Features

Lower Returns is a Fact of Life for Multifamily Stakeholders, Say InterFace Speakers

by John Nelson December 13, 2018

There is no shortage of capital available to seasoned multifamily developers and investors because the property sector’s underlying real estate fundamentals remain so strong. That was one of the key takeaways of the ninth annual InterFace Multifamily Southeast, a real estate conference hosted by InterFace Conference Group and Southeast Real Estate Business. The event drew more than 400 multifamily professionals to The Whitley hotel in Atlanta on Nov. 27. Speakers during the development panel said that multifamily real estate has plenty options on both the debt and equity sides, but underwriting financing for new construction can still be a strenuous process because they aren’t seeing as high of returns as years past. “Our return thresholds are lower, that’s a fact,” said Chad DuBeau, senior managing director of Mill Creek Residential Trust. “Construction costs are high and land prices are high. The cost of capital is very reasonable, but when you put all those factors together, underwriting is just difficult.” Panel moderator Ron Cameron, senior vice president and principal of Colliers International, asked his fellow panelists a pointed question about the state of the industry. If the multifamily cycle were a game of golf, what hole is the sector currently on? …

December 13, 2018

Features

Will Fed Hit Pause Button on Rate Hikes In Wake of November Jobs Report?

by Taylor Williams December 12, 2018

The U.S. economy added 155,000 jobs in November, according to the Bureau of Labor Statistics (BLS), falling well short of the consensus forecast of 195,000 jobs. Still, November marked the 98th consecutive month of employment gains. Meanwhile, the unemployment rate held steady at 3.7 percent, while year-over-year wage growth registered 3.1 percent, one of the highest rates of the cycle. Given the recent volatility in the stock market, the shrinking spread between the two- and 10-year Treasury yields and the adverse impacts of tariffs on U.S. manufacturing, the latest jobs report raises an interesting question: Will the Federal Open Market Committee (FOMC), the branch of the Federal Reserve Board that shapes monetary policy, decide to increase the fed funds rate another quarter percentage point to 2.5 percent at its next meeting on Dec. 18-19? Rebusinessonline.com spoke with three economists on what the jobs data means for America’s short-term fiscal policy, as well as expectations for retail and manufacturing output and job growth during the holiday season. This month’s featured participants are Michael Hicks, director of the center for business and economic research at Ball State University; K.C. Conway, chief economist at CCIM; and Itziar Aguirre, senior research analyst at CBRE. …

December 12, 2018

Content Partner Features

Relationship Advice from a Commercial Real Estate Lender

by Amy Works December 11, 2018

To underwrite and successfully close a loan, a lender must have an intimate understanding of the principals involved, the collateral and the marketplace specific to the property. Principals play a key role in ensuring an efficient vetting process by providing accurate and in-depth information during the initial financial request — before the due diligence research delves into further detail. Providing lenders with a clear and concise case for a financial package is an easy first step to securing a loan. The more details provided, the better, according to David De Bauche, manager of Commercial Credit Lending Administration at Alliant Credit Union. Ideal Borrower? There is rarely a model borrower or financial package, De Bauche says. Each package and borrower has its own strengths and weaknesses, and it’s up to the lender to decide if the separate pieces join together to create a successful financial package. “What is considered a green-light package with one lender may carry too many risks for another lender,” he says. “At Alliant, we’re open to considering most financial proposals. If we’re presented with a clear, concise proposal with details upfront — it catches our eye.” Borrowers that are transparent with lenders about potential weaknesses — past …

December 11, 2018

Conference Coverage Features Industrial Western

Effects of E-Commerce Ripple Across Salt Lake City Industrial Market, Concludes InterFace Panel

by Alex Tostado December 10, 2018

SALT LAKE CITY — E-commerce has emerged both as a major driver and hindrance to manufacturing growth in Salt Lake City, where increasing costs of technology are limiting the speed at which industrial users deliver goods to consumers. The rise of online shopping has been predicated on rapid delivery of product, but achieving an expedient pace of distribution requires greater investment in automated technology that can package and ship goods faster than human laborers. But e-commerce is not cheap to execute. According to Wick Udy, managing director in the Salt Lake City office of brokerage giant JLL, the cost of delivering an item purchased online generally accounts for about 25 to 30 percent of the total purchase price. “We’re starting to see a lot of these companies re-evaluate their network,” said Udy. “They’re going closer to the consumer, and that’s helping with logistics costs. E-commerce and certainly manufacturing are really what’s driving our market here.” Udy made his remarks during InterFace Industrial Real Estate in Salt Lake City on Nov. 29. The half-day conference at Little America Hotel and was followed by InterFace Multifamily Real Estate later that same day. All totaled, the two events drew 306 professionals from across …

December 10, 2018

Features Office

Coldwell Banker: Office Employees Want Private Spaces, Limited Noise

by Kristin Harlow December 6, 2018

MADISON, N.J. — The open office concept, which became a prominent design trend over the last decade, has declined in popularity with concerns over a lack of privacy and distractions. New research commissioned by Coldwell Banker Commercial and conducted online in late September by The Harris Poll found that almost three-quarters of employed adults would be comfortable working in an open office if they had access to a private space or small work areas, and if noise and distractions were limited. The consumer survey of more than 2,000 adults ages 18 and older found that Americans seem to consider private and quiet spaces more important than team-meeting spaces, as only 66 percent of respondents said they would be amenable to working in an open office if there were large meeting spaces or conference rooms available. Also less appealing was sharing workspace, as 52 percent of those surveyed would not be comfortable working in an open office if it meant multiple workers in one workspace. “It’s important for commercial building designs to accommodate a variety of working styles, and the more we know what workers want — in this case, an open office with private spaces and limited noise — the …

December 6, 2018

Conference Coverage Features Multifamily Seniors Housing

Clear Information, Smart Analysis Fuel Successful Seniors Housing Market Studies

by Kristin Harlow December 4, 2018

PHILADELPHIA — If you own a piece of land that you think might be suitable for a seniors housing development, what is your best course of action to determine the feasibility of such a project? “The first step is to do a desktop study,” advises Cheri Clarke-Doyle, senior vice president of Trammell Crow Co. In other words, conduct a supply-demand analysis that projects demand based on current supply and population growth within a radius of five to seven miles, or a 15- to 20-minute drive time. If those analytics turn out to be favorable and help justify the site to the prospective operator or equity partner, proceed to the next step, urges Clarke-Doyle, who is responsible for sourcing and overseeing new healthcare, wellness and science development in the Northeast for Trammell Crow. “Once you get the results of that desktop study, I think you go into other factors relative to the site. Those factors include the size of the site: Will it support what you want to build? If you’re doing a specific prototype, will the prototype fit on that piece of land? It’s important to go through several checks on the land before you go into a more detailed study.” The …

December 4, 2018

Conference Coverage Features Georgia Southeast

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

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