Apartment Sector Remains On Top

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Rick Sharga of Auction.com told GlobeSt.com “The continued strength of the apartment sector is directly related to the trends we’ve been seeing in residential real estate, namely the rise in household formations and the ongoing decrease in home ownership rates.”

Sharga says the staying power of apartments in the investment sector is tied to the residential housing market where there is movement toward household formation. Mom and Dad are finally kicking Junior out of the basement, and many households are going toward rentals. This is happening at a time when apartments are already at 96% occupancy. So, the market of potential renters is growing.

This trend, Shargasaid, will continue for the next couple of years. Homeownership will decline a bit, and even the supply of apartment units that’s coming online is not strong enough to keep up with the demand.
Forty percent of housing starts now are attributed to multifamily units.

The office sector, Sharga said, is doing pretty well while industrial is flat and retail is very weak.
at the moment.

With office, it seems like a lot of the vacancies we were seeing during the recession have been eliminated, and there’s been an uptick in both activity and pricing. Industrial is flat, but it’s still at a fairly healthy number. The only segment that’s suffering is retail.

If you’re considering buying or selling apartments or other commercial property, we at Landmark Group are ready to help. We also can manage, maintain or renovate your rental properties. Just give us a call.

Thanks,

omaha economy

 

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

Email: dpaladino@landmarkmg.com

Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

 

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Commercial Real Estate Sector Rising

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Commercial real estate is expected to show continued improvement during the next few years, but property owners, investors and commercial real estate practitioners need to keep a close eye on the Federal Reserve, which is poised to raise interest rates in 2015, Lawrence Yun, chief economist for the National Association of Realtors®, told last week’s Realtors® Conference & Expo.

Prices and rents for the commercial properties are on the rise and sales volume is increasing, driven by strong job creation in many states, mild inflation and low energy costs, Yun said. “More jobs means more demand for office spaces, more demand for warehouse spaces, more demand for rental housing, more demand for retail space. So with the economy expanding, the commercial activity should be rising” as well, he said.

These factors have helped the commercial real estate sector recover from the downturn stemming from the Great Recession, but they also are contributing to a growing sense among economists that the era of highly favorable monetary policies will soon end. This could adversely affect capitalization rates – a measure of how well a real estate investment is performing based on the ratio of net operating income to its original price.

“I am of the view the Federal Reserve will increase interest rates sooner, because rents, a major component of consumer price inflation, [are] rising strongly,” he said, predicting that the central bank could raise the benchmark Federal Funds rate as early as next April.

Mortgage rates can be expected to rise as a result of the Fed’s shift in policy, which means that for capitalization rates to rise, landlords will have to raise rents, or property prices will have to decline, Yun said. “Property owners should be not overly concerned, but they should be monitoring what will happen to prices” as the Federal Reserve reacts to improvements in economic conditions.

Another issue commercial property practitioners need to watch is credit availability. Financial institutions such as credit unions and local banks that traditionally cater to real estate investors involved in relatively small deals are reluctant to make loans because of new government lending regulations, Yun said.

If you’re considering buying or selling commercial property, we at Landmark Group stand ready to help. We also can manage, maintain or renovate your rental properties. Just give us a call.

Thanks,

omaha economy

 

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

Email: dpaladino@landmarkmg.com

Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

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Institutional Investors Pull Back

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The share of institutional investors — entities who purchase at least 10 properties in a year — dropped to a four-year low in the third quarter, according to RealtyTrac’s third-quarter 2014 report.

Institutional investors accounted for 4.3 percent of all single-family home and condo sales, down from 5.3 percent a year ago. It is the lowest share of institutional investors since the fourth quarter of 2010.

Cash sales continue to make up a large share of the market, according to RealtyTrac, which found that nearly 34 percent of all single-family home and condo sales in the third quarter were from cash sales, unchanged from a year ago. But RealtyTrac forecasters say that a drop in cash sales in many markets is looming.

“Cash sales continue to be an important piece of the real estate puzzle right now, helping to drive up U.S. median home prices 38 percent over the last two-and-a-half years,” says Daren Blomquist, vice president at RealtyTrac. “As institutional investors and other cash buyers slow down their purchasing in many markets across the country, more traditional buyers — including first-time home buyers and move-up buyers — will need to increasingly fill in the missing puzzle pieces to maintain the momentum of the housing recovery.”

Institutional investors are still actively purchasing single-family rentals, but are mostly targeting markets where bargains can still be found. Omaha’s rental market remains strong with numerous apartment projects under way and a low vacancy rate.

If you’re considering buying or selling rental property, we at Landmark Group stand ready to help. We also can manage, maintain or renovate your rental properties. Just give us a call.

Thanks,

omaha economy

 

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

Email: dpaladino@landmarkmg.com

Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

 

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Why Renters Keep Renting

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Most Americans who do not own their own home say they intend to one day and hold strong feelings toward home ownership. But 20 percent of householders say they intend to stay renters now and in the future.

Researchers at Harvard’s Joint Center for Housing Studies recently surveyed such renters to find out why they’re shying away from home ownership.

The bottom line: It’s not the lifestyle choices but financial constraints that renters say keep them from purchasing a home in the future. More than half of renters surveyed said they do not intend to buy because they think they cannot afford it or their credit is not good enough.

The top 10 reasons renters give for not planning to buy in the future:
● Cannot afford the purchase or upkeep of a home
● Not good enough credit for a mortgage
● Not a good time economically to buy a home
● Cheaper per month to rent than to buy
● Don’t want to be concerned with doing the upkeep
● Don’t plan to be in a certain area for an extended period of time
● Rather use the money for other investments than a home
● Process of buying a home seems too complicated
● Purchasing a home limits flexibility in future choices
● Can live in better neighborhood by renting

“These results suggest that about a third of renters, or 10 percent of all households, rent because of lifestyle and personal preferences,” writes Rachel Bogardus Drew, a post-doctoral fellow conducting the research for JCHS. “That their reasons appear to be largely idiosyncratic, rather than systematically related to their personal characteristics, further indicates that those who rent by choice do so in spite of strong social biases towards ownership that encourage the remaining 90 percent of households to view owning favorably. More than half of lifetime renters, however, see their tenure options as constrained, either by their own financial circumstances or by macroeconomic conditions.”

Whatever the reason, rental properties remain in high demand with declining home ownership rates and a rising percentage of the population opting to rent. It’s a good time for owners of rental properties. But it can also be a stressful time for those trying to self-manage such properties.

Ar Landmark Group we can help you buy or sell rental property. We can also manage and even maintain your rental properties for you. We manage hundreds of rental properties. Wherever you fit in the rental market – land owner, property owner or property manager – we have the know-how to assist you. Just give us a call.

Thanks,

omaha economy

 

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

Email: dpaladino@landmarkmg.com

 

Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

 

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The Commercial Market’s Hot Sector

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Analysts are pointing to the sizzling warehouse sector as the industry to watch in the nation’s commercial sector. Robust leasing for warehouses the last few quarters have prompted developers to scour the nation looking for new sites to accommodate the growth in warehouse demand.

The need is growing: Many markets have little or no available warehouse buildings that are 500,000 square feet or larger, CoStar Group reports.

Spec developers are increasing their purchases of industrial land. In the first three quarters of this year, developers have made at least $1.59 billion in land sales for proposed warehouse, industrial park and light industrial projects. That exceeds the total industrial land sales from last year. It’s also the highest sales volume for industrial land since 2008, when it stood at $2.3 billion, according to CoStar Group national data.

Assuming planned projects aren’t delayed, the sector could reach a record-breaking level of construction in the final quarter of this year, according to Rene Circ, director of U.S. industrial research for CoStar Portfolio Strategy.

Currently, about 120 million square feet of industrial space is under construction in the U.S., with the most active markets centered in Dallas, southern California, Philadelphia, Chicago, northern New Jersey and Houston, the CoStar Group reports.

“Overall, there is a lack of available supply across the U.S., supporting the growth of development pipelines and delivery of new product into the marketplace,” says David Toti, REIT analyst with Cantor Fitzgerald.

Warehouse sales and leasing are a big part of our business at Landmark Group. Need help in this area? Just give us a call.

Thanks,

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Office Sector Soars to Post-Recession High

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Developers are ramping up construction of office space, as thesector reaches its highest pace since 2008. More markets seeing job growth, rising rents, and falling vacancies – such as in Texas and the San Francisco Bay Area – are justifying the uptick, according to an analysis by CoStar.

“The office market recovery is at its best point of the past seven or eight years,” says John Sikaitis, managing director of U.S. office market research for JLL. “We experienced more occupancy gains in the third quarter than so far in the recovery.”

About 86 million square feet of high-end office properties larger than 50,000 square feet is under construction, a nearly 26 percent increase compared to 2013. It also marks the highest total since the end of 2008 (when 105.7 million square feet of new office space was under construction), according to CoStar Analytics data.

CoStar researchers expect office construction to edge even higher before the end of the year. Overall, forecasters estimate that 44.5 million square feet of office project deliveries to be ready by the end of this year – a 22 percent rise over last year.

“Developers are hustling now to get new product to the market, given the stronger absorption trends, particularly for newer, high-quality space,” says Kevin Thorpe, Cassidy Turley’s chief economist. “But it will take a couple of years for all of this new development to materialize, meaning demand will continue to outstrip supply, which will keep upward pressure on rents.”

If you are need office space, or have office space to lease or sell, we at Landmark Group can help. Just give us a call.

Thanks,

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Single-Family Rental Market Strong

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“The single-family rental market is still strong,” says Daren Blomquist, RealtyTrac vice president. “Even so, the market is softening. In the high-risk, high-yield markets, where unemployment and vacancy rates are higher than national averages, the average return was a whopping 19 percent – actually up from a year ago thanks to a strong increase in rental rates. Home prices, meanwhile, were more volatile in the high-risk, high-yield markets, with three out of the 16 posting double-digit percentage decreases in median home prices from a year ago.”

Investors purchasing residential rental property in the third quarter earned an average annual return of 9.06 percent, slightly down from the annual return of 9.65 percent a year ago, according to RealtyTrac’s third-quarter Residential Property Rental Report, which ranks the top markets for buying residential rental properties. RealtyTrac analyzed the fair market rents for three-bedroom properties in 586 counties. Rental returns were calculated using annual gross rental yields.

RealtyTrac identified Edgecombe County, N.C., as having the highest annual gross rental yield return, at 41.57 percent, followed by Clayton County, Ga., at 26.88 percent, and Duplin County, N.C., at 24.40 percent. Those areas can carry high risk, RealtyTrac noted.

At the same time, CoreLogic reports that distressed properties – where investors have found bargains since the housing slump – are vanishing from most markets.

REO and short sales comprised about 11 percent of total home sales in July, the lowest share since December 2007, CoreLogic reports. At its peak, in January 2009, distressed sales made up 32.5 percent of all sales. The pre-crisis share of distressed sales typically was about 2 percent.

“The ongoing shift away from REO sales is a driver of improving home prices, as REOs typically sell at a larger discount than do short sales,” CoreLogic noted.

If you are in the market to buy or sell investment property, we at Landmark Group are ready to help. Just give us a call.

Thanks,

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Renters Account for Growth in Household Formation

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Construction on buildings with at least five apartments reached the highest monthly pace since the beginning of 2006, Freddie Mac reports in its Economic and Housing Market Outlook for September. A similar boom has swept the Omaha metro area.

“Over the past four quarters, all the growth in net household formations has been among renters,” Freddie Mac’s report notes. “The decline in home ownership rates has been primarily concentrated among younger households.” Over the past decade, the home ownership rate among those 35 years old and younger has fallen from 43.6 percent to 35.9 percent.
The rising number of tenant households has prompted vacancy rates to drop to the lowest level since 2000.

“The apartment market has been vibrant, reflecting the desire of many millennials to live in an urban setting and retain locational flexibility,” says Frank Nothaft, Freddie Mac’s chief economist. “Unfortunately, if they’re looking to live in the larger cities, that’s where rents are rising the fastest, especially in the West or Northeast regions of the United States – places like Los Angeles and New York City.

Omaha’s Seldin Company reports strong demand for its still under construction Tuscany Apartments, a luxury development in Papilion. It is filling almost as fast as units become available, said Bob Dean of Seldin Co., which developed and manages the property. Units rent for up to $1,550 per month.

The Omaha metro-area apartment market is outshining the national average in key areas such as the pace of new construction, Dean and other real estate pros report. Building permit activity locally has surpassed its 2008 peak. Beyond Papillion and across the metro’s Sarpy, Douglas and Pottawattamie Counties, apartment living in roughly 90,000 leasable units is dominating the housing landscape in ways not seen in the last decade or so.

The number of new Omaha metro area apartments is projected to grow 3.2 percent in 2014 over 2013 – that’s above the 1.9 percent increase anticipated for the nation and the largest annual jump for the Omaha area since 2001, according to Reis Inc., a New York City-based real estate trend watcher.

Building permits issued for new construction have jumped more than fourfold, from about 370 apartments in 2009 to 1,600 in 2013, according to Greater Omaha Chamber of Commerce records. Because of Omaha’s tracking system, a planning official said that increase doesn’t even reflect all the hundreds of units added to the inventory by way of conversion of old office buildings, mostly in downtown and midtown.

The vacancy rate fell to 3.4 percent last year, the lowest Reis said it’s been for any full year since at least 2007, and it dropped further the past two quarters. The second quarter’s vacancy rate was 2.9 percent, putting Omaha among the markets with the largest vacancy declines since the first quarter. Only 17 markets nationally registered a multifamily unit vacancy rate lower than 3 percent this past quarter, Reis reports show, and that constituted a post-recession high. The U.S. vacancy rate average was 4.1 percent for the same period.

Ryan Severino, a senior economist at Reis, pointed to the fall in Omaha’s apartment vacancy rate from a peak of 7.4 percent in late 2009. “That’s the kind of movement that serves as a catalyst for people to start building,” he said.

Whether you are looking to rent an apartment, buy or sell an apartment complex or seeking management assistance for units you own, we at Landmark Group stand ready to help. Just give us a call.

Thanks,

 

omaha economy

 

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

Email: dpaladino@landmarkmg.com

 

Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

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Top City for Tech Company Launch

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Think Silicon Valley is the best place to start a company? Think again!

Inc. Magazine contributing editor John Brandon says the best place to start a tech company is right smack in the Midwest, most notably in Omaha, Nebraska.

In a recent column for Inc.com, Brandon says the financial advice tech company SmartAsset picked Omaha as the best place to launch a tech company. Why? Mainly because the cost of living in Omaha is almost half that of San Francisco (about 58 percent) and less than half that of New York (40 percent). That means renting office space is going to be quite a bit cheaper, as will buying a home and paying expenses.

Seven of the 10 top cities for tech startups are in the Midwest. Places like Columbus, Ohio, and Springfield, Illinois, rank higher than Chicago and Minneapolis. Iowa scored two cities on the list – Cedar Rapids and Dubuque.

According to SmartAsset, the costs of starting a company, including renting an office, transportation and utilities, are much lower in the Midwest, giving entrepreneurs a foothold to hire programmers, spend a little more on advertising and marketing and get to market faster without the burden of heavy business expenses.

The rankings are based on three main factors: the number of tech workers, the typical compensation for tech workers and the cost of living. Omaha ranked highest on the list also because of the average speed of its internet broadband, at 35Mbps. That’s 50 percent greater than the national average, according to SmartAsset. The main reason the two Iowa cities rank so high is because of the cost of living there, which is about 92 percent of the national average.

For those thinking of creating a new iPhone app or a website, it’s a good idea to think about how much money you will need for the fundamentals – paying rent, hiring workers and paying utilities. In San Francisco, employees will pay much more to live and therefore demand a much higher salary.

If you’re looking to launch a business, tech or otherwise, we at Landmark Group can help you find the right facilities at the right price. In fact we have a lot of commercial space for rent right now, mainly around 1,200 to 2,000 square feet and all of it in around downtown and midtown Omaha. Give us a call.

 

Thanks,

omaha economy

David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

 

Email: dpaladino@landmarkmg.com
Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

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Builders Say Apartment, Condo Market Continues to Strengthen

 

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Builders and developers are optimistic about the current conditions in the apartment and condominium market, which posted more gains in the second quarter.

The Multifamily Production Index, produced by the National Association of Home Builders, netted a five-point gain in the second quarter with a reading of 58. It marks the tenth consecutive quarter for a reading of 50 or above, which indicates that more respondents view conditions as improving.

During the second quarter, the index’s measure of builder and developer perceptions of market-rate rental properties posted a nine-point jump to 68 – the highest reading since the third quarter of 2012. Other measures like builders’ perceptions of low-rent units rose four points to 52 while perceptions of for-sale units increased two points to 56.

“We have seen steady growth for the apartment market since 2011,” says W. Dean Henry, chair of NAHB’s Multifamily Leadership Board. “There will continue to be strong demand for the foreseeable future, but the availability of construction labor is still proving to be a challenge.”

As the employment picture improves, more young consumers are branching out and forming their own households, which is also expected to give a sustainable lift to apartment demand, says David Crowe, NAHB’s chief economist.

At Landmark Group we can help you buy, sell, lease, manage or build multifamily properties or single unit rentals. Just give us a call.

Thanks,

omaha economy
David J. Paladino CPM, MSRED
President
Landmark Group ■ 402-672-6566
2702 Douglas St. ■ Omaha NE 68131

 

Email: dpaladino@landmarkmg.com
Blog: www.davepaladino.com
www.landmarkomaha.com
www.grncompanies.com
www.dinosstorage.com

 

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