Top Stories

M&M: Homeownership Hits 12-Year Low as Young Households Favor Apartments

by Jeff Shaw March 14, 2017

Homeownership rates in the United States have hit a 12-year low due to a combination of younger people’s preference for apartments, a low housing inventory that has inflated sales prices and strong absorption in the multifamily sector, according to a research brief from Marcus & Millichap. Single-family homes are experiencing low inventory compared to demand, with the supply of available homes holding steady for several months. The current supply represents just 3.6 months of sales, a record low, according to the brief. As a result, the median home price increased 7.3 percent on a year-over-year basis to $230,400 in January 2017. The apartment sector, meanwhile, is still seeing a drop in vacancy despite the fact that deliveries are expected to peak this year. Nearly 290,000 apartments were delivered nationally during 2016, but strong absorption still managed to push vacancy down 20 basis points to 3.9 percent. According to the brief, “young households’ increased propensity to rent fuels apartment demand, and the absorption of 294,100 units in 2016 was the fourth highest year on record.” Following this year’s peak, though, Marcus & Millichap predicts new apartment supply will taper off in 2018. Lenders have already begun to tighten the purse strings …

March 14, 2017

Hospitality Loans New York Northeast Top Stories

Eastern Consolidated Arranges $120M in Construction Financing for New Hyatt Place Hotel in Manhattan

by Taylor Williams March 13, 2017

NEW YORK CITY — Eastern Consolidated has secured a $210 million debt and equity package to finance the construction of a new, 180,000-square-foot Hyatt Place Hotel in Manhattan’s Garment District. The financing consists of a $95 million first-mortgage loan from Bank of the Ozarks and a $25 million preferred equity investment by Square Mile Capital Management. Adam Hakim and James Murad of Eastern Consolidated arranged the financing on behalf of the McSam Hotel Group, a New York-based hotel development firm. “With a revitalized theater district, thriving hospitality industry and constantly improving retail, the Times Square area is a magnet for tourists,” Hakim said. “New York City hosted a record 60.3 million visitors last year, which boosted the city’s hotel occupancy rate to an average of 90.1 percent, and more visitors are expected this year.” The 25-story, 520-key hotel will be located at 350 W. 39th St., in between Eighth and Ninth avenues in the Hudson Yards submarket. The chairman of McSam Hotel Group, Sam Chang, purchased the site in 2015 for $112 million; terms of sale allow him to develop up to 300,000 square feet of the property, according to The Real Deal. Consequently, plans for a 123,000-square-foot, 21-story, 380-room hotel …

March 13, 2017

Office Texas Top Stories

Stream Realty, J.P. Morgan Unveil $135M Renovation Plans for Trammell Crow Center in Dallas

by Kristin Harlow March 10, 2017

DALLAS — Stream Realty Partners and J.P. Morgan Asset Management have unveiled plans for the $135 million renovation and expansion of Trammell Crow Center in Dallas. This will be the first major renovation of the office tower in 32 years. The building, located at 2001 Ross Ave., will be transformed into a mixed-use property. The redevelopment of the 1.2 million-square-foot office tower will include enhancements to the building’s interior lobby, lower exterior and plaza. A ground-up, mixed-use development on an adjacent 2.66-acre site will be anchored by more than 26,000 square feet of restaurant-driven retail space and a parking facility. The transformation of the Dallas landmark will collectively total five acres. The redesign will also focus on expanding the building’s on-site amenities to include a new 3,000-square-foot tenant lounge, an expanded, 9,000-square-foot athletic club and a 9,000-square-foot conference center located on the second floor. The most notable change for the building will consist of a new 50-by-80-foot glass and metal façade below the third floor, which will extend out to Ross Avenue. A similar glass entry will be featured at the Flora Street entrance, and the ground floor of the Olive and Harwood Street corners will extend towards Ross Avenue …

