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CCIM Institute Market Forecast – Through the Looking Glass January 23, 2013

Posted by Erik Swanson in Articles, Investment Tools, Research/Data.
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Click HERE or on the image above to be directed to the full article.

Office. The office sector’s vacancy declined to 17.1 percent in 3Q12 from 17.4 percent a year earlier, according to Reis. Absorption was positive throughout the year, although asking and effective rents increased only slightly (approximately 35 cents to 50 cents per square foot on average). The total volume of office properties declined to $60.2 million on a 12-month trailing basis in 3Q12, which was lower than a year ago and compared to the previous quarter’s volume, according to RERC’s transaction analysis. The size-weighted average price dropped to $177 psf on a 12-month trailing basis.

Industrial. The industrial sector’s availability rate fell to 13.1 percent during 3Q12, which is the ninth consecutive quarter in which the industrial availability rate has declined, according to CBRE. Total sales volume of industrial properties increased slightly to more than $30.7 million in 3Q12, higher than a year ago and the previous quarter’s sales on a 12-month trailing basis, per RERC’s transaction analysis. In addition, the size-weighted average price of industrial space increased to $55 psf on a 12-month trailing basis.

Retail. The retail sector’s vacancy remained at 10.8 percent in 3Q12, down only 20 basis points from 3Q11. Asking and effective rents for neighborhood and community centers were flat, increasing an average of only 8 cents psf over the year, according to Reis. However, this is the first year since the recession began that absorption was positive during each quarter. RERC’s transaction analysis shows that 12-month trailing total retail sales volume decreased to $40.5 million in 3Q12, which was down from YOY volume and from prior-quarter volume. The size-weighted average price of retail space decreased to $136 psf in 3Q12.

As for the future, the relative safety of commercial real estate as an asset class is likely to continue to be critical for investors in the year ahead. Real estate is tangible and transparent, and it offers reasonable returns as an investment alternative, particularly in periods of volatility, which we expect as long as the challenges in the national economy continue.

Apartments. Although fundamentals continue to improve for the multifamily sector, volume and price declined in 3Q12. The vacancy rate for the apartment sector declined to 4.6 percent during 3Q12 compared to 5.6 percent a year ago, according to Reis. Net absorption began to slow, but asking and effective rents increased $35 to $40 per unit during the year. According to RERC’s transaction analysis, total transaction volume for the apartment sector decreased to nearly $56.8 million in 3Q12 on a 12-month trailing basis, which was higher than year-ago volume, but less than 2Q12 volume. The size-weighted average price per apartment unit increased to $90,848 on a 12-month trailing basis, which was higher than the year-ago average price but lower than the 2Q12 price.

Hotels. Third-quarter 2012 hotel sector occupancy rose to 64.2 percent, a 2.5-percent YOY increase, according to Smith Travel Research. The average daily rate was up 5.4 percent to $106.60, and revenue per available room increased 8.0 percent to $68.43. However, RERC’s transaction analysis indicates that total sales volume for the hotel sector declined to more than $12.3 million on a 12-month trailing basis in 3Q12, which was lower than both year-ago volume and prior-quarter volume. The price for hotel rooms also declined compared to both year-ago and previous-quarter pricing, with a size-weighted average price per unit of $89,832 on a 12-month trailing basis in 3Q12.

Click HERE or on the image above to be directed to the full article.

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Jeff Lyon, Kidder Mathews featured in NAIOP video December 5, 2011

Posted by Erik Swanson in Articles, Blogs, Development, Research/Data, Uncategorized, Video.
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KM’s CEO Jeff Lyon hosted NAIOPs 2011 Night of the Stars awards gala last month. Jeff’s appears in a short promotional video with some pretty cool animation featuring Kidder Mathews. You can check out the video here.  

Here are the 2011 NAIOP WINNERS with some links below:  

Public Project of the Year: UW Foster School of Business – Paccar Hall

Public Project of the Year: Pike Place Market Renovation

Community Impact of the Year: Compass Veterans Center

Hospitality Development of the Year: The Alaska Building – Marriott Hotel

Private Education Development of the Year: Seattle University – Lemieux Library & Expansion and Renovation

Technology/Life Sciences (Non-Public) Development of the Year: Swedish Issaquah Hospital and Medical Center

Redevelopment/Renovation of the Year: Terry Avenue Building

Commercial Interior of the Year: Nuance Communications

Multi-Family Development of the Year: LINK Apartments

Mixed Use Development of the Year: The Landing – Renton

Industrial Development of the Year: Harbor Wholesale Grocery Headquarters: Warehouse and Distribution Center at Hawks Prairie 111 Corporate Park

Office Development of the Year: Bill & Melinda Gates Foundation Campus

Market Adaptation of the Year: Stadium Nissan of Seattle

Deal of the Year: Seventh & Madison Building – Polyclinic

Developer of the Year: Vulcan Real Estate

SIOR Industrial Broker of the Year: Wilma Warshak

SIOR Office Broker of the Year: Jesse Ottele

SIOR Investment Sales Broker of the Year: Jon Hallgrimson

KM’s Seattle Market Update September 20, 2011

Posted by Erik Swanson in Articles, Research/Data, Uncategorized.
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Kent Mueller, Manager of Strategic Research at Kidder Mathews puts together a nice piece that details market activity for the Apartment, Industrial, Office and Retail sectors here in the Puget Sound. Check it out by clicking on the graphic below.  

Puget Sound Investment Review – September 2011 September 19, 2011

Posted by Erik Swanson in Articles, Puget Sound Investment Review, Research/Data, Retail News, Sale, Uncategorized.
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Anchored Retail Draws Buyers August 9, 2011

Posted by Erik Swanson in Articles, Retail News, Retail Sales Comps, Sale, Uncategorized.
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The appetite for grocery anchored retail investments remains strong. Two area centers traded hands over the last couple of weeks. 

Gerrity Holdings purchased the QFC anchored North Lynnwood Shopping center for $10.2 million which is roughly a 7.25% cap rate. The property was originally listed for sale last year at $10,600,000  a 7% cap rate. 

Another recent sale was the 120,860 square foot Canyon Park Shopping Center. The Albertson, Rite Aid anchored center sold for $18,400,000 which equates to $152 per square foot in an all cash transaction. The purchase included the inline space and the ground leases for the Albertson’s and Shell. Retail Opportunity Investment Corporation beat out numerous buyers with a 7.06 Cap rate, all-cash offer with a quick 3 week close.  

It’s been an interesting few weeks with all that’s gone on in the world. The political fight over raising the debt ceiling and the S&P down grade have certainly been a distraction and investors seem uncertain as to the lasting effects on CRE (check out this nreionline.com article). It seems clear that for the foreseeable future well located properties with strong anchors will continue to draw serious buyer interest.

Kidder Mathews 2nd Quarter Retail Report August 2, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News, Retail Sales Comps.
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Below is the Kidder Mathews 2Q retail market report compiled by Andy Robinson in our appraisal department. The report details construction activity, retail sales, rent forecasts and highlights sales comparables for the first half of 2011.

The investment activity chart shows continued improvement in both deal volume and cap rate compression.

The full report is available by clicking here: Retail-Market-Research-Seattle-2011-2q.

More vacant space…in Lebam, WA July 26, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Most of us by now have heard that the Borders Group, the second largest bookstore chain after Barnes & Noble, announced last week that they were abandoning bankruptcy protection plans after failing  to find an investor. This means the closure of nearly 400 stores (after already closing 200 earlier this year) and subsequent loss of roughly 11,000 jobs. While the writing has been on the wall for some time, the announcement is yet another blow for battered landlords who just beginning to enjoy renewed tenant interest. And large, two store retail boxes might be tough to re-lease.

Now, in blow to small  town landlords, the U.S. Postal Service has announced the closure of 3700 locations, including 39 in Washington State alone.  Two locations in downtown Seattle will be closed but most of the remaining locations appear to be in rural towns…by the way, where are Marlin, Wishram and Lebam? Anyway, in these smaller towns where there is no post office branch, the USPS may pursue a “village post office” concept whereby they will locate limited services within grocery stores or gas stations. The Puget Sound Business Journal lists the local closures here and there’s more from the Wall St. Journal article here.

Another commercial real estate industry resource: CRE Radio July 22, 2011

Posted by Erik Swanson in Articles, Blogs, Investment Tools, Research/Data, Uncategorized.
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A few months back, while surfing commercial real estate blogs, I came across “America’s Commercial Real Estate Show”.  It’s an innovative national talk show that focuses on commercial real estate. The Founder, Michael Bull is a 30 year veteran of commercial real estate and owner of Bull Realty in Atlanta.  Bull puts together weekly broadcasts that cover all property types. Topics have ranged from retail leasing strategy to CRE auctions to medical office development. Each show begins with a market update from an industry data provider or news source that helps facilitate a panel discussion.   

The program is recorded each Wednesday and airs Saturday from 10 a.m. to 11 a.m. (Eastern Standard Time) on biz 1190 WAFS and on the Internet at www.commercialrealestateshow.com. The programs are archived as a podcast and available on demand at the same web address. The show can also be accessed with a smart phone.  Below are links to some recent shows:

Land and Development Industry
U.S. Office Market Update 
U.S. Industrial Market Update 
Loan Workout Strategies 
Capital Markets Update 

ACRE’s next show focuses on medical office investments and is scheduled for July 30th. Check it out here.

Landlord concessions diminish while sales increase July 15, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Although it seems rents will remain soft for some time, vacancy rates are stabilizing and landlords for the most part have stopped having to give rent concessions.  The caveat is that this will vary widely by location and even down to the asset level. Grocery anchored centers and core assets are more likely to maintain and potentially even grow rents (barring another blow to the shaky economy). Older centers without a strong anchor in tertiary markets have more of an uphill battle.

According to Costar,the nationwide vacancy rate for all retail stood at 7.1%. Malls fared better with vacancy at 5.8% (see chart above).

As a result of improving market conditions, average cap rates on retail acquisitions fell to 7.5% in April, according to RCA, 20 basis points below the 7.7% recorded in January. – NREI Online

With the capital markets showing more interest in the secondary markets, investors are now beginning to acquire assets in non-core areas. April sales of retail properties valued over $2.5 million increased by 39% over last year. As we indicated before, competition for good retail has continued to push cap rates down.  According to Real Capital Analytics, caps have dropped nationally as much as 20 basis points from the start of the year.

Data shows CRE recovery continues July 6, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.
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Separately released data from the Mortgage Bankers Association and Costar shows that despite continued weakness in the general economy and in job creation, commercial real estate fundamentals continue to improve in all sectors.

The MBA’s Q1 Databook showed 1st quarter commercial mortgage origination for all property types were up over 1st quarter last year and the index reached its highest mark since 2008. For retail in particular, the data is much the same and reflected the cyclical nature of the CRE market. Although down from 184 in 4th quarter 2010, the 1st quarter index score of 96 was the highest 1st quarter since 2008 (a score of 100 on the origination index equates to an average quarter in 2001). This equates to a 13% increase in loans for retail properties. Full report here.

“The retail real estate market has now experienced eight quarters of positive net absorption” -Costar

Real estate strategists at Costar predict that a second half improvement in the economy will accelerate CRE recovery. Retail sales are expected to increase and retailers should again begin expansion after scaling back new store openings at the end of last year.  Furthermore, with almost no new construction, positive net absorption should continue as retailers move into second and third generation space. See complete Costar article here.