Features

From Confident Buyers to Tech Solutions, Six Trends Emerge from InterFace Multifamily Southeast

by John Nelson November 29, 2018

The runway is still long for multifamily real estate in the current cycle as investors and developers continue to pour money into the space. The apartment industry took center stage during the ninth-annual InterFace Multifamily Southeast conference on Tuesday, Nov. 27. Produced by InterFace Conference Group, the full-day event drew more than 400 multifamily real estate professionals from around the Southeast. The conference, held at The Whitley hotel in Atlanta’s Buckhead district, featured panel discussions on a variety of topics, including finance, investment sales, new development and operations, and highlighted the region’s most active markets. While attendees were able to glean numerous takeaways from the event’s more than 50 speakers, the following are six key trends that apartment professionals are monitoring heading into the new year. 1.) Investment to remain robust in 2019 During the conference’s state of the market panel, Josh Champion of Carroll Organization and Jim Street of PGIM Real Estate said that their firms were net buyers in 2018 and plan to be net buyers again next year. Coincidentally, within an hour after the panel concluded their companies announced a $600 million joint venture acquisition of three multifamily portfolios. “Real estate is still a favored asset class, …

November 29, 2018

Development Features Northeast Northeast Feature Archive Pennsylvania

Five Reasons to Use Virtual Reality in Design

by David Cohen November 28, 2018

By Michael Prifti Technology is moving quickly across many different industries. Architects are now using emerging technology like virtual reality (VR) to improve experience for clients, tenants and the general public. An architecture firm can use VR to accomplish many different goals. VR can be used as both a design tool and a marketing tool. As a design tool, one can create impressive virtual mockups with the technology. To be used as a marketing tool, it is important to figure out the overall goals of the project, such as how interactive and immersive the VR models need to be. For example, higher quality VR models require higher computer processing power. In general, VR sets have become much more affordable, and jumping into this emerging technology doesn’t necessarily require a large investment. Today, VR headsets can be found for under $500, and the software has become so intuitive that nearly anyone can be taught how to produce very basic VR ready models in about 15 minutes. While two-dimensional renderings will likely never disappear, the use of virtual reality is becoming more widespread throughout the industry. 2D drawings or 3D models can give you a general idea of a building’s scale, but VR …

November 28, 2018

Conference Coverage Features Northeast Pennsylvania

Standalone Memory Care Facilities Fraught With Challenges, Says InterFace Panel

by David Cohen November 27, 2018

PHILADELPHIA — Standalone memory care facilities were the darling of seniors housing three to five years ago, but more recently this property segment has been tagged as the dog of the industry amid overbuilding concerns and lease-up challenges. “They get bashed at every conference,” says J.P. LoMonaco, president of Valuation & Information Group headquartered in Culver City, California. The conventional wisdom is that many investors and lenders have soured on the product. Not so fast, says Wendy Nowokunski, president of Northbridge Cos., who cautions against making blanket statements about this specialized niche within seniors housing. “Actually, standalone memory care is our darling.” The private company based in Burlington, Massachusetts, operates 17 seniors housing communities serving over 2,000 residents across New England. Five properties in Northbridge’s portfolio are standalone memory care communities, including three in Maine and two in Massachusetts, each ranging in size from 60 to 70 units. “Those communities run at 100 percent occupancy all the time. We have waiting lists,” says Nowokunski, who adds that Northbridge has established partnerships with local hospitals to meet the needs of seniors with memory issues. “It all comes down to programming and knowing the disease process, and having the right people in the …

November 27, 2018

Features

Beware of Double Taxation on Personal Property

by Taylor Williams November 20, 2018

Many states tax business personal property, a classification that includes furniture, fixtures, equipment, machinery and, in some states, inventory. Whatever the jurisdiction, the values of business personal property and real estate can easily be conflated in ad valorem taxation, unfairly burdening the taxpayer with an additional appraisal and/or taxation. If you live and work in a state that doesn’t tax business personal property, it may be included with the taxes on your real estate anyway. If you are in a state that taxes personal property, you might be taxed for it twice. While it seems contrary to acceptable appraisal practice to include personal property in the real estate value and then to additionally appraise and/or tax the same items, it does happen. The Texas Legislature wrestled with this problem of additional valuation and taxation for more than a decade. That process and the resulting tax law offer important lessons that may help taxpayers and lawmakers in other states. Texas Gets Personal In 1999, the Texas Legislature enacted Section 23.24, titled “Furniture, Fixtures and Equipment,” as a new statute in the State Tax Code. Prior to its enactment, furniture, fixtures and equipment were often included in the appraised value of income-producing …

November 20, 2018

Features Multifamily Seniors Housing

Complacency Equals Vulnerability in Seniors Housing Industry, Warns Benchmark CEO Tom Grape

by Jeff Shaw November 16, 2018

Tom Grape has a sobering message for a senior living industry facing a growing number of disruptive forces, including rapid technological change and shifting consumer preferences that pose a threat to the long-term health of the sector. “If we continue to think of ourselves as senior living operators in the way that we have, I personally think we’re vulnerable. If we think of ourselves in ways that will allow us to compete for this new era, we’ll be positioning ourselves successfully.” Grape is chairman and CEO of Waltham, Mass.-based Benchmark Senior Living, which operates 58 communities offering independent living, assisted living, memory care and continuing care across eight states in the Northeast. His concerns about disruption aren’t centered on overly aggressive capital providers or new entrants to the business. Instead, the veteran executive, who has been in this niche sector for 32 years, believes that there is “a whole host of people from a whole variety of different angles that are trying to put the senior living business out of business. I think that has huge implications.” The comments from Grape came Tuesday morning during a keynote address titled “Prospering in the Era of Disruption” at InterFace Seniors Housing Northeast, which …