March 10, 2017

Maryland Office Southeast Top Stories

First Potomac Realty Trust, AEW Sell Two Office Assets in Maryland for $59.5M

by John Nelson March 9, 2017

COLUMBIA AND GLEN BURNIE, MD. — First Potomac Realty Trust (NYSE: FPO) and an affiliate of AEW Capital Management have sold two office developments in Maryland for $59.5 million. An affiliate of Adler Kawa Real Estate Advisors purchased the two assets: Rivers Park I and II in Columbia and Aviation Business Park in Glen Burnie. The sale of the 428,268-square-foot portfolio is part of First Potomac Realty Trust’s strategic plan, which includes the sale of $350 million of non-core assets. First Potomac owned a 25 percent interest in Rivers Park I and II and a 50 percent interest in Aviation Business Park. “The sale of these joint-venture assets marks another meaningful step forward at FPO,” says Robert Milkovich, CEO of First Potomac Realty Trust. “In 2017, we have generated over $100 million of proceeds, at our share, providing capital to repay debt and fund our redevelopment program, and have now sold $311 million of assets. As we progress through 2017, we remain focused on completion of our strategic plan and driving long-term value for our shareholders.” First Potomac’s share of the gross proceeds from the sales — approximately $19 million — was utilized to pay down its share of mortgage …

March 9, 2017

Features Top Stories

Interest Rates, Political Unrest Threaten to Jeopardize Health of Commercial Real Estate, Says Economist

by John Nelson March 9, 2017

The U.S. economic expansion continues on, extending its long streak of slow but steady growth. The economy has benefitted from years of stability in both the political and monetary realms, but massive paradigm shifts are underway. These changes are breeding uncertainty, which threaten both overall economic expansion and the commercial real estate industry in a way not seen in years. On the monetary front, years of low and declining interest rates supporting credit markets and asset prices are giving way to a new environment. Rates have risen noticeably since the fall and the Fed is overseeing a tightening cycle. Rising interest rates pose a new challenge to credit conditions and valuations, which has already been reflected in the significant decline in investment volume reported in January by Real Capital Analytics. The sharp rise in interest rates has scuttled the closing of some deals, protracted the closing of others and thrown financing terms for a loop across the board. The larger uncertainty and concern, however, is emanating from the political realm. The new administration has proposed radical policy shifts to immigration, trade, regulations and taxes. Both the amount of proposed policy changes and their severity are resulting in an uptick in …

March 9, 2017

Midwest North Dakota Retail Top Stories

Mall-Based Apparel Chain Vanity to Shutter All 137 Store Locations in 27 States

by Nellie Day March 8, 2017

FARGO, N.D. — Vanity Shop of Grand Forks is shuttering all 137 of its Vanity stores throughout 27 states. Tiger Capital Group is conducting the going-out-of-business sale, which is now underway. The Fargo-based clothing store has roots dating back to the 1950s. The announcement follows the company’s filing for Chapter 11 bankruptcy protection on March 1 in the U.S. Bankruptcy Court for the District of North Dakota. The chain offers discount women’s and children’s apparel and accessories. The heaviest concentration of stores is in the Midwest, particularly Minnesota, Iowa, Wisconsin and Ohio. The stores average 3,000 square feet in size and are mostly located in malls. “The company’s difficult decision to close all stores is emblematic of the pressures facing mall-based specialty apparel retailers in the wake of ever-increasing competition from big-box ‘fast fashion’ chains and e-commerce sites,” says Michael McGrail, COO of Tiger Group. Tiger will also liquidate store fixtures and equipment, as well as furniture, fixtures and equipment from the company’s distribution centers. — Nellie Day

March 8, 2017

Michigan Midwest Retail Top Stories

Brixmor Property Group Acquires 404,000 SF Shopping Center in Ann Arbor for $102M

by Katie Sloan March 7, 2017

ANN ARBOR, MICH. — Brixmor Property Group (NYSE: BRX) has acquired Arborland Center, a 404,000-square-foot, grocery-anchored shopping center located in Ann Arbor, for $102 million. The property is located between the University of Michigan and Eastern Michigan University at 3600 Washtenaw Ave. Kroger anchors the center, which is also home to tenants including DSW, Old Navy, Marshalls, Maurices, Nordstrom Rack, Starbucks Coffee, Ulta Beauty, Bed Bath & Beyond, Petco and Five Below. The property was previously owned by Stamford, Conn.-based AmCap Inc. and was roughly 96 percent occupied at the time of sale, according to reports by Crain’s Detroit Business. With this acquisition, Brixmor owns four assets totaling over 1 million square feet in metro Ann Arbor. The company’s stock price closed on Monday, March 6, at $22.30 per share, down from $24.04 a year ago. — Katie Sloan

March 7, 2017

Features Multifamily Top Stories

Interest Rates Are Top Concern for Multifamily Professionals, Capital One Survey Finds

by John Nelson March 7, 2017

BETHESDA, MD. — Concern over potential interest rate hikes is tempering optimism in the multifamily market, according to a recent survey conducted by Capital One Multifamily Finance. Capital One conducted the survey during the NMHC 2017 conference in San Diego in late January. The survey gauges emerging trends and industry insights from multifamily real estate professionals across the country. About 51 percent of multifamily professionals consider rising interest rates to be their biggest challenge in 2017, more than double the 25 percent of respondents who cited rising costs as their greatest concern. Only 5 percent of those surveyed anticipate potential regulation to be their biggest challenge this year. (Percentages are based on 95 responses.) These interest rate concerns may signal the end of the current cycle for the multifamily market as 50 percent of those surveyed believe the market has entered the last few legs of the race, while only 7 percent feel the cycle is in its early stages. Despite market sentiment, significantly more respondents anticipate being buyers than sellers in 2017; 51 percent said that they anticipate being buyers, while 23 percent anticipate being sellers. “While more industry professionals expect to be buyers than sellers in 2017, increasing …

March 7, 2017

Indiana Retail Top Stories

Growth of E-Commerce Sales, Intense Competition Lead to hhgregg Store Closures

by Taylor Williams March 6, 2017

INDIANAPOLIS — Electronics and home appliances retailer hhgregg’s Inc.’s decision last week to close 88 stores — or roughly 40 percent of its total outlets — and three distribution facilities over the next two months came in the wake of a rough financial stretch for the company. Net sales decreased 23.7 percent on a year-over-year basis during the company’s most recent fiscal quarter, which ended Dec. 31, 2016, and the gross operating margin declined 4.1 percent. The net loss for the quarter was roughly $58.3 million, despite the fact that this period encompassed the holidays. The company was recently delisted from the New York Stock Exchange for failing to meet minimum requirements. Most commonly, delisting occurs when a security trades below $1 per share for 30 consecutive business days; hhgregg had not closed at or above this level since Jan. 9 of this year As a supplier of consumer goods that span several different sectors, hhgregg has been hit equally hard by the rising popularity of e-commerce and competition from other multichannel retailers like Walmart and Home Depot, both of which have enjoyed upward-trending stock prices throughout the year’s early stages. Its electronics division, in particular, was hit hard by this …

March 6, 2017

Midwest Mixed-Use Nebraska Top Stories

Jasper Stone Plans $1.2B Mixed-Use Development in Omaha

by Kristin Harlow March 3, 2017

OMAHA, NEB. — Jasper Stone Partners has received preliminary governmental approval for Avenue One, a $1.2 billion mixed-use development in west Omaha. The Omaha Planning Board unanimously approved the nearly 200-acre project this week, according to the Omaha World-Herald, the local daily newspaper. Avenue One will be located south of 192nd and Dodge streets. The development will feature office, retail, residential, hotel and civic spaces, as well as public green spaces and walking trails. Jasper Stone plans to break ground later this year on the project, which will consist of 1.3 million square feet of office and retail space, and more than 2,000 residential units. Phase I of construction is slated for completion in late 2018. Avenue One will be one of the largest projects of its kind in Omaha and is expected to have an annual economic impact of more than $1 billion, according to a news release from the developers. Jasper Stone is working with Block Real Estate Services LLC during the master planning phase. Other participants in the project include HOK for architecture and land planning, Omaha-based Olsson and Associates for engineering and design, Pansing Hogan Ernst & Bachman and Husch Blackwell for legal services and Pinnacle …

March 3, 2017

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