April News (full article): http://hosted.vresp.com/657244/f4e7a01ed6/1641010525/fc4ea8f222
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Friday, April 24, 2015
April News: Vacancy rates and buying multi-unit buildings
April News (full article): http://hosted.vresp.com/657244/f4e7a01ed6/1641010525/fc4ea8f222
In business, creativity equals success. Those who can think outside the box may become superachievers. But, according to the latest business theorists, creativity is not the purview of a few; it can be learned.
Monday, April 20, 2015
Evernote and Blogging
Evernote is very functional. It's a phone app. It's a workspace app. You can write everyday from anywhere. You can work together, gather research, and you can find your documents, texts and images very fast. It's a platform to share your ideas and stay in sync availble whenever whereever on every device and computer you use.
Sounds pretty awesome right?
Evernote gets better.
I just came across a blog about an ebook called Evernote Hacks for Bloggers by Michael Hyatt http://mhyatt.us/1DNywm9. It discusses how to generate powerful content in less time!
Here is the skinny.
Whether you blog or not, Evernote is a wonderful time-saving app which is very flexible across different devices. It should be a primary tool in your daily business for collaboration, generating content and sharing.
I would love to hear other people's experiences with Evernote!
Sounds pretty awesome right?
Evernote gets better.
I just came across a blog about an ebook called Evernote Hacks for Bloggers by Michael Hyatt http://mhyatt.us/1DNywm9. It discusses how to generate powerful content in less time!
Here is the skinny.
Michael's Evernote Hacks for Bloggers shows you:
- How to use tags, instead of notebooks, for super efficient organization of your content.
- How to save time by organizing research and post ideas for quick, reliable retrieval.
- The best way I know to set up your saved searches to help with your content workflow.
- Collaboration tips that will enable you to incorporate your team into research, editing, and more.
- The one writing technique that you can learn in twenty minutes that will save you hours of HTML coding hassles.
- Why Evernote has replaced almost every other word processing app for my blogging needs.
- How to set up blogging templates to help you blog more consistently and efficiently. I’ve even included my own Evernote template that I use to guide my own work.
- A simple, automated method for using Evernote as a backup for your blog.
Whether you blog or not, Evernote is a wonderful time-saving app which is very flexible across different devices. It should be a primary tool in your daily business for collaboration, generating content and sharing.
I would love to hear other people's experiences with Evernote!
8 Food Truck Stops in DFW
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Tuesday, October 28, 2014
Why Is Dallas Building So Many Hospitals?
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| Parkland’s new $1.3 billion, 2.1 million-square-foot hospital is said to be the largest healthcare construction project in the U.S. |
I pictured the bustle: Nurses pulled to the centralized nursing station as if it were a magnet, other patients gliding in and out of rooms, doctors eyeballing the charts in their hands. The worst part, though, was staring into those jarring, fluorescent lights in the ceiling. I imagined being jolted into further disorientation every few feet, my pupils dilating and shrinking.
Methodist is by no means the only system in North Texas employing these strategies in its new projects. But Wilson’s request was interesting: Close your eyes and picture what you’ve known; now open them and look at what it has become.
There are examples of this in nearly every corner of the region, where new hospitals are cropping up to replace aging facilities and to meet the demands of a population that won’t stop growing.
Ground zero is in Dallas’ Medical District, with Parkland Health & Hospital System’s monolithic new $1.3 billion building and UT Southwestern’s W-shaped William P. Clements Jr. University Hospital. The Hospital Corp. of America is betting on growth in the Alliance area, on the northern edge of Tarrant County, with a new facility. The luxury, physician-owned hospital system Forest Park Medical Center has staked its claim in Frisco, North Dallas, Southlake, and Fort Worth. And that’s only a sampling.
“Most folks are saying there may be as many as 1,000 people or more moving to Texas every day, and I think a lot of them are moving to the urban areas,” says John Hawkins, the Texas Hospital Association’s senior vice president of advocacy and public policy. “We’re trying to stay in front of those growth trends.”
The boom is also dictated by the aging baby boomer population. By 2050, the U.S. Census predicts 20.9 percent of Americans will be older than 65: “People who are older and more elderly tend to use more healthcare services because they generally have more chronic illnesses,” says Steve Love, president and CEO of The Dallas-Fort Worth Hospital Council.
As for overall growth, the Dallas-Fort Worth-Arlington Metropolitan Statistical Area added just under 400,000 people between April 2010 and July 2013, Census figures show. That 6 percent growth rate was eclipsed by only one MSA in the country with more than 2 million residents during that same time period: Houston-The Woodlands-Sugarland, which grew by 6.6 percent.
Are the hospitals keeping up? In 2011, the Kaiser Family Foundation found that Texas had 2.4 hospital beds for every 1,000 residents, just below the national average of 2.6. It’s important to note that some of the hospital growth, including the upswing in Dallas’ Medical District, is meant to replace older facilities. So while they are bringing new beds into commission, others are being taken out.
For instance, Parkland’s new facility will replace its existing, 730-bed campus, which opened in 1954. And UTSW’s $800 million Clements Hospital is the death knell for St. Paul University Hospital, which has stood at Inwood Road and Harry Hines Boulevard since December 1963. The 300-bed facility is constantly at or near capacity. It will be demolished not long after the 12-story, 460-bed teaching hospital opens this month.
“It was not easily adapted to what is needed to provide the best care today,” says Dr. Daniel K. Podolsky, the university’s president. “When we looked at the cost of investing further to bring it up, we realized it was a completely unreasonable investment.”
The 2010 enactment of the Patient Protection and Affordable Care Act effectively killed the top-down approach of hospital design. Peppered throughout the reform law is the phrase “quality measures,” which refers to evidence-based patient satisfaction metrics that ultimately affect reimbursements from the Centers for Medicare and Medicaid Services. Hospital systems that are building from the ground up or expanding current facilities have this in mind when they enter into the design process.
The 2010 enactment of the Patient Protection and Affordable Care Act effectively killed the top-down approach of hospital design. Peppered throughout the reform law is the phrase “quality measures,” which refers to evidence-based patient satisfaction metrics that ultimately affect reimbursements from the Centers for Medicare and Medicaid Services. Hospital systems that are building from the ground up or expanding current facilities have this in mind when they enter into the design process.
So when Podolsky speaks of providing “the best care today,” he’s talking about including stakeholders from every aspect of the facility—patients and doctors and nurses and administrators—and incorporating their points of view.
“There has to be a lot more collaboration because it affects readmission rates, it affects satisfaction rates,” says John Castorina, senior vice president of the architecture firm RTKL, which designed UTSW’s Clements Hospital. He says his team incorporated advice from a dozen subcommittees: “From what I’ve experienced, there’s more and more information-sharing. It’s getting more collaborative because of what the Affordable Care Act dictates.”
Another reform: transitioning to Electronic Medical Records. Both Parkland and Clements aim to be as paperless as possible.
The 2.1 million-square-foot New Parkland purports to be the largest healthcare construction project in America. It’s billed as an “all-digital” facility. Outside each inpatient room is a digital screen that allows the physician to access the patient’s (HIPAA-compliant) EMRs.
“They have the key clinical data they need to serve that patient before they walk in,” says Joseph Longo, the vice president of information technology at New Parkland Hospital.
The televisions in the hospital rooms are now tools for patient engagement. Patients can access educational material about their condition. They choose their meals using the TV interface—if the doctor has ordered a low-sodium diet, the menu will correlate with their nutrition demands.
Technology changes rapidly. So, years ago, it didn’t make sense for Parkland to decide on specific products when planning began. Longo says administrators determined a set of goals they wanted to achieve—make it more patient-friendly, increase connectivity, facilitate workflow transformations that make providing care easier. About four years ago, he says, the hospital began seeking out the technologies that would best position it as a setting for efficient healthcare delivery now and in the future.
“We want to be able to expand upon these platforms on day 360 or year five,” Longo says. “We wanted to anticipate this to be a useful building for the next 50 years. That’s very tough to do from a technology perspective.”
UTSW is also thinking ahead, too, with 35,000 square feet solely dedicated for research and learning. The new hospital also includes a 10,000-square-foot education and conference center, larger than any educational resource area at St. Paul.
The state’s growth has lawmakers eyeing incentives to boost health education and residency programs to ensure there are enough doctors to treat residents. Republican gubernatorial candidate Greg Abbott’s $175 million jolt to healthcare funding sets aside additional money for medical school residency slots in the state.
There also are the things that came out of the more collaborative strategy. These range from simple improvements, like the comforting lighting at Methodist’s trauma tower, to larger-scale features, like the 1.3 million-square-foot Clements Hospital’s “W” design. It allows the medical staff to split each floor into four separate units, which, as Castorina puts it, “brings what otherwise is a very large building to a human scale.”
Keeping up with new healthcare regulations, advances in medicine and technology, and growing demand is no easy feat, says Love with the Hopsital Council. “We are continually addressing the needs of the population in North Texas,” he says. “We’re making a good-faith effort to have the supply and the demand meet at the appropriate level.”
Source: DHealthcare Daily by Matt Goodman
Tuesday, May 20, 2014
Tick, Tick, Tick...Check your Lease!
Is Your Lease a Ticking Time Bomb?
Every landlord wants a lease agreement that’s tough. But did you know that if your lease is too tough, it could cause legal problems?
In legal terms, a standard lease agreement is called an “adhesion” contract. That simply means that there is one party who drafted the agreement, and possesses all or most of the power in the negotiation. A lease agreement is a “take it or leave it” proposition.
There’s nothing particularly wrong with that, unless the lease provisions are too oppressive.
Then, an adhesion contract may be viewed as “unconscionable.” Tenants are forced to abide by disagreeable terms in order to get what they need — a place to live. Courts will restore the balance the power in an unconscionable contract by refusing to enforce some or all of the provisions.
An Iowa landlord learned that lesson when his tenants joined forces, initiating a legal battle over provisions in the lease that a court ultimately determined were unconscionable. The landlord argued (unsuccessfully) that he didn’t enforce any of the illegal provisions, therefore there was no harm in including them in the lease. But the judge found that these provisions could be intimidating to a tenant. Next, the court will decide whether demanding that tenants sign such an unfair lease violates the state’s consumer protection laws — the same laws that govern door-to-door sales and telemarketers. Consumer protection statutes generally allow for significant penalties.
Leases must be carefully crafted so they cover all of the bases, without going to the extreme. Does your lease put you at risk?
When evaluating your lease agreement, there are two aspects to consider. The first is to identify any specific provisions that could be illegal. These may include seemingly innocent provisions that are only illegal in your particular locale. For example, some states allow attorneys fees against a tenant, and other states strictly prohibit that provision. Attempting to shift your legal responsibilities onto the tenant is another potentially illegal term. The Iowa landlord required tenants to agree to pay for repairs and upkeep that were not the tenant’s fault.
Other common problem lease provisions include excessive late fees, application or administrative fees that may be prohibited locally, or any attempt to override the law, like extending the period allowed to return a security deposit. Controversial terms hidden deep in the “fine print” can also be viewed as unfair. Your attorney can help you identify these potential problem spots.
The other aspect of the lease agreement that you should evaluate is the overall impact. Rather than looking at one particular paragraph, a judge ruling on a lease dispute will consider all things together. Not only do the separate paragraphs of the lease have to mesh, but the lease, coupled with the leasing policies, must be fair. Let’s say you charge a nonrefundable pet fee for cleaning the carpet. At the same time, you reserve the right to deduct from the security deposit a carpet cleaning fee. If you attempt to enforce that provision and take both the fee and the deduction, these lease terms may be viewed as unconscionable. That’s even more likely to happen if you take the deduction even when the tenant cleans the carpet.
To avoid lease problems, the best defense is to know your responsibilities under the law. From there, choose a reputable lease form to work with, and avoid modifications that add fees, change the tenant’s responsibilities or shift liability. When you have your draft lease completed, run it past an attorney, just to be on the safe side. Also, try to resolve disputes with tenants before things get heated — it’s almost always cheaper that way!
American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org.
Courtesty of: www.american-apartment-owners-association.org
Every landlord wants a lease agreement that’s tough. But did you know that if your lease is too tough, it could cause legal problems?In legal terms, a standard lease agreement is called an “adhesion” contract. That simply means that there is one party who drafted the agreement, and possesses all or most of the power in the negotiation. A lease agreement is a “take it or leave it” proposition.
There’s nothing particularly wrong with that, unless the lease provisions are too oppressive.
Then, an adhesion contract may be viewed as “unconscionable.” Tenants are forced to abide by disagreeable terms in order to get what they need — a place to live. Courts will restore the balance the power in an unconscionable contract by refusing to enforce some or all of the provisions.
An Iowa landlord learned that lesson when his tenants joined forces, initiating a legal battle over provisions in the lease that a court ultimately determined were unconscionable. The landlord argued (unsuccessfully) that he didn’t enforce any of the illegal provisions, therefore there was no harm in including them in the lease. But the judge found that these provisions could be intimidating to a tenant. Next, the court will decide whether demanding that tenants sign such an unfair lease violates the state’s consumer protection laws — the same laws that govern door-to-door sales and telemarketers. Consumer protection statutes generally allow for significant penalties.
Leases must be carefully crafted so they cover all of the bases, without going to the extreme. Does your lease put you at risk?
When evaluating your lease agreement, there are two aspects to consider. The first is to identify any specific provisions that could be illegal. These may include seemingly innocent provisions that are only illegal in your particular locale. For example, some states allow attorneys fees against a tenant, and other states strictly prohibit that provision. Attempting to shift your legal responsibilities onto the tenant is another potentially illegal term. The Iowa landlord required tenants to agree to pay for repairs and upkeep that were not the tenant’s fault.
Other common problem lease provisions include excessive late fees, application or administrative fees that may be prohibited locally, or any attempt to override the law, like extending the period allowed to return a security deposit. Controversial terms hidden deep in the “fine print” can also be viewed as unfair. Your attorney can help you identify these potential problem spots.
The other aspect of the lease agreement that you should evaluate is the overall impact. Rather than looking at one particular paragraph, a judge ruling on a lease dispute will consider all things together. Not only do the separate paragraphs of the lease have to mesh, but the lease, coupled with the leasing policies, must be fair. Let’s say you charge a nonrefundable pet fee for cleaning the carpet. At the same time, you reserve the right to deduct from the security deposit a carpet cleaning fee. If you attempt to enforce that provision and take both the fee and the deduction, these lease terms may be viewed as unconscionable. That’s even more likely to happen if you take the deduction even when the tenant cleans the carpet.
To avoid lease problems, the best defense is to know your responsibilities under the law. From there, choose a reputable lease form to work with, and avoid modifications that add fees, change the tenant’s responsibilities or shift liability. When you have your draft lease completed, run it past an attorney, just to be on the safe side. Also, try to resolve disputes with tenants before things get heated — it’s almost always cheaper that way!
American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org.
Courtesty of: www.american-apartment-owners-association.org
Friday, May 16, 2014
A Strong Texas Market
Texas' middle market is the strongest in the country - May 2, 2014
Texas business conditions continue to improve and retail sales are rising, which is good news for the state’s middle market.
Monthly data from the Federal Reserve Bank of Dallas confirms labor market indicators, such as employment and numbers of hours worked, are improving. Perceptions of economic conditions also reflected more optimism in April, and retail sales continued to increase for the 10th consecutive month.
The National Center for the Middle Market, a collaboration of the Ohio State University Fisher College of Business and GE Capital, conducted a survey on the country’s middle market, which is made up of approximately 200,000 businesses with $10 million to $1 billion in revenue. Findings showed that these companies had more than $10 trillion total in annual revenue and created 1.2 million new jobs in 2012–2013.
“The U.S. economy for the middle market has grown rapidly,” NCMM academic director Anil Makhija said. “When you talk about national growth, it is in fact the middle market that’s being the driver behind that.”
Texas accounted for much of that success, named by the NCMM as the nation’s top growth market for mid-sized businesses. The state has approximately 10,000 middle market firms, which employ 4 million and generate $500 billion in annual revenues, NCMM said. Those numbers are higher than the same values nationally.
“Even though (middle market companies) make up less than 1 percent of all Texas firms, they apply 29 percent of the workforce,” Makhija said. “The middle market in Texas, in the last 12 months had revenue growth of 6.5 percent, and that’s impressive.”
And that prosperity is only expected to continue. The survey reported Texas middle market executives have strong confidence in the local economy.
“Ninety-one percent of middle market companies in Texas report confidence in their local economy, compared with 81 percent nationally,” the survey reported.
However, these companies are still facing the same problems as their bigger competitors. In NCMM’s survey, 75 percent of mid-size business executives say they are having a hard time attracting and retaining top talent. Still, job creation growth is still slated at 3.2 nationally percent and 5.3 percent in Texas.
“There is growth, and more so in Texas, but Texas and the U.S. are still facing some challenges,” Makhija said. “Nationally, we still have a pretty high unemployment rate. As a country, we are somewhat behind in producing science, technology, engineering and mathematics graduates, and that’s what’s needed.”
Texas business conditions continue to improve and retail sales are rising, which is good news for the state’s middle market.
Monthly data from the Federal Reserve Bank of Dallas confirms labor market indicators, such as employment and numbers of hours worked, are improving. Perceptions of economic conditions also reflected more optimism in April, and retail sales continued to increase for the 10th consecutive month.
The National Center for the Middle Market, a collaboration of the Ohio State University Fisher College of Business and GE Capital, conducted a survey on the country’s middle market, which is made up of approximately 200,000 businesses with $10 million to $1 billion in revenue. Findings showed that these companies had more than $10 trillion total in annual revenue and created 1.2 million new jobs in 2012–2013.
“The U.S. economy for the middle market has grown rapidly,” NCMM academic director Anil Makhija said. “When you talk about national growth, it is in fact the middle market that’s being the driver behind that.”
Texas accounted for much of that success, named by the NCMM as the nation’s top growth market for mid-sized businesses. The state has approximately 10,000 middle market firms, which employ 4 million and generate $500 billion in annual revenues, NCMM said. Those numbers are higher than the same values nationally.
“Even though (middle market companies) make up less than 1 percent of all Texas firms, they apply 29 percent of the workforce,” Makhija said. “The middle market in Texas, in the last 12 months had revenue growth of 6.5 percent, and that’s impressive.”
And that prosperity is only expected to continue. The survey reported Texas middle market executives have strong confidence in the local economy.
“Ninety-one percent of middle market companies in Texas report confidence in their local economy, compared with 81 percent nationally,” the survey reported.
However, these companies are still facing the same problems as their bigger competitors. In NCMM’s survey, 75 percent of mid-size business executives say they are having a hard time attracting and retaining top talent. Still, job creation growth is still slated at 3.2 nationally percent and 5.3 percent in Texas.
“There is growth, and more so in Texas, but Texas and the U.S. are still facing some challenges,” Makhija said. “Nationally, we still have a pretty high unemployment rate. As a country, we are somewhat behind in producing science, technology, engineering and mathematics graduates, and that’s what’s needed.”
Korri Kezar - Dallas Business Journal.
Tuesday, April 15, 2014
How to Make More Money from Your Rental Property
An apartment complex in San Francisco is trying out a new strategy to
make some additional cash: parking space rentals for non-residents.
While this isn’t a new idea, it encourages other landlords to
consider hidden income possibilities — this could be a great money maker
for other city apartment owners with unused spaces in their parking
lot.
Hunting for parking in a city like San Francisco can be very
difficult and frustrating. People vacationing to the area are often
surprised to find just how expensive it is to park. The savvy property
managers with Marina Cove Apartments saw this as opportunity to market
their idle spaces.
Monthly parking in San Francisco and similar areas can reach nearly
$400. Marina Cove is setting the rate at $250, taking advantage of a
highly desirable location near the Bay.
The complex offers luxury Marina District apartments for rent,
serving the needs of San Francisco residents who desire to live in one
of the city’s most prestigious neighborhoods.
William Harlow, marketing manager at Trinity Management Services,
says the policy will benefit residents. “We understand how important it
is for our tenants’ guests to be able to have a place to park when they
are visiting. No one wants to tell their Mom or Grandma or friend that
they have to park a mile away and hike up to the apartment complex to be
able to visit them. With the outrageous cost of scarce parking in the
city, $250 a month for a guaranteed spot is a deal.” That’s bound to
enhance tenant retention.
Marina Cove also benefits from diversification, offering furnished
apartments, short term leases, and corporate suite leases or rentals.
The company focuses attention on its friendly and professional staff.
American Apartment Owners Association offers discounts on
products and services for all your property management needs. Find out
more at www.joinaaoa.org.
Source: American Apartment Owners Association
make some additional cash: parking space rentals for non-residents.
While this isn’t a new idea, it encourages other landlords to
consider hidden income possibilities — this could be a great money maker
for other city apartment owners with unused spaces in their parking
lot.
Hunting for parking in a city like San Francisco can be very
difficult and frustrating. People vacationing to the area are often
surprised to find just how expensive it is to park. The savvy property
managers with Marina Cove Apartments saw this as opportunity to market
their idle spaces.
Monthly parking in San Francisco and similar areas can reach nearly
$400. Marina Cove is setting the rate at $250, taking advantage of a
highly desirable location near the Bay.
The complex offers luxury Marina District apartments for rent,
serving the needs of San Francisco residents who desire to live in one
of the city’s most prestigious neighborhoods.
William Harlow, marketing manager at Trinity Management Services,
says the policy will benefit residents. “We understand how important it
is for our tenants’ guests to be able to have a place to park when they
are visiting. No one wants to tell their Mom or Grandma or friend that
they have to park a mile away and hike up to the apartment complex to be
able to visit them. With the outrageous cost of scarce parking in the
city, $250 a month for a guaranteed spot is a deal.” That’s bound to
enhance tenant retention.
Marina Cove also benefits from diversification, offering furnished
apartments, short term leases, and corporate suite leases or rentals.
The company focuses attention on its friendly and professional staff.
American Apartment Owners Association offers discounts on
products and services for all your property management needs. Find out
more at www.joinaaoa.org.
Source: American Apartment Owners Association
Monday, March 3, 2014
America’s 10 Fastest-Growing Cities
When it comes to growing cities, Texas is booming. The Lone Star State boasts the highest number of cities on Forbes’ annual list of America’s Fastest Growing Cities. Three Texas cities made it into the top 10: Austin (at No. 1), Dallas (No. 4), and Houston (No. 10).
Forbes’ list of America’s fastest-growing cities rates the 100 most populated metros in the country based on several factors, such as the estimated rate of population growth for 2013 and 2014, year-over-year job growth for 2013, unemployment data, median salaries for local college-educated workers, and the rate of economic growth for 2013.
The following cities topped this year’s list:
1. Austin, Texas
2013 population growth: 2.5%
2. Raleigh, N.C.
2013 population growth: 2.15%
3. Phoenix
2013 population growth: 1.67%
4. Dallas
2013 population growth: 1.91%
5. Salt Lake City, Utah
2013 population growth: 1.33%
6. Denver
2013 population growth: 1.75%
7. Ogden, Utah
2013 population growth: 2.05%
8. Charlotte, N.C.
2013 population growth: 1.92%
9. Orlando, Fla.
2013 population growth: 1.82%
10. Houston
2013 population growth: 1.82%
Source: “America’s 20 Fastest-Growing Cities,” Forbes.com (Feb. 14, 2014)
Forbes’ list of America’s fastest-growing cities rates the 100 most populated metros in the country based on several factors, such as the estimated rate of population growth for 2013 and 2014, year-over-year job growth for 2013, unemployment data, median salaries for local college-educated workers, and the rate of economic growth for 2013.
The following cities topped this year’s list:
1. Austin, Texas
2013 population growth: 2.5%
2. Raleigh, N.C.
2013 population growth: 2.15%
3. Phoenix
2013 population growth: 1.67%
4. Dallas
2013 population growth: 1.91%
5. Salt Lake City, Utah
2013 population growth: 1.33%
6. Denver
2013 population growth: 1.75%
7. Ogden, Utah
2013 population growth: 2.05%
8. Charlotte, N.C.
2013 population growth: 1.92%
9. Orlando, Fla.
2013 population growth: 1.82%
10. Houston
2013 population growth: 1.82%
Source: “America’s 20 Fastest-Growing Cities,” Forbes.com (Feb. 14, 2014)
Friday, January 31, 2014
25 Predictions for 2014
International capital will seek property returns around the globe.
Global
1. Much of the world will see slow growth
2. Global investors will push into new property markets
Europe, Middle East & Africa
3. Second tier cities will be back on the radar
4. European economy to emerge from recession
5. UK economy will strengthen through further government stimulus
6. UK regional markets and secondary assets will be back in play
7. Large-scale infrastructure investments across the GCC
8. Foreign companies will expand to South Africa and beyond
Asia
9. Modest growth in office rentals in Asian Financial Centers
10. Chinese investors will buy overseas in a big way
11. JREITs will expand
India
12. More supply deferrals in 2014
13. Regulatory changes will boost investments
Singapore
14. Singapore's prime office rents will jump by 10-16%
Australia & New Zealand
15. Domestic property investors will take back Australia
16. Leasing conditions will improve in all sectors
17. New Zealand development activity will rise
Latin America
18. Mexican Investment will be Drive by New REITs
19. More Foreign Investors will target Colombia
USA
20. U.S. GDP growth will struggle to average 2%
21. QE will end and interest rates will rise
22. U.S. Home prices will rise as much as 9%
23. Secondary U.S. markets will see expanded demand
24. Industrial will be top U.S. performer in 2014
Canada
25. The Prairie Provinces will be real estate hot spots
Full story here http://www.colliers.com/en-us/insights/market-news/2014-commercial-real-estate-predictions#.UuvNrU2A0y8
Credit: Colliers International
Global
1. Much of the world will see slow growth
2. Global investors will push into new property markets
Europe, Middle East & Africa
3. Second tier cities will be back on the radar
4. European economy to emerge from recession
5. UK economy will strengthen through further government stimulus
6. UK regional markets and secondary assets will be back in play
7. Large-scale infrastructure investments across the GCC
8. Foreign companies will expand to South Africa and beyond
Asia
9. Modest growth in office rentals in Asian Financial Centers
10. Chinese investors will buy overseas in a big way
11. JREITs will expand
India
12. More supply deferrals in 2014
13. Regulatory changes will boost investments
Singapore
14. Singapore's prime office rents will jump by 10-16%
Australia & New Zealand
15. Domestic property investors will take back Australia
16. Leasing conditions will improve in all sectors
17. New Zealand development activity will rise
Latin America
18. Mexican Investment will be Drive by New REITs
19. More Foreign Investors will target Colombia
USA
20. U.S. GDP growth will struggle to average 2%
21. QE will end and interest rates will rise
22. U.S. Home prices will rise as much as 9%
23. Secondary U.S. markets will see expanded demand
24. Industrial will be top U.S. performer in 2014
Canada
25. The Prairie Provinces will be real estate hot spots
Full story here http://www.colliers.com/en-us/insights/market-news/2014-commercial-real-estate-predictions#.UuvNrU2A0y8
Credit: Colliers International
Tuesday, September 10, 2013
Tuesday, July 30, 2013
Tuesday, June 11, 2013
Vacancy Rates Continue Decline in Second Quarter 2013
Economic activity posted a steady pace of growth over the past few months, as consumers and businesses seemed committed to moving forward. Gross domestic product rose 2.4 percent in the first quarter of the year. Riding the moderate temperature of a mild winter, consumers opened up their wallets at the fastest pace since the fourth quarter 2010.
Behind an improving economy lies a subtle uplift in consumers’ wealth. Consumers have been paying off debt over the past few years, while cutting back on discretionary spending. At the same time, household wealth tied to financial assets has been rising steadily post-recession, with the Dow recently crossing the 15,000 threshold. Household wealth tied to housing has seen a noticeable improvement in 2012 and the first quarter of 2013. Sale of existing homes rose 9.8 percent in the first quarter of this year, following the 9.0 percent rise in 2012. Due to very tight inventories, multiple bids have returned to the market, and price escalation clauses are pushing home prices up. Based on NAR data, the median sales price of existing homes jumped 11.2 percent in the first quarter of the year.
With vacancy rates falling and rents rising, market fundamentals have improved. National vacancy rates over the coming year are expected to continue declining in most property sectors. The average multifamily vacancy rate is forecast to rise 0.2 percentage point, although the sector still shows the tightest availability and largest rent increases.
Net absorption of office space is projected to total 31.7 million square feet by year end. Office vacancies are expected to decline to 15.6 percent by the end of 2013. The markets with the lowest forecasted office vacancy rates are Washington, D.C., New York and Little Rock, with availability rates of 9.4 percent, 9.9 percent and 12.0 percent, respectively. Rents for office properties are expected to increase 2.6 percent over the year.
Industrial markets are benefiting from rising international trade, which drives demand for warehouse space. Net absorption of industrial space is projected to total 107.1 million square feet by the end of 2013, driving vacancy rates to 9.3 percent. The metro areas with the lowest industrial vacancy rates are Orange County, at 3.9 percent, followed by Los Angeles with 4.1 percent, and Miami, at 5.8 percent. Rents for industrial buildings are expected to grow 2.4 percent this year.
With consumers continuing a cautiously optimistic approach to spending, retail spaces have been on the rebound. Net absorption of retail buildings is expected to total 12.5 million square feet this year. With the supply of new buildings still constrained, vacancies are expected to drop to 10.4 by year-end. Markets with the lowest retail vacancy rates are led by San Francisco, at 3.6 percent. Rounding the top three are Fairfield County, CT, at 4.1 percent, and Long Island, NY, along with Orange County, CA, both at 5.3 percent. Rent for retail properties are projected to increase 1.4 percent over the year.
The apartment market has seen the strongest demand and lowest vacancies, driven by a recovery of household formation towards long-term averages. Net absorption is expected to total 276,320 units this year. Against a supply of only 136,342 new units, vacancy rates are estimated to decline to 3.8 percent by the end of 2013. Metro areas with the lowest vacancy rates are New Haven, CT, at 2.0 percent and New York City, at 2.2 percent. Sharing the number three spot, Minneapolis and San Diego, each record 2.3 percent. Apartment rents are projected to increase 4.6 percent in 2013.
For the full Commercial Real Estate Outlook report, visit http://www.realtor.org/reports/commercial-real-estate-outlook.
Reported by George Ratiu, Research Economist
Vacancy Rates Continue Decline in Second Quarter 2013
Behind an improving economy lies a subtle uplift in consumers’ wealth. Consumers have been paying off debt over the past few years, while cutting back on discretionary spending. At the same time, household wealth tied to financial assets has been rising steadily post-recession, with the Dow recently crossing the 15,000 threshold. Household wealth tied to housing has seen a noticeable improvement in 2012 and the first quarter of 2013. Sale of existing homes rose 9.8 percent in the first quarter of this year, following the 9.0 percent rise in 2012. Due to very tight inventories, multiple bids have returned to the market, and price escalation clauses are pushing home prices up. Based on NAR data, the median sales price of existing homes jumped 11.2 percent in the first quarter of the year.
With vacancy rates falling and rents rising, market fundamentals have improved. National vacancy rates over the coming year are expected to continue declining in most property sectors. The average multifamily vacancy rate is forecast to rise 0.2 percentage point, although the sector still shows the tightest availability and largest rent increases.
Net absorption of office space is projected to total 31.7 million square feet by year end. Office vacancies are expected to decline to 15.6 percent by the end of 2013. The markets with the lowest forecasted office vacancy rates are Washington, D.C., New York and Little Rock, with availability rates of 9.4 percent, 9.9 percent and 12.0 percent, respectively. Rents for office properties are expected to increase 2.6 percent over the year.
Industrial markets are benefiting from rising international trade, which drives demand for warehouse space. Net absorption of industrial space is projected to total 107.1 million square feet by the end of 2013, driving vacancy rates to 9.3 percent. The metro areas with the lowest industrial vacancy rates are Orange County, at 3.9 percent, followed by Los Angeles with 4.1 percent, and Miami, at 5.8 percent. Rents for industrial buildings are expected to grow 2.4 percent this year.
With consumers continuing a cautiously optimistic approach to spending, retail spaces have been on the rebound. Net absorption of retail buildings is expected to total 12.5 million square feet this year. With the supply of new buildings still constrained, vacancies are expected to drop to 10.4 by year-end. Markets with the lowest retail vacancy rates are led by San Francisco, at 3.6 percent. Rounding the top three are Fairfield County, CT, at 4.1 percent, and Long Island, NY, along with Orange County, CA, both at 5.3 percent. Rent for retail properties are projected to increase 1.4 percent over the year.
The apartment market has seen the strongest demand and lowest vacancies, driven by a recovery of household formation towards long-term averages. Net absorption is expected to total 276,320 units this year. Against a supply of only 136,342 new units, vacancy rates are estimated to decline to 3.8 percent by the end of 2013. Metro areas with the lowest vacancy rates are New Haven, CT, at 2.0 percent and New York City, at 2.2 percent. Sharing the number three spot, Minneapolis and San Diego, each record 2.3 percent. Apartment rents are projected to increase 4.6 percent in 2013.
For the full Commercial Real Estate Outlook report, visit http://www.realtor.org/reports/commercial-real-estate-outlook.
Reported by George Ratiu, Research Economist
Vacancy Rates Continue Decline in Second Quarter 2013
Tuesday, May 28, 2013
Business Success Newsletter - May 2013
Check out a training opportunity for investors, what to discuss when renewing a lease, and a few other things to read and learn. Don't miss our May edition of Business Success newsletter!
https://app.verticalresponse.com/app/emails/email/view/1641840027#view_as_html
https://app.verticalresponse.com/app/emails/email/view/1641840027#view_as_html
Retail Rent Growth Finally Takes Root Across U.S. Metros
Change is on its way in Retail rent. Read about it below...
Absorption, Vacancy Benchmarks Continue to Drift Sideways As Retailers Shake Out Closed Stores
Following a recent string of relentlessly unexciting market trends in retail real estate over the past several quarters comes this distinctly positive news for retail property owners -- quoted asking rents have finally turned upward across all retail property types in the U.S. for the first time since 2008.
"This is a symbolic victory," said CoStar real estate economist Ryan McCullough, who co-presented the First-Quarter 2013 Retail Review and Outlook with Suzanne Mulvee, director of U.S. research, retail for Property and Portfolio Research (PPR), CoStar's analytics and economic forecasting company.
This reversal of bad fortune for landlords, which started with rental rate increases in higher-end institutional retail and a few scattered metros of several quarters ago, is the culmination of 2 ½ years of steady fundamentals recovery in retail, he said.
"We’re finally to the point where the average asset is showing steady rent growth again," McCullough said.
Mulvee made note that the 70% of U.S. retail markets that reported positive rent growth during the first quarter represents "a true turning point for the market" into a broad-based recovery.
Without getting too carried away, it should be clearly noted that plenty of challenges remain for owners, tenants and retailers. Rents aren't going to shoot upward and fundamentals are continuing to improve slowly or move sideways.
Muted absorption appears to be the new normal, with a light 17 million square feet in net absorption for the first quarter, down slightly from a year ago, as retailers continue to shed stores and consolidate into stronger shopping centers. Leading year-over-year demand growth are western markets such as Dallas-Fort Worth, Phoenix, Denver, Salt Lake City and San Diego.
With little new construction, vacancies continue to edge downward, with progress still slowed by about 19 million square feet of store closures tracked by CoStar - space shed by such chains as Fashion Bug and Big Lots, as well as hangover from already downsized retailers like Barnes & Noble and Blockbuster.
CoStar expects construction to pick up a bit in 2013 as shifting population opens new pockets of wealth. The first developments to come back have been outlet centers, with six centers under construction across the U.S. and another dozen in the planning stages - and some shopping centers being converted to outlet space.
Power centers and malls are at the lower end of the vacancy spectrum at about 5.9%, while neighborhood centers are starting to rebound, with total store openings exceeding closings by a fairly wide margin.
Demand for malls and especially power centers by category killer retailers such as Best Buy and Staples remains under attack by e-commerce, including the advent of Amazon.com's same-day delivery, Mulvee said. When new construction ramps up again, stronger retailers will gravitate toward the newer centers -- and power centers are like to go dark as a result, McCullough said, adding, "In 10 years, we may be saying the same thing about dead power centers as we do today about dead malls."
The broadening scope of the recovery was reflected in the sentiments of webinar attendees surveyed by CoStar following the retail market presentation:
Lisa Diehl of Diehl and Partners, LLC, of Edina, MN, said the climate for retail investment is strong in the Minneapolis market.
"We had our issues during the downturn, but we're recovering. Everyone I speak with is busier than they were last year, and have done better through May than they did in the entirety of last year. That's a positive sign of activity picking up," Diehl said.
That said, prospects are still playing it safe, she added.
"Landlords are trying to push the rents higher if they can get it. There's still some uncertainly, but things are improving," Diehl said.
John E. Crump, director with HFF in Los Angeles and an investment sales broker mainly focused on California, Arizona and Nevada markets, picked up especially on Phoenix’s relative outperformance on job growth. He found the discussion of the return of the wealth effect and positive rent growth for the first time nationally since 2008 to be of particular note.
"In the California, Nevada and Arizona markets, we are seeing much fewer distressed sales and more stabilized assets," Crump said. "There is a notable lack of product versus supply, and coupled with the ample available low price debt, pricing is at or near peak for coastal areas and improving in the Inland Empire, Las Vegas and Arizona - areas clobbered by the housing downturn."
Almost all property types are performing well with grocery/drug and top-tier malls in highest demand, and other property types following suit improved pricing.
"We foresee continued strength in the next three quarters as investor demand greatly exceeds available supply," Crump said.
"While we have room to grow, I like the favorable and consistent 'North Easterly' trends we are seeing," said Brian Capo, associate with the Marcus & Millichap office in Orlando, FL, another housing-bust market. "Lots or tenants are expanding into Florida, and this will help curb our retail vacancies."
On the investment front, the single-tenant net lease market in properties with national credit tenants is simply "white hot," with numbers surpassing even the mid-2000s boom, according to Capo.
"When a true triple-net deal is put on the market, it does not last long," Capo said. "Investors are aggressive, and meeting the seller's price points. Capitalization rate have compressed rapidly over the last 60 days, in some cases by 50 basis points, he added.
By Randyl Drummer - CoStar
Absorption, Vacancy Benchmarks Continue to Drift Sideways As Retailers Shake Out Closed Stores
Following a recent string of relentlessly unexciting market trends in retail real estate over the past several quarters comes this distinctly positive news for retail property owners -- quoted asking rents have finally turned upward across all retail property types in the U.S. for the first time since 2008.
"This is a symbolic victory," said CoStar real estate economist Ryan McCullough, who co-presented the First-Quarter 2013 Retail Review and Outlook with Suzanne Mulvee, director of U.S. research, retail for Property and Portfolio Research (PPR), CoStar's analytics and economic forecasting company.
This reversal of bad fortune for landlords, which started with rental rate increases in higher-end institutional retail and a few scattered metros of several quarters ago, is the culmination of 2 ½ years of steady fundamentals recovery in retail, he said.
"We’re finally to the point where the average asset is showing steady rent growth again," McCullough said.
Mulvee made note that the 70% of U.S. retail markets that reported positive rent growth during the first quarter represents "a true turning point for the market" into a broad-based recovery.
Without getting too carried away, it should be clearly noted that plenty of challenges remain for owners, tenants and retailers. Rents aren't going to shoot upward and fundamentals are continuing to improve slowly or move sideways.
Muted absorption appears to be the new normal, with a light 17 million square feet in net absorption for the first quarter, down slightly from a year ago, as retailers continue to shed stores and consolidate into stronger shopping centers. Leading year-over-year demand growth are western markets such as Dallas-Fort Worth, Phoenix, Denver, Salt Lake City and San Diego.
With little new construction, vacancies continue to edge downward, with progress still slowed by about 19 million square feet of store closures tracked by CoStar - space shed by such chains as Fashion Bug and Big Lots, as well as hangover from already downsized retailers like Barnes & Noble and Blockbuster.
CoStar expects construction to pick up a bit in 2013 as shifting population opens new pockets of wealth. The first developments to come back have been outlet centers, with six centers under construction across the U.S. and another dozen in the planning stages - and some shopping centers being converted to outlet space.
Power centers and malls are at the lower end of the vacancy spectrum at about 5.9%, while neighborhood centers are starting to rebound, with total store openings exceeding closings by a fairly wide margin.
Demand for malls and especially power centers by category killer retailers such as Best Buy and Staples remains under attack by e-commerce, including the advent of Amazon.com's same-day delivery, Mulvee said. When new construction ramps up again, stronger retailers will gravitate toward the newer centers -- and power centers are like to go dark as a result, McCullough said, adding, "In 10 years, we may be saying the same thing about dead power centers as we do today about dead malls."
The broadening scope of the recovery was reflected in the sentiments of webinar attendees surveyed by CoStar following the retail market presentation:
Lisa Diehl of Diehl and Partners, LLC, of Edina, MN, said the climate for retail investment is strong in the Minneapolis market.
"We had our issues during the downturn, but we're recovering. Everyone I speak with is busier than they were last year, and have done better through May than they did in the entirety of last year. That's a positive sign of activity picking up," Diehl said.
That said, prospects are still playing it safe, she added.
"Landlords are trying to push the rents higher if they can get it. There's still some uncertainly, but things are improving," Diehl said.
John E. Crump, director with HFF in Los Angeles and an investment sales broker mainly focused on California, Arizona and Nevada markets, picked up especially on Phoenix’s relative outperformance on job growth. He found the discussion of the return of the wealth effect and positive rent growth for the first time nationally since 2008 to be of particular note.
"In the California, Nevada and Arizona markets, we are seeing much fewer distressed sales and more stabilized assets," Crump said. "There is a notable lack of product versus supply, and coupled with the ample available low price debt, pricing is at or near peak for coastal areas and improving in the Inland Empire, Las Vegas and Arizona - areas clobbered by the housing downturn."
Almost all property types are performing well with grocery/drug and top-tier malls in highest demand, and other property types following suit improved pricing.
"We foresee continued strength in the next three quarters as investor demand greatly exceeds available supply," Crump said.
"While we have room to grow, I like the favorable and consistent 'North Easterly' trends we are seeing," said Brian Capo, associate with the Marcus & Millichap office in Orlando, FL, another housing-bust market. "Lots or tenants are expanding into Florida, and this will help curb our retail vacancies."
On the investment front, the single-tenant net lease market in properties with national credit tenants is simply "white hot," with numbers surpassing even the mid-2000s boom, according to Capo.
"When a true triple-net deal is put on the market, it does not last long," Capo said. "Investors are aggressive, and meeting the seller's price points. Capitalization rate have compressed rapidly over the last 60 days, in some cases by 50 basis points, he added.
By Randyl Drummer - CoStar
Tuesday, March 26, 2013
10 Ways to Make Good Tenants Stay
As a landlord, retaining good tenants should be one of the biggest priorities. Good renters make great assets.
The good news is that keeping great renters isn’t too hard. Here are ten things to do to keep good tenants happy and in no rush to move:
1. Respond quickly to complaints about noise or reports of criminal activity, such as drug dealing.
Always enforce rules on noise. If you are aware of any crimes taking place at the rental property, take action immediately. Consult an attorney, or consider hiring a property management company that includes evictions in its services.
2. Schedule maintenance and repairs at times convenient for the tenants, and let them know in advance.
Minimize the impact of repairs and maintenance by scheduling them at the times the renters are least likely to be around, typically between 9 and 5, Monday through Friday. Let the tenants know in advance when repair work is being done, and why.
3. Provide designated parking spots and enforce parking rules.
Having a parking spot with a short walking distance to home is very important for many tenants. Assign parking spots and enforce parking rules. Send warning letters to tenants who break the rules and have their cars towed if they ignore your warning. Also, make sure the parking is well-marked and sufficient guest parking.
4. Follow through on repair requests and other commitments.
It’s simple: do what you say you’ll do. Recognize that all tenants want their repairs handled promptly, efficiently, and predictably. Remember that many tenants are “renters by choice“. They prefer to rent rather than own partly because they want someone else to be responsible for repairs. Have a repair and maintenance process that helps to consistently meet or exceed tenant expectations.
5. Give the tenants advance notice of upcoming inconveniences that you’re aware of.
If you’re aware of upcoming road closures or a planned power outage, consider sending out a newsletter, email, or a Facebook update to inform the tenants.
6. Understand that tenants want to feel safe at home.
Make sure that any outdoor areas used by tenants at night, such as a parking areas, paths, and entries, are well-lit. Keep on top of preventative maintenance and repairs.
7. Make sure all tenants follow the House Rules.
Good tenants are good neighbors. In return, they want the same consideration. They will follow reasonable rules for the property, outlined in the lease. All of your tenants should read and sign a copy of your rules when they execute the lease. Let the tenants know that rules will be enforced, and eviction can be used if necessary.
8. If you are allowing pets, make sure owners clean up after them!
Tenant retention has been shown to improve if pets are allowed, and certainly there are some great tenants out there who are also animal lovers. If tenants are allowed to keep pets, make sure the lease outlines that the tenant is responsible for all pet damages and for cleaning up after the pets. It is normal to require an additional pet deposit or additional rent.
9. Be polite, courteous, and professional.
Recognize that being a landlord requires great customer service skills. When the phone rings and the call is from a tenant who is paying thousands of dollars a year, speak politely and be helpful.
10. Create opportunities to appreciate the good tenants.
Take time to say “thank you” or send thank-you cards when appropriate. Gestures such as these go a long way in making your good tenants feel welcome and appreciated.
Good tenants know they are good tenants, and they expect to be treated that way. It’s worth the extra effort to keep them. Especially when the rent is paid on time and the property is well maintained.
REI Liaison is a full service residential Property Management and Leasing company serving the St. Louis, Missouri area.
by REI Liaison Property Management
The good news is that keeping great renters isn’t too hard. Here are ten things to do to keep good tenants happy and in no rush to move:
1. Respond quickly to complaints about noise or reports of criminal activity, such as drug dealing.
Always enforce rules on noise. If you are aware of any crimes taking place at the rental property, take action immediately. Consult an attorney, or consider hiring a property management company that includes evictions in its services.
2. Schedule maintenance and repairs at times convenient for the tenants, and let them know in advance.
Minimize the impact of repairs and maintenance by scheduling them at the times the renters are least likely to be around, typically between 9 and 5, Monday through Friday. Let the tenants know in advance when repair work is being done, and why.
3. Provide designated parking spots and enforce parking rules.
Having a parking spot with a short walking distance to home is very important for many tenants. Assign parking spots and enforce parking rules. Send warning letters to tenants who break the rules and have their cars towed if they ignore your warning. Also, make sure the parking is well-marked and sufficient guest parking.
4. Follow through on repair requests and other commitments.
It’s simple: do what you say you’ll do. Recognize that all tenants want their repairs handled promptly, efficiently, and predictably. Remember that many tenants are “renters by choice“. They prefer to rent rather than own partly because they want someone else to be responsible for repairs. Have a repair and maintenance process that helps to consistently meet or exceed tenant expectations.
5. Give the tenants advance notice of upcoming inconveniences that you’re aware of.
If you’re aware of upcoming road closures or a planned power outage, consider sending out a newsletter, email, or a Facebook update to inform the tenants.
6. Understand that tenants want to feel safe at home.
Make sure that any outdoor areas used by tenants at night, such as a parking areas, paths, and entries, are well-lit. Keep on top of preventative maintenance and repairs.
7. Make sure all tenants follow the House Rules.
Good tenants are good neighbors. In return, they want the same consideration. They will follow reasonable rules for the property, outlined in the lease. All of your tenants should read and sign a copy of your rules when they execute the lease. Let the tenants know that rules will be enforced, and eviction can be used if necessary.
8. If you are allowing pets, make sure owners clean up after them!
Tenant retention has been shown to improve if pets are allowed, and certainly there are some great tenants out there who are also animal lovers. If tenants are allowed to keep pets, make sure the lease outlines that the tenant is responsible for all pet damages and for cleaning up after the pets. It is normal to require an additional pet deposit or additional rent.
9. Be polite, courteous, and professional.
Recognize that being a landlord requires great customer service skills. When the phone rings and the call is from a tenant who is paying thousands of dollars a year, speak politely and be helpful.
10. Create opportunities to appreciate the good tenants.
Take time to say “thank you” or send thank-you cards when appropriate. Gestures such as these go a long way in making your good tenants feel welcome and appreciated.
Good tenants know they are good tenants, and they expect to be treated that way. It’s worth the extra effort to keep them. Especially when the rent is paid on time and the property is well maintained.
REI Liaison is a full service residential Property Management and Leasing company serving the St. Louis, Missouri area.
by REI Liaison Property Management
Thursday, September 13, 2012
Transaction Volume at Mid-Year Trending Lower
Real estate investors have responded to an especially disappointing year economically (i.e., market uncertainty, sluggish GDP growth, and the lackluster job market) by curtailing their buying activity—or waiting on the sidelines entirely. Consequently, transaction volume during 2Q 2012 has retreated back to near the level observed in 3Q 2010. This reverses the trend seen over the last few years, where sales volumes increased throughout the calendar year. If this trend persists over the second half of 2012, transaction volume will come in below last year’s levels. A definite indicator of lukewarm investor sentiment.
Cap Rates on the Rise
Cap rates have been trending slightly upward for office deals and remain essentially unchanged from one year ago for apartments, while cap rates for retail have been declining. Still, cap rate spreads—calculated as the difference between the 12-month rolling cap rates and the 10-year Treasury yield—for all three sectors have been rising (though the spread in apartment and office are rising faster than the spread in retail). Why? Blame the global phenomenon of investor flight to quality and the safety in capital markets for the record-low levels reached by U.S. Treasuries during the second quarter.
Who’s buying what, where
Investors continue to be a discriminating bunch. Apartment deals this past quarter tended to show a preference for high-priced, high-quality assets primarily focused in a relatively small number of primary gateway markets. However, high prices have some investors shying away from buying existing apartments and considering other alternatives, such as development. Office pricing has also become expensive over the last few years, and it’s likely this development along with the fact that economic growth continues to disappoint and uncertainty in the marketplace persists that investor behavior is being affected. Because of the weakness in retail property fundamentals, selection bias is even stronger for retail than the other major sectors, with a select few high-quality properties trading.
Investments in Top Markets Come at a Price
A comparison of the volume-weighted 12-month rolling cap rate for the top 10 markets by transaction volume and the volume-weighted 12-month rolling cap rate for all other markets clearly shows that investors are willing to pay a cap rate premium to be in the markets with the largest volumes. This premium has been fairly consistent over the last five years. Therefore, although risk aversion persists in the current transactions market, investors prefer deals in these high-volume markets during all types of economic environments, not just the distressed environments of today. The top 10 retail markets present a somewhat different picture, however. The risk premium for high-volume retail markets is not only inconsistent; it is actually negative during certain periods, including the most recent quarter. Local factors– the trade area, the economic and demographic make-up of the consumers in the trade area, and often the characteristics of the property itself—are most important. Consequently, investors focus on local factors while less-important metro-level factors will be largely ignored and do not translate into a transaction premium. What distinguishes a top 10 market? Generally, they have better liquidity—they are large, institutional markets with many properties and a large number of market participants. They also have better market fundamentals and economic prospects.
The Year Ahead
Little is expected to change this year, particularly since continued slow economic growth is forecast. Selection bias in the market should remain as entrenched as ever, even with cap rates ticking up slightly. And, with the recovery in fundamentals failing to spur an interest in a wider swath of the market, expect the transaction volume to remain restrained over the latter half of the year.
Source: ReisReports Connie Vitucci
Cap rates have been trending slightly upward for office deals and remain essentially unchanged from one year ago for apartments, while cap rates for retail have been declining. Still, cap rate spreads—calculated as the difference between the 12-month rolling cap rates and the 10-year Treasury yield—for all three sectors have been rising (though the spread in apartment and office are rising faster than the spread in retail). Why? Blame the global phenomenon of investor flight to quality and the safety in capital markets for the record-low levels reached by U.S. Treasuries during the second quarter.
Who’s buying what, where
Investors continue to be a discriminating bunch. Apartment deals this past quarter tended to show a preference for high-priced, high-quality assets primarily focused in a relatively small number of primary gateway markets. However, high prices have some investors shying away from buying existing apartments and considering other alternatives, such as development. Office pricing has also become expensive over the last few years, and it’s likely this development along with the fact that economic growth continues to disappoint and uncertainty in the marketplace persists that investor behavior is being affected. Because of the weakness in retail property fundamentals, selection bias is even stronger for retail than the other major sectors, with a select few high-quality properties trading.
Investments in Top Markets Come at a Price
A comparison of the volume-weighted 12-month rolling cap rate for the top 10 markets by transaction volume and the volume-weighted 12-month rolling cap rate for all other markets clearly shows that investors are willing to pay a cap rate premium to be in the markets with the largest volumes. This premium has been fairly consistent over the last five years. Therefore, although risk aversion persists in the current transactions market, investors prefer deals in these high-volume markets during all types of economic environments, not just the distressed environments of today. The top 10 retail markets present a somewhat different picture, however. The risk premium for high-volume retail markets is not only inconsistent; it is actually negative during certain periods, including the most recent quarter. Local factors– the trade area, the economic and demographic make-up of the consumers in the trade area, and often the characteristics of the property itself—are most important. Consequently, investors focus on local factors while less-important metro-level factors will be largely ignored and do not translate into a transaction premium. What distinguishes a top 10 market? Generally, they have better liquidity—they are large, institutional markets with many properties and a large number of market participants. They also have better market fundamentals and economic prospects.
The Year Ahead
Little is expected to change this year, particularly since continued slow economic growth is forecast. Selection bias in the market should remain as entrenched as ever, even with cap rates ticking up slightly. And, with the recovery in fundamentals failing to spur an interest in a wider swath of the market, expect the transaction volume to remain restrained over the latter half of the year.
Source: ReisReports Connie Vitucci
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