November 16, 2018

Content Partner Features Lument RED Capital Group

RED: Florida 2018 Multifamily Performance Shines, Despite Rising Supply

by Jaime Lackey November 15, 2018

Florida markets typically perform well during flush economic times and the current cycle isn’t an exception. Blessed with the fastest growing population east of the Rockies and a business-friendly tax and operating cost environment, Florida is one of the first alternatives multifamily developers and investors look to when the primary markets begin to feel crowded. True to form, Florida experienced record investment sales volume in each of the past two years, and 2018 is shaping up to meet or exceed last year’s total. Acquisition cap rates continue to track lower, with asset prices reaching new highs. By the same token, the supply pipeline is building and occupancy is beginning to erode at the margin. Nearly 70,000 units in 300 projects are under construction across the state and another 375 or more projects are proposed. At least 40,000 new units will be delivered this year, and vintages of similar magnitude can be expected in 2019 and 2020. Can the Sunshine State property performance and investment returns continue to sizzle under these conditions? Strong Job Growth in Jacksonville and Tampa Keep Apartment Markets on Even Keel To date, Jacksonville and Tampa have exhibited the greatest resiliency among the six Florida markets that …

November 15, 2018

Features

U.S. Wage Growth Points to Likely Interest Rate Increase in December, Say Real Estate Economists

by John Nelson November 13, 2018

The Bureau of Labor Statistics (BLS) released its monthly jobs report on Friday, Nov. 2, revealing that the U.S. added 250,000 jobs in October, above forecasts of 188,000 by The Wall Street Journal. The unemployment rate also stayed at 3.7 percent, its lowest rate since 1969. In addition to the strong employment findings, the BLS reports that wages are up 3.14 percent over the past 12 months, the first time since April 2009 that the metric rose more than 3 percent from a year earlier. The Federal Open Markets Committee (FOMC) decided in its November meetings last week to not raise the short-term federal funds rate, but real estate economists are confident that the Fed will raise rates at its year-end meetings on Dec. 10-11 due to higher wages paid to U.S. workers. “The Fed will likely interpret [strong wage growth] as a warning sign for higher inflation,” says Ryan Severino, chief economist at JLL. “The Fed is raising rates from more than a wage inflation risk perspective. Labor shortages lead to wage inflation,” adds Kiernan “KC” Conway, chief economist of the CCIM Institute. “I expect three more rate hikes in 2019, and one of those to be a 50-basis-point …

November 13, 2018

Features

What’s Your Take on Real Estate in 2019?

by John Nelson November 8, 2018

The editors of France Media are conducting a brief online survey to gauge market conditions, and we welcome your participation. This survey should only take a few minutes to complete. Questions range from property sectors that you are most bullish on heading into 2019 to trends in deal volume to your outlook for interest rates. The results will be collated and published in the January issues of our regional magazines. Conducting these surveys is part of our mission at France Media to provide readers with indispensable information. To participate in our broker survey, click here. To participate in our developer/owner/manager survey, click here. To participate in our lender/financial intermediary survey, click here. (Note: Please remember to click on “done” to properly submit the survey.) Sincerely, Matt Valley Editorial Director, Real Estate Regionals France Media Inc.

November 8, 2018

Features Office

Strong Economy Bolsters Absorption, Rents in U.S. Office Market, Says Transwestern Report

by John Nelson November 6, 2018

HOUSTON — A robust American economy is strengthening the fundamentals of the country’s office market, keeping vacancy in check and driving asking rents up, according to a new report from Houston-based Transwestern. Strong job growth resulting in a 3.7 percent unemployment rate in October, coupled with a 3.5 percent increase in GDP during the third quarter, propelled the U.S. office market to nearly 23 million square feet of positive net absorption. Year-to-date absorption in the office market has now increased by 17.1 percent compared to the first three quarters of 2017, per the report. Year-over-year, the national vacancy rate has held steady at 10.1 percent, nearing its lowest mark during the current cycle. Asking rents have increased by 4 percent year-over-year to a national average of $26.03 per square foot. Transwestern’s report tracked competitive single- and multi-tenant office buildings in 49 select U.S. markets. Owner-occupied, medical offices and government-owned buildings were not included in the analysis. According to Ryan Tharp, director of research in Transwestern’s Dallas office, the combined momentum from quarterly job and GDP growth was strong enough to offset soft wage gains, which would otherwise have dampened the sector’s performance. Despite a tight labor market, wages increased by …

November 6, 2018

Features Heartland Feature Archive Michigan Midwest Mixed-Use

When Done Right, New Stadium Development Can Transform Neighborhoods

by Kristin Harlow November 1, 2018

The practice of building large stadiums and sports arenas in urban areas has long been a hotly debated strategy. Critics cite the civic disruption that comes with unavoidable breakdowns in infrastructure and transportation and the significant parking and logistical requirements. There’s also the difficulty of reconciling the financial bottom line, or the aesthetic and functional disconnect of a grand facility that operates intermittently and towers over its surroundings. Stanford economist Roger Noll, an expert on the economics of sports, has argued persuasively that “NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover major financial contributions by the city.” Noll has also suggested in the past that smaller, multi-use facilities, and facilities that are “embedded in larger commercial and residential projects,” make more sense. In recent years, innovators in the world of sports and performance arena design, as well as urban planning and design experts, have embraced such an approach, creating inspired new compact arena concepts that are a better fit for urban environments. They are also figuring out new ways to make smaller, multiuse venues a community asset rather than a liability. As cities like Detroit make difficult decisions …

November 1, 2018

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