Commercial Real Estate Execs Bullish on Economy

Top real estate executives remain optimistic about the performance potential of the U.S. market, according to the findings of the 2016 Real Confidence survey.

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Altus Group, in partnership with the National Association of Real Estate Investment Trusts and the National Council of Real Estate Investment Fiduciaries, polled executives in charge of over $700 billion combined real estate assets under management.

Survey participants continue to believe in the security of the U.S. economy. Investors’ sentiment reflects the conventional wisdom that inflation is tame, interest rate increases might already have been figured into forecasts and the nation’s gross domestic product is poised to continue growing modestly.

Investors are less confident in the prospects for the jobs market than most economic forecasters, who expect employment to continue to grow at an accelerated rate in 2016. Job growth is being balanced by  upward pressure on wages, which led respondents to forecast that wage increases will outpace inflation this year. The nation’s unemployment rate is approaching the full-employment mark and the job market is tilting slightly in favor of higher labor costs.

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Many executives believe that good investment opportunities in real estate still exist this year. Demand for core investments in primary markets remains strong, supply is still catching up to demand in a few key sectors, and interest is trending upward in secondary markets, as some buyers who are priced out of the core markets seek alternatives. Respondents rated the state of the real estate industry as healthy.

Survey respondents showed relatively strong confidence that rents will continue to increase. They were also confident that occupancies will rise further in 2016.

A market with strong fundamentals, an economy with slow and steady growth and a steady pipeline of capital and development are giving investors hope, even as the economy settles into a lumbering recovery pace.

If you are considering investing in real estate, we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

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What’s Up in Commercial Real Estate?

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Two new data reports on the commercial real estate sector offer very different visions regarding the sector’s vibrancy. One details a healthy 2015. The other forecasts a bumpy future for the next several years.

 

Last year commercial and multifamily mortgage bankers closed $503.8 billion in loans, according to the 2015 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation published by the Mortgage Bankers Association (MBA). The 2015 level was 26 percent higher than 2014, while dollar volume of closed loans rose by 17 percent year-over-year.

 

Multifamily properties saw the highest origination volume, $201.7 billion, followed by office buildings, retail properties, lodging, industrial and health care. First liens accounted for 97 percent of the total dollar volume closed.

 

“Commercial real estate borrowing and lending in 2015 came within a whisker of the record high level of 2007,” said Jamie Woodwell, MBA Vice President of Commercial Real Estate Research. “Volume was driven by improving property fundamentals, strong property values and very low interest rates. Many of those positive factors remain in place.” Commercial Property Management Omaha Financing Market conditions Multifamily Investing Real Estate2

On the other hand, a new three-year economic forecast from the Urban Land Institute (ULI) Center for Capital Markets and Real Estate predicts commercial property transaction volume will decline over the next three years. The ULI anticipates $475 billion in transaction volume by 2018, while CMBS issuance is forecast to decline this year to $85 billion before rising to $100 billion in both 2017 and 2018. The ULI also forecasts a slow decline in commercial real estate prices over the next three years: 5 percent this year, 2.7 percent in 2017 and 3 percent in 2018.

 

“Compared to six months ago, real estate researchers are predicting slower economic growth, slipping real estate fundamentals and lower returns from both the public and private markets,” said William Maher, ULI leader and director of North American strategy for LaSalle Investment Management. “There is no imminent downturn on the horizon, although global economies and markets remain fragile and volatile.”

 

If you are considering investing in rental property, we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Omaha Commercial Real Estate Trends

LoopNet.com’s most recent update provided these snapshots of Omaha’s commercial real estate markets. Here’s the status for Omaha’s multifamily, office, industrial and retail real estate properties as of Feb. 16, 2016.

 

Multifamily: Current Omaha market trends data indicates an increase of +43.6% in the median asking price per unit for multifamily properties compared to the prior three months, with an increase of +26.2% compared to last year’s prices. County-wide, asking prices for multifamily properties are 1.1% higher at $32,203 per unit compared to the current median price of $51,759 per unit for multifamily properties in Omaha.

 

 

Office: Current Omaha market trends data indicates a decrease of -1.5% in the median asking price per sq. ft. for office properties compared to the prior 3 months, with an increase of +0.9% compared to last year’s prices. County-wide, asking prices for office properties are -2.0% lower at $99 per sq. ft. compared to the current median price of $98 per sq ft for office properties in Omaha.

