Total nonfarm payroll employment grew by 312,000 in December, boosting job gains for the year to approximately 2.6 million, according to the U.S. Bureau of Labor Statistics (BLS). The results easily surpassed economists’ predictions of 180,000 to 185,000 in monthly job gains. What’s more, revised employment figures show that employment gains in October and November were 58,000 higher than previously reported. The job gains were also broad-based. Leisure and hospitality employers added 55,000 jobs in December, followed by health care (50,000 jobs), professional and business services (43,000 jobs), construction (38,000 jobs), manufacturing (32,000 jobs), and retail (23,800 jobs). While the unemployment rate rose two-tenths of a percentage point from November …

January 10, 2019

Features Retail Western Western Feature Archive

10 Ways to Screw Up a Retail Investment Sale

by Amy Works January 9, 2019

By Philip D. Voorhees, Vice Chairman, CBRE During more than 730 retail investment transactions in the Western U.S. totaling more than $11 billion, we’ve identified some sure-fire ways to make an already tough retail investment sale transaction even more challenging. Our pain is your gain. In the cases below, we’re giving you the test after the lessons! 1. Move Slowly, and Lack Urgency. Nothing kills a retail investment sale transaction like a lack of urgency. All too often, sellers fail to have a Purchase and Sale Agreement (PSA) ready when an agreement is reached on the Letter of Intent (LOI), subsequently squandering a week or two while their attorney completes the draft PSA. It can also be difficult to circle the partners to obtain consensus on the next action step if you don’t have a “point” person designated as the lead for a partnership. Sellers will oftentimes mirror slow PSA comment turnaround times from a buyer, assuming the stance that, “if the buyer is slow, we’ll take our time, too.” This makes no sense: Eyes on the prize, sellers! Solutions: • Approve template LOI/counter proposal and PSA drafts early in the marketing process. • Put legal counsel on standby when …

January 9, 2019

Content Partner Features

E-Commerce Logistics Impact Industrial Property Loans

by Amy Works January 8, 2019

The evolution of retail logistics is cultivating a new industrial landscape. “With the explosion in popularity of e-commerce, logistics models have shifted from hub-and-spoke organization to a product-to-consumer model,” says Casey Martin, commercial real estate commercial loan underwriter with Chicago-based Alliant Credit Union. The traditional hub-and-spoke distribution model features a central warehouse supporting a few large distribution centers, allowing product to move within a day’s drive from facility to facility to storefronts. Product-to-consumer models seek to satisfy purchasers that expect one- or two-day shipping, which has become the norm with many online retailers. This expectation is driving retailers to seek non-traditional properties that are close to high-demand consumers to serve as distribution facilities. The old real estate adage “location, location, location” takes on new meaning with each evolution of the retail industry. Retailers are utilizing smaller in-fill industrial properties in land-constrained markets in an effort to meet consumers’ increasing demands for faster delivery, notes Martin. He adds that older facilities or properties with atypical warehousing clear heights are of interest to smaller retailers who want their products to be closer to consumers. Retailers Compete on Delivery Guarantees The Federal Reserve Economic Data shows that the inventories-to-sales ratio of total business …

January 8, 2019

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