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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.


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.

Bellevue Galleria, Costar/Loopnet & Development April 29, 2011

Posted by Sean Tufts in Articles, Investment Tools, Retail News, Retail Sales Comps, Sale.
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The Bellevue Galleria was purchased by Thor Equities of New York for $87.5MM this week. Based on a marketing package we had seen last year that equates to a 7.7% cap rate. The property is 99% leased and sold at $429/sf. This is an unusual story in the current environment and shows the strength of the Bellevue market. The property was purchased in July of 2007 for $53.4MM. There are very few examples of relatively stable properties that were purchased in 2007 that have turned around and sold for a profit. The seller did spend significant dollars on new tenants but the return on this deal is still very healthy!

In other news, Costar has signed a deal to purchase Loopnet for $860 million. We use both sources on a daily basis in our business and are very interested to see how the information and resources come together. Hopefully, the blend of the two will allow a better flow of information than what is currently available. Below is a quote from an article that sums up their differences pretty well:

CoStar relies on the work of 900 researchers to compile data on high-value properties in urban areas, and LoopNet allows users to post their own property information and has listings that span small towns and farms throughout the country. Florance said LoopNet’s listings would immediately allow CoStar to add more than 500,000 listings….“We’re (Costar) really about data, and they’re (LoopNet) more about sales,” Florance said. “We’re very urban, they’re rural and suburban and middle America.”

Lastly, Lorig is finally breaking ground on the big hole in Green Lake. PCC Market stepped up to anchor the project and give it new life. The old Vitamilk site should finally be rebuilt after sitting vacant demolished for over 6 years. The full article is here.

Tax Day Cometh… April 17, 2011

Posted by Erik Swanson in Articles, Blogs, Investment Tools, Research/Data.
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I was all set to post a blog entry Friday when someone asked me if I was finished doing my taxes. “Taxes? Is it the 15th already?!”  I asked as I began the frantic exploration for receipts that had been tossed in my “deductions drawer”.  Trust me though, I wasn’t the only one in my office sorting through stacks of tiny, wrinkly, barely legible register paper.  I was elated to hear that the IRS extended the deadline to April 18th. Great… A whole weekend to work on tax stuff.  Fortunately, my accountant had already sent in my extension. I guess he knows me pretty well.  Anyway, in the spirit of the season, check out the tax related articles below…

Real Estate Losses become IRS tax audit target – Yahoo

Tax Tips for Real Estate Partnerships and Partners – Kurtz & Company

Considerations for  April 15th 2011 Tax Deadline – Bigger Pockets

A Taxing Situation – CCIM

Inflation and CRE April 13, 2011

Posted by Sean Tufts in Articles, Blogs, Investment Tools, Research/Data, Retail News.
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There is a long held belief that real estate is a solid hedge against rising inflation. We have heard the mantra that “higher inflation is right around the corner” for what seems like forever. It is a common topic we discuss with our clients who are considering purchasing commercial real estate. National Real Estate Investor has an interesting article that goes in depth into the realities of using real estate as an inflation hedge.

Multifamily as a whole might be all the rage right now, but finding a high-quality retail property fully occupied by reliable tenants locked in for several years may be a better option, depending on prevailing prices.

Concerns about rising inflation emphasize the importance of — but do not really change — the basic mandate of good real estate investing. Know your property types and market trends, and find assets that offer a good rate of income and capital return.”

Read the full article here.

Lenders increase “off-market” sales April 6, 2011

Posted by Erik Swanson in Articles, Investment Tools, Research/Data, Retail News, Sale.
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Many of us in the commercial real estate business have been frustrated by the extend and pretend policies that have stalled a meaningful recovery in the broader market. Lately however, foreclosures and note sales have increased significantly and lenders are showing an eagerness to clear their books of these toxic assets. 

…the estimated 7,000 CMBS loans that were in special servicing as of Dec. 31, 2010, only 354 were officially reported as having been restructured or modified.

That is a far cry from a year earlier when lenders were extending more than 80% of troubled loans through various forbearance and modification programs. Lenders are foreclosing on about 71% of these loans today and modifying only about 29%. 

Locally, our own experience supports this data. Last month, we closed 3 separate distressed sales.  In two cases the lender sold the note, choosing to let a new investor workout a deal with the borrower. The other was an REO sale involving a severely distressed shopping center in which the lender originally wanted to lease-up  the asset before selling.  After receiving multiple “off market” offers to purchase in a relative short amount of time, and considering the time and cost to stabilize, the lender chose to sell and let an investor take on the project. 

-check out NREI article here.

Bifurcated Market March 17, 2011

Posted by Sean Tufts in Articles, Investment Tools, Research/Data, Retail News.
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I had to stop myself from mocking yesterday’s NREI article titled “Real Estate Returns Bounce Back, Index Shows“. They started off by saying that “U.S. real estate investment performance for 2010 delivered its third strongest annual returns over the last decade.” That statement, taken out of context, is a slap in the face to most investors that have continued to struggle in a market with fewer tenants and market rents well off of the high times leading up to the crash.

When you look at the data set for their analysis it provides some relief to my frustration: “IPD’s Annual Databank measures the performance of 46 mainly core funds worth $119 billion in annual return. The annual property index gauges returns on direct investment in U.S. commercial real estate by calculating the total return on capital employed in market investments, excluding transactions and developments.” Right. If you own core assets in major markets and don’t include your failed development projects, you probably did pretty darn well in 2010. Especially, because you could probably find debt at historic lows.

On the other hand, if you do not tour your portfolio via private jet or helicopter it remains challenging to finance new acquisitions or take advantage of the distressed marketplace. It is challenging enough trying to hold on to anything that was purchased in the last 5 years. Thankfully, for my sanity, Costar sums it up correctly in the title of this morning’s article, “The Recovery Will Be Bifurcated“.

These are the best of times for cash-rich borrowers and lenders, but they continue to be tough times for less well-funded borrowers and lenders. Just as the investment markets are bifurcated with top-notch properties in top-tier cities commanding escalating prices and lower tier properties and cities still fighting uphill climbs, so too does it appear that the capital markets are split between the haves and have-nots.”

The smaller banks continue to struggle and are reluctant to lend on CRE. The lack of debt continues to limit transactions under $10MM, which is one of the factors holding down a value recovery on smaller properties. At the end of the day it takes money to make money.

Holiday Reading List November 24, 2010

Posted by Erik Swanson in Articles, Blogs, Development, Investment Tools, Research/Data, Retail News, Uncategorized.
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I’ve compiled a few articles to keep you busy reading this weekend between the football games and visits to the in-laws. Happy Thanksgiving!

As we approach the holidays tenants looking to capitalize on vacant mall space open “pop up” stores for the holiday shopping season.  Landlords and retailers cross their fingers and hope for a strong holiday season  Needing Black Friday More Than Most . ReCapNWwould like to show our support by providing a complete list of black friday store opening times.

Lots of excitement around the increase in CRE prices in September. Calculated Risk provides a little perspective  Moody’s: Commercial Real Estate Prices increase in September .

Local banks still struggling… FDIC: Fewer banks in WA and less loans – and Viking Banking is put on notice with the Feds – Puget Sound Business Journal

Development life signs?  American Life , Barkley Company , Harbor Properties  have all announced new projects.

Puget Sound Investment Review – November 2010 November 15, 2010

Posted by Erik Swanson in Articles, Blogs, Development, Investment Tools, Listings, Puget Sound Investment Review, Research/Data, Retail News, Retail Sales Comps.
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Weekend Reading List October 29, 2010

Posted by Erik Swanson in Articles, Blogs, Development, Investment Tools, Research/Data, Retail News, Sale, Uncategorized.
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Leasing, Absorption Improves for U.S. Retail Market Amid Mixed Economic Signals – CoStar Group

Blockbuster Wins Court Approval to Fund Operations and Pay Bills – Yahoo News

Bank Credit Freeze Shows Signs of Thawing – CoStar Group

Commercial Real Estate Index Shows Promising Signs– National Real Estate Investor

New, empty biotech building faces foreclosure– Seattle Times

Have a great weekend and a Happy Halloween.