 

 

Industrial: Current Omaha market trends data indicates an increase of +4.0% in the median asking price per sq. ft. for Industrial properties compared to the prior three months, with an increase of +12.9% compared to last year’s prices. County-wide, asking prices for Industrial properties are 4.7% higher at $58 per sq. ft. compared to the current median price of $59 per sq. ft. for Industrial properties in Omaha.

 

Retail: Current Omaha market trends data indicates an increase of +6.4% in the median asking price per sq. ft. for retail commercial properties compared to the prior three months, with an increase of +18.3% compared to last year’s prices. County-wide, asking prices for retail commercial properties are 7.5% higher at $108 per sq. ft. compared to the current median price of $118 per sq ft for retail commercial properties in Omaha.

 

If you are considering investing in rental property, we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Commercial Real Estate Roundup

 

Fortune magazine reports that the housing crises never ended. The magazine says “We learned this week that new home sales fell in February by 6.1% from a year earlier and that existing home sales fell 7.1% from the previous month. This is despite the fact that home values remain relatively strong, as evidenced by the Case-Shiller home price index. With home prices reaching, or even surpassing, their pre-bubble peaks in many markets, weak home-sales numbers are likely not the result of weak demand. Indeed, the U.S. economy has created more than 13 million new jobs since the 2010, and more Americans are forming new households, pushing up the price of housing rents to all time highs.”

 

Real Estate offers a better investment opportunity than do equity markets, according to The Street. “In this uncertain climate, real estate looks increasingly like a safe haven. Demand for properties seems likely to be strong, and one recent analysis predicts that home prices will increase this year. This comes amidst increasing unpredictability in equity markets, which is the result of a rare confluence of economic, political and social forces. Oil prices and the Chinese economy are depressed and other emerging and more industrialized markets are struggling,” according to The Street.

 

“Amazon is opening a new fulfillment center in Kansas as the e-commerce giant plots more ways to deliver packages to customer doorsteps,” Fortune reports. “According to the Kansas City Star, the new 822,104-square-foot facility will be located in Edgerton, Kan., and will create around 1,000 full-time jobs. Amazon previously operated a 915,000-square-foot warehouse in Coffeyville, Kan., but it was shuttered in 2015. Amazon uses its fulfillment centers as warehouses for its own inventory as well as for third-party merchants who want sell to Amazon’s estimated 50 million Prime members.” Edgerton is located in populous Johnson County on the west side of the Kansas City metro.

 

Strip mall renovation and construction continue in the Omaha metro. The two buildings that make up the Spring Ridge Shopping Center at 180th & Pacific were sold last year. The shopping center was suffering and occupancy of one building dropped to 35 percent, while the other was fully occupied but had tenant turnover pending on more than 60 percent of the space. Both buildings had deferred maintenance issues.

 

Since the sale, the new owners have completed needed repairs to the property and have given the exterior a face lift. In the past several months, they have completed three leases totaling approximately 20,000 square feet with another lease in process. The Spring Ridge Shopping Center is on its way to a healthy recovery.

 

Meanwhile a pair of new strip malls are going up south of Pacific Street facing 204th Street. Businesses already have opened it the southernmost of the two strips.

 

If you are considering investing in rental property, we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.     Commercial Real Estate Roundup

 

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Big City, Small Space

Millennials want an “on-demand lifestyle,” which means they are valuing location over square footage and amenities, says Glenn Kelman, the chief executive of the real estate firm Redfin. A growing number of young adults living in tech hubs like San Francisco, Seattle and New York are showing a desire to live closer to the city center so that they can walk, bike or take public transportation for their commutes.

 

And to get the luxury of living downtown, they may need to live in a smaller space. But developers believe millennials are OK with that. Traditional rooms in the home are becoming less significant to the tech crowd of millennials who desire better locations. For example, some say they no longer need a garage (they’ll commute to work in other ways than via car), and they don’t require much of a kitchen (they’ll use a food delivery service). The living room has also grown less relevant since some say they don’t bother with parties anymore; they can socialize online.

 

“I don’t know people under 30 who entertain,” Kelman says. “There is so much social capital that is being re-invested elsewhere. I think almost the whole home has become a private space.”

 

Developers are responding by building smaller. From 2002 to 2008, the average unit nationwide mostly held at 995 square feet. Since then, square footage has dropped nearly 10 percent to 950 square feet, according to RealPage/MPF Research. In the West, the drop has been even more. Average units grew to about 963 square feet between 2002 and 2008-2009. Today, square footage has dropped to 919 square feet.

 

Most of this decrease has been due to developers building more studios and one-bedroom apartments. Studios and one-bedroom apartments have increased from 40 percent in 2002 to 50 percent currently, according to data from SB Architects in San Francisco. In some areas, a growing number of units are popping up that are just 350 square feet. These units are most popular in cities like San Francisco, New York and Seattle – where spaces are really fetching a premium.

 

A not of caution, however, has been sounded by the National Association of Realtors® 2016 Home Buyer and Seller Generational Trends study. The study found that the millennial generation, much like their parents, want to buy a single-family home in the suburbs. This contradicts the perception that most millennials prefer an urban lifestyle.

 

USC urban planning professor Dowell Myers says those millennials who have reached age 25 represent “a turning point, where young people start thinking about their living and working situations in a different way, eventually leading them buy housing in the suburbs.” That means many urban areas that were reliant on the youth economy could see a decline in demand for housing geared towards young people.

 

Myers says cities need to gear features toward families, and support new construction of all types and sizes, not just studio and one-bedroom apartments.

 

If you are considering investing in rental property, we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Strong Cellular Coverage Boosts Building Values

Only about 2 percent of commercial buildings have dedicated technology in place that offers a strong, reliable mobile coverage and capacity indoors, a new study finds. The buildings that do offer strong mobile coverage are seeing property values increase because of it, a new study by CommScope, a global network infrastructure company, suggests.

 

“People are obsessed with their mobile phones and see indoor wireless coverage as important as having access to water and electricity,” says Ispran Kandasamy with Building Solutions and CommScope. “The time has come for building professionals to step forward and take ownership for connecting their tenants to mobile networks.”

 

Indoor wireless mobile coverage in commercial buildings stands to increase a property’s value by 28 percent, on average. That means a $2.5 million office building could be worth $700,000 more with a dedicated indoor cellular system, according to the survey of professionals building managers, facilities managers, real estate managers and architects.

 

What’s more, survey respondents even linked a strong signal to an increase in workforce productivity (77%), helping in the recruitment of more talented individuals (46%), and attracting more visitors (39%). Also, two-thirds of survey respondents rated indoor wireless connectivity as “essential” for employees, the survey found.

 

However, delivering mobile coverage in large, complex buildings could prove to be a financial hurdle for many buildings. Thirty-five percent of respondents cited the costs as the main roadblock.

 

“While there are clearly concerns around the cost and complexity of the technology, building owners must acknowledge that ignoring this issue could result in more costly work in the future,” Kandasamy says. “Engaging with architects, facilities managers and enterprises at an early stage will ultimately save money – as well as providing an enhanced user experience. Only by taking the lead will building owners be able to provide much needed connectivity in their properties.”

 

If you are looking to invest in real estate, make your first call to Landmark Group. We are here to help. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

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Rental Housing Crisis Projected to Grow

The number of households spending more than 50 percent of their income on rent is expected to rise at least 11 percent from 11.8 million to 13.1 million by 2025, according to new research by Harvard University’s Joint Center for Housing Studies (JCHS) and Enterprise Community Partners Inc (Enterprise).

The research paints a bleak picture of a growing renter affordability crisis, with the largest increases expected among older adults, Hispanics and single-person households. The findings suggest that even if trends in incomes and rents turn more favorable, a variety of demographic forces – including the rapid growth of minority and senior populations – will exert continued upward pressure on the number of severely cost-burdened renters.

“There are simply not enough quality, affordable rental units to provide housing for the millions of households paying over half their income in rental costs,” said Christopher Herbert, managing director of Harvard’s Joint Center for Housing Studies.

Terri Ludwig, president and CEO of Enterprise Community Partners, said “Enterprise has set a generational goal to end housing insecurity in the U.S. by creating and preserving more high-quality affordable housing with connections to jobs, good schools, transit and health care.

The need for affordable housing is already overwhelming the capacity of federal, state and local governments to supply assistance. At last measure, 11.2 million extremely low-income households competed for 7.3 million homes affordable to them – a 3.9 million home shortfall, and just over a quarter of eligible very low-income households received rental assistance, leaving 7.7 million unassisted very low-income renters with worst case housing needs in 2013 according to HUD.

The research suggests that investing in affordable housing can be a smart move now and in the years ahead.  If you are considering investment, this is a prime area and we at Landmark Group are ready to assist you. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

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Investors Snap Up Starter Homes, Then Rent Them

Stepping into home ownership is a struggle for many first-time buyers. Housing inventory and affordability are two big issues. High student-loan debt and rising rental rates also make it tough for buyers to save enough to get into a home of their own.

A big, under-reported reason why first-time buyers are struggling to buy homes is competition from investors. Money Magazine reports one in four homes sold in October were bought by investors paying cash. These investors often target the same pool of affordable starter homes as young buyers, and rather than flipping the homes right away, investors “turn around and rent these properties to those same young adults for increasing amounts every year,” according to the magazine.

This strategy pays off for investors, but makes it more difficult for would-be first-time buyers to get into a home. It also adds to the low inventory woes plaguing many markets right now.

“Home supply is diminishing but investor demand is not going away,” Lawrence Yun, chief economist for the National Association of Realtors®, recently told the Wall Street Journal.

A report from NAR showed that between December 2014 and December 2015 the number of homes on the market priced below $100,000 dropped 11 percent.

If you are looking to invest in real estate, make your first call to Landmark Group. We are here to help. We can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

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Commercial to See Modest Growth in 2016

Steady job gains and stable leasing demand will boost global and domestic commercial real estate activity this year, according to a new report published by Situs Real Estate Research Corp. (RERC) and the National Association of Realtors®.

 

Commercial real estate activity is forecast to gradually grow this year, across all commercial sectors, according to the report “Expectations & Market Realities in Real Estate 2016 – Navigating through the Crosscurrents.” Commercial property values and price gains, however, are expected to flatten, after having recently surpassed 2007 peaks in some major markets.

 

“Historically low interest rates, especially in treasuries, combined with commercial real estate’s stable prices and value make this asset an attractive investment,” says Ken Riggs, president of Situs RERC. “Looking into 2016, the commercial real estate market should moderate, which could stabilize prices.”

 

Vacancies in the commercial sector are forecast to decline slightly this year across property types – except in the apartment sector, which will likely see a modest increase by the end of the year as new project completions enter onto the market.

 

Rising rents and steady investor returns will likely continue as job growth persists and demand exceeds supply with limited new construction – except with the multifamily sector, the report notes.

 

“Supported by solid hiring in most parts of the country, the demand for ownership and rental housing will continue to increase in 2016 despite another year of meager economic expansion,” says Lawrence Yun, NAR’s chief economist. “While supply shortages will weigh on housing affordability and push home prices and rents higher, the housing sector will keep the U.S. economy afloat and lead the residential investment component of GDP growth by up to 10 percent this year.”

 

If you are looking to invest in real estate, make your first call to Landmark Group. We are here to help. We  can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

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Real Estate Investment A Good Bet

More of America’s millionaires have a sober outlook on the U.S. economy headed into 2016, with many  assuming another year with a flat S&P 500 index leading to a lower personal rate of return and a majority belief among millionaires that household income will remain the same, according to a CNBC report.

Meanwhile, the Fall 2015 CNBC Millionaire Survey says, the rich are concentrating investments in only a few stock sectors, and more so outside the stock market entirely.

“Returns will come down,” said Ron Carson, founder and CEO of Carson Wealth Management, who works with many mass affluent clients. Carson said this outlook is the right one for investors. “If you’re netting 4 percent to 6 percent and doing it with a level of risk that’s comfortable, that’s pretty good,” the financial advisor said. “And for the next decade, at least, investors need to think about rates of return in the 4 percent to 6 percent range, unless you are willing to take on liquidity or market risk that is high,” Carson said.

Carson said most investors should join millionaires in thinking of this outlook as being permanent: “Miilionaires are very understanding of the fact that the days of double-digit returns without having to work are gone,” he said.

Carson also gave a thumbs up to real estate investment for those willing to give up daily liquidity.

Among stocks, three sectors dominate millionaire portfolios: technology, financials and health care. Health care was the surprise among the sectors where millionaires plan to invest more next year. Technology and financials have typically flip-flopped quarter-to-quarter for the top two spots among millionaire stock plays, but health care is ahead of financials for 2016, according to the CNBC Millionaire Survey.

The percentage of millionaires who indicated that the greatest percentage of assets would go to health care jumped from 13 percent to 16 percent. That put health care ahead of financials, where interest dropped steeply, from 23 percent of millionaires saying it would be among their greatest investments down to 12 percent in the fall survey.

Carson noted that his firm’s global portfolio has been a bright spot this year with the U.S. market being flat, but he sees millionaires seizing upon real estate ownership as one of the most interesting opportunities for investors. Carson’s firm bought and rehabbed individual homes, and that investment is up 19 percent year-to-date, with an 11 percent dividend yield. However, it’s an illiquid investment that requires a five- to six-year holding period. “If you can give up daily liquidity, you’ll get a better return,” Carson said.

 

If you are looking to invest in real estate, make your first call to Landmark Group. We are here to help. We know the market and can assist you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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