Profits Climb for Office Market Landlords

Office vacancies dipped below 16 percent nationally in the second quarter of 2016. This marks the lowest vacancy rate since the recession began seven years ago, according to new data released by Reis Inc. That bodes well for landlords of office buildings who are seeing demand high and profits rising. 

In the Omaha metro area office vacancy rates are below the national average, ranging from 13 percent downtown to just 4.6 percent in the suburban West Dodge corridor. 

“Large, name-brand firms are opening new offices in primary and secondary markets, trying to tap into new talent pools,” says Julia Georgules, vice president of JLL research. “In some places, the high-demand urban core is becoming too expensive, and tenants are looking for fringe areas.” 

More than 100 million square feet of new construction is in the pipeline nationally, but that has softened rents. Office rents rose 1 percent in the second quarter over the first quarter, Reis reports. About 65 percent of the new supply has been focused on just 10 markets, such as Dallas/Fort Worth and Southern California, Georgules notes. 

“Occupancy growth is just trailing new supply,” Georgules says. “A lot of tenants want to wait until more supply comes in, so you have developers breaking ground speculatively based on strong market fundamentals.” 

Investors still see big potential with office properties. For 2016, employers are on track to hire 2.1 million workers. Also, office properties are the only major commercial property type that has yet to regain its prior peak pricing, according to a report by Marcus & Millichap. That report and one by JLL predict that office rents will rise nearly 4 percent this year, and the vacancy rate will drop by 30 basis points this year. 

As such, landlords likely will continue to find big returns in the office market well through 2017 in most areas, while then stabilizing by 2018, according to JLL. 

If you are seeking opportunities in real estate, we at Landmark Group are here to help you find them. We can help 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.

 

Posted in Business, Commercial real estate, Office buildings, Real Estate | Leave a comment

E-Commerce Creates Bull Market in Warehouses

With Amazon and other e-commerce sites continuing to take market share from brick and mortar retailers, U.S. mutual fund managers are upping their bets on an overlooked part of the online shopping boom: warehouses.

Real estate investment trusts (REITs) own the distribution centers required to fill all those Amazon Prime boxes and these REITS are a growing favorite on Wall Street after two years of underperformance compared with the broad real estate market.

The move comes about largely because of changes in the supply chains of online retail giants like Amazon.com over the last few years as they focus on fast, two-day shipping.

A traditional retailer might send a pallet full of merchandise to a store, but online shippers send out individual packages. That requires significantly more space to hold greater amounts of inventory on hand and to route all those boxes, said Eric Frankel, an analyst at research firm Green Street Advisors.

That has allowed companies such as Prologis Inc  – which counts Amazon among its largest customers – to raise rents a record 20.1 percent in the first three months of the year. Even with the rent increases seen this year, warehouse occupancy rates are at their highest since 2000, making rent spikes across the industry likely for newer, modern warehouses near major cities, according to Green Street.

“We think the shift to e-commerce is just going to create more demand for warehouses and while those aren’t the sexiest parts of the industry, that’s where the demand is,” said Nate Weisshaar, a portfolio manager at Motley Fool Asset Management. He has been adding to his position in Stag Industrial Inc., a warehouse company whose shares are up 24 percent year-to-date.

Total fund ownership of real estate companies such as Prologis Inc and Duke Realty Corp has jumped by 30 percent or more over the last quarter, according to Morningstar data. At the same time, their share prices are up 15 percent or more for the year to date, well outpacing the 3-percent gain in the benchmark S&P 500, or the 9.9-percent increase in the Dow Jones All REIT index.

Whether you are considering investing in a warehouse or prefer other types of real estate, we at Landmark Group are ready to assist you. We can help 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.

Posted in Commercial real estate, Industrial property, Nebraska Real Estate, Warehouses, Warehouses - Management | Leave a comment

Looking for Opportunities?

Investors are always looking opportunities to make money. Some want homes to renovate and flip, others want homes to hold as rental properties. Some would like to have the income stream from a strip mall, apartment building or commercial building.

For me, the dream is historical structures that allow me to fuse retail and residential in overlooked downtown neighborhoods. I purchased a historical structure in a rough area around 24th & Leavenworth and am in the process of creating retail bays and apartments. I also bought a commercial building and parking lot across the street, along with two more nearby vacant apartment buildings and a nearby corner store that I hope to redo and fill with a trendy motor scooter business. I also have a nearby warehouse where I am trying to lease office space.

It’s going to take around $15 million to get these projects up and running. And I am still hoping to buy more nearby properties.

?????????????

My Landmark Group is just one of a number of local investment groups puttiing together multiple parcels and neighborhoods to better control, brand and transform older pockets of Omaha into the next hot spots for shopping, dining, living or all three.

It’s more economical to renovate in bulk and to provide services such as security and maintenance to contiguous rather than scattered properties. That critical mass of activity also can fuel momentum. It just makes a lot of sense controlling the neighborhood, you can get things done, move the needle easier.

kitchen slide 2

Well Grounded coffee shop opened last year in one of my buildings. Tastes of Soul Cafe will open soon. I’d love to get more restaurants going; that would really change things down here. An antique store is open in another of my buildings.

?????????????

My vision is to infuse a dynamic kind of feel with a dense mix of retail and residential uses. I know the Leavenworth corridor is scary to many, as homeless and transient people often loiter. There isn’t much  parking near my apartment buildings, and I am counting on most of the tenants being mass-transit users.

Renovation of the Anderson building is complete, and tenants are beginning to move in to the 28 market-rate apartments there. Rents range from the $600s for a micro-unit to the $800s for larger apartments.

Whatever your real estate investment dream, we at Landmark Group are ready to help. We can help you buy, sell or rent residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

Posted in Apartment buildings, Apartment houses, Apartments, Apartments in Omaha, Business, Cities and towns - Growth, City planning, Commercial Property Management Omaha, Financing, Landmark Group, Multifamily housing, Multifamily Investing Omaha, Nebraska Real Estate, Omaha Commercial Real Estate, Paladino Development Group, Property Management Omaha, Real Estate, Real Estate Expert Omaha, Real Estate Investing Omaha, Real Estate Omaha, Rental properties, Restoration Omaha | Leave a comment

Online Fraud Worries Property Managers

The increase in online rental applications has raised concerns about identity theft and online fraud among property managers, according to the results of a new survey by TransUnion of 163 property managers who manage more than 500 rental units nationwide.

 

More than 56 percent of property managers surveyed say they’ve seen an increase in online applications in the past year. Nearly 70 percent of respondents reported concerns about identity theft and online fraud. Nearly four in 10 property managers surveyed say they are not confident about the accuracy of residents’ application information.

Rental Application pic

“In today’s online and mobile era, residents expect quick approvals and smooth application processes, but property managers must remain cognizant of the potential fraud threat,” says Mike Doherty, senior vice president of TransUnion’s Rental Screening Solutions Group. “Online rental application fraud is a growing problem. In order to quickly approve good residents, property managers must arm themselves with solutions that provide greater certainty and verify identities online and detect potentially fraudulent applicants.”

?????????????

 

Property managers ranked income and employment information as the most important techniques for screening prospective residents, followed by criminal background checks, rental and eviction history and credit history, according to the survey.

 

“Credit history, prior rental payments and other screening techniques allow property managers to make smarter and better objective decisions on leasing to prospective residents,” says Doherty. “As an emerging issue in the multi-family industry, property managers should pay additional attention to their online fraud and identity theft protocols to protect their business while allowing strong applicants through the rental application process faster.”

 

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.

Posted in Apartment buildings, Apartment houses, Apartments, Attitudes, Electronic commerce, Internet fraud | Leave a comment

Apartment Development, Demand Spreads to Suburbs

While the development boom in core apartment and condominium submarkets has garnered most of the headlines, developers have actually delivered more than twice as much new multifamily supply in the suburban markets.  

Several executives of large publicly traded apartment REITs spoke of a shift of development out to the suburbs during quarterly earnings conference calls with analysts over the last couple of weeks.  

“We think that the suburbs might have missed some of the new supply over the last several years, but will get their fair share going forward,” said David Neithercut, president and CEO of Equity Residential Trust (NYSE: EQR).  

Apartment buildings houses Apartments Business Cities planning Construction industry Market Metropolitan areas Multifamily housing Real Estate

As new apartment supply peaks amid steady job growth, market mix and price points will be important for apartment operator UDR Inc., which has a diverse portfolio spread across 20 urban and suburban markets, President and CEO Tom Toomey noted.  

For example, UDR’s Seattle assets posted 8.4% revenue growth in the first quarter and “continue to benefit from the strong growth inherent in our suburban class B assets, which are located in submarkets that are less exposed to new supply,” COO Jerry Davis said.  

While the suburbs may be a good spot for investors and owners in 2016 and 2017, “after that, I would suspect that they are going to start seeing the same supply pressures that we are seeing in some of the urban markets today,” Toomey added.  

Like the office market, non-core, mainly suburban apartment inventory constitutes the overwhelming majority of stock at 9 million units, compared with 1.5 million core units. More than 140,000 units of non-core units were built in 2015, more than twice the 65,000 units that delivered in high-density, mixