TORONTO — Commercial real estate services firm Avison Young is continuing its growth strategy with a new equity investment totaling 250 million Canadian dollars (approximately $188.6 million) from Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ). Toronto-based Avison Young will use the new capital to grow its operating platform in North America. “CDPQ’s investment will provide additional momentum as we accelerate our innovative and technology-based capabilities and market presence to serve clients,” says Mark Rose, chair and CEO of Avison Young. In less than 10 years, Avison Young has grown from 300 real estate professionals in 11 offices in Canada to approximately 2,600 professionals in 84 offices in Canada, the United States, Mexico and Europe. The company’s largest U.S. office in terms of staff size is in Washington, D.C., followed in order by Chicago, New York and Atlanta. Avison Young will use the investment to continue its acquisition strategy of commercial real estate service firms, as well as recruit new talent, open new offices and cover transaction expenses. “Due to the significant size of the equity infusion we won’t be faced with having to make choices between regions for deployment of capital or be limited in …
CHICAGO — Tech and financial services firms are the most aggressively expanding office users through the first half of the year, according to a report from Cushman & Wakefield. Of the 144.6 million square feet of absorption closed in the first six months of 2018, the tech industry was responsible for approximately 23 percent. Tech and software firms are investing heavily in their own operations, including expanding in markets they deem necessary to house their staffers. Back in May, Facebook signed a full-building office lease for a 43-story tower under construction in San Francisco. The 764,700-square-foot space will be a much more convenient location for the company’s San Francisco-based employees, who now are shuttling to Facebook headquarters in Menlo Park. Like the Facebook lease, a good portion of the office transactions closed in the first half of the year by tech firms have been larger in scope. Amazon leased 430,000 square feet of office space within W.S. Development’s Seaport project in Boston, and Nokia signed a 350,000-square-foot lease in Dallas within Billingsley Co.’s Cypress Waters mixed-use project. The No. 2 most active office-using industry was the financial services sector, which accounted for roughly 17 percent of all office leasing in …
WASHINGTON, D.C. — With virtually all construction costs tied to either materials or labor, President Donald Trump’s tariffs on two key building supplies could further exacerbate the construction industry’s longtime worker shortage, according to industry experts. Trump’s tariffs on imported construction materials — 25 percent for steel and 10 percent for aluminum — have enabled American steel and aluminum producers to raise prices to new benchmark levels. But there’s more at stake than short-term increases in materials costs. By forcing construction firms to allocate more operating income toward materials, the tariffs are likely to prevent firms from offering higher wages to attract more labor. Immediate labor impact A recent study from Trade Partnership Worldwide LLC, a Washington, D.C.-based economic consulting firm, estimates that the tariffs will generate an overall net loss of 146,000 jobs. The report also notes that across all impacted sectors there will be five jobs lost for every new job gained. The automobile, fabricated metals and logistics and distribution industries would be among the sectors hit. According to the study, job losses in these three fields alone would exceed 50,000 positions. The American construction industry is poised to lose about 28,000 jobs as a result of the tariffs. …
WASHINGTON, D.C. — Employers hired at a steady clip last month while beating expectations. The U.S. economy added 213,000 jobs in June, marking the 93rd consecutive month businesses added to payrolls, the Bureau of Labor Statistics said last Friday in its monthly report. Economists surveyed by Reuters had expected a monthly gain of 195,000 in total nonfarm payroll employment. The unemployment rate inched up to 4 percent — the first increase in almost a year — but even that uptick reflected a healthy economy, according to industry experts. More than 600,000 people entered the workforce in June, increasing the unemployment rate, but signaling that previously discouraged Americans are confident in the tight labor market and are starting to hunt for jobs again. Still, the U.S. economy faces potential headwinds. Late last week the U.S. and China began imposing levies on $34 billion of each other’s exports, and tariffs on an additional $16 billion in goods are looming, according to The Wall Street Journal. U.S. President Donald Trump has threatened to raise the levies to include nearly all of China’s imports to the U.S. — approximately $505 billion last year. Trump wants China to cease alleged unfair trade practices it uses …
Advances in artificial intelligence and machine learning are slowly changing the processes of buying and selling commercial real estate. Although widespread adaptation appears to be several years off, the application of new technology within commercial real estate appears inevitable and of enormous value. In particular, the opportunity appears greatest within the realm of property valuations, according to David Mitchell, business intelligence and operational specialist with Chicago-based Alliant Credit Union. “Developing more accurate evaluation techniques will help set healthy interest rates and lower credit costs,” he says. “This points to more efficient loan capital in the market. That’s the ultimate outcome: more efficiency and more liquidity in the market.” Valuing commercial real estate is a tremendous exercise in synthesizing information, Mitchell notes. “Understanding factors such as rental rates, vacancy rates, employment growth, demographics, new construction supply, interest rates and capital availability are not simple propositions. Understanding the interdependence of these variables, as well as accounting for historical data and knowing how to properly weight the variables is more than any one human can synthesize in a rigorous manner.” By contrast, a machine-learning model excels in an environment with massive amounts of interdependent variables. In many cases, the algorithms used in machine …
CHICAGO — What are the limitations of a market study? In light of overbuilding concerns in some major metros, it’s a salient question. J.P. LoMonaco, president of Valuation & Information Group, moderated a panel discussion on the impact of market studies on new development during the InterFace Seniors Housing Midwest conference in June. The textbook definition of a market study is a comparison of supply and demand within a defined geographic area. It is a risk-assessment tool. Rick Banas, vice president of development and positioning at Gardant Management Solutions, considers a market study to be a snapshot in time that can help an owner or operator formulate strategies for developing a community. “[A market study] helps you identify red flags, caution flags. It may provide a green light, but it is not the only element that can give you an indication whether a project is a go, no go, or whether it is going to be successful,” said Banas. Dave Erickson, vice president of real estate development for the Ryan Cos., said one step he takes early on in the market study process is to mesh the National Investment Center for Seniors Housing & Care (NIC) data on supply and …
Demand for industrial space is soaring and the growth of e-commerce has opened the doors for more competitors to enter the freight and logistics spaces. In addition, the latest data from the Bureau of Labor Statistics (BLS) notes that year-to-date, the United States has added 200,000 new positions in the manufacturing sector, greatly increasing the demand for new industrial space. The advent of new technology is changing the face of the sector’s day-to-day operations. The rising influence of cloud computing and other forms of software that track inventories and model ideal production rates allow for more seamless manufacturing. Automated racking and shelving systems have increased the amount of vertical storage space available to operators and helped get product out the door with greater efficiency. These innovations have yet to significantly eat into industrial job growth, but they are already impacting design trends for new projects. “At this point we are only seeing a minor impact from automation, but it’s clearly present,” says Michael Scheurich, CEO of Arch-Con Construction, a general contracting firm with offices in Dallas and Houston. “Developers are figuring on smaller aisles between racking for conveyors and automated pickup equipment. This allows them to squeeze in more racks …
Retail Insight recently sat down with Hernan Martinez, CEO of Cuestamoras Urbanismo, to discuss the changing landscape of shopping centers as they become more of a community center for the cities they service. Martinez has firsthand experience with this as he and his company develop Oxigeno, a mixed-use project in Costa Rica that offers four unique zones that incorporate entertainment, shopping, dining, green areas, and the local Heredia neighborhood. Do you think today’s convenience-driven, instant-gratification world is one reason we seem to be seeing an uptick in mixed-use projects? The uptick of mixed-use projects is the result of several important urban and consumer trends. The resurgence of mixed-use, town and city centers derives, in big part, from the recognition of the negative impacts of urban sprawl. It is now generally recognized that development of car-centric, low-density, single-use urban areas has detrimental economic, environmental and social consequences. These can include higher infrastructure costs, the loss of natural land to accommodate a limited number of people and the disruption of neighborhoods’ social fabric. Cuestamoras Urbanismo is committed to the development of open (non-gated), dynamic urban communities and projects. We strongly believe that mixed-use projects play an important part in the creation of …
CHICAGO — The top two issues facing both residential and commercial real estate today are rising interest rates and the health of the general U.S. economy. That’s according to The Counselors of Real Estate, a Chicago-based consortium of high-profile property professionals, which has issued its annual list of the “Top Ten Issues Affecting Real Estate” for 2018 and 2019. Joseph Nahas Jr., the 2018 chair of The Counselors of Real Estate, made the announcement during the keynote address of this year’s National Association of Real Estate Editors conference in Las Vegas. The year’s list is broken down into the top five current and top five longer-term issues being seen for commercial and residential real estate today. The commercial and residential real estate markets are experiencing changes, including decreasing demand for commercial property and higher home mortgage rates as a result of rising interest rates. The Counselors also report that these rate increases are limiting value appreciation for commercial real estate, while lack of wage growth for all but the wealthiest population segment is limiting consumer spending, which the economy needs for growth. The group cited a 2017 Brookings Institution study to back up this argument, which showed real wages for …
Billy Meyer, managing director of Seattle-based Columbia Pacific Advisors, doesn’t mince words when talking about the bridge lender’s cautious approach to financing seniors housing product today. “We don’t underwrite hope as a strategy anymore. It’s just not a good execution strategy, we believe.” Against the backdrop of elevated levels of construction, rising interest rates and operational challenges in seniors housing, Columbia Pacific Advisors is scrutinizing operators heavily before providing funding. “We’re bridge lenders. That is all that we do. Our average loan is 19 months. It’s a short horizon of how far away our exit is, so we need to make sure that [pathway] is very real and clear,” said Meyer. Meyer’s insights on the loan underwriting process came during InterFace Seniors Housing Midwest on Thursday, June 7. The one-day event, which took place at the recently opened four-star Marriott Marquis Chicago at McCormick Place, drew 372 professionals from across the region. Panel discussions focused on everything from design to development to growth strategies for operators, in addition to the state of the capital markets. Moderated by Mike Taylor, senior vice president and group manager for healthcare lending at First Midwest Bank, the capital markets panel also included Ari Adlerstein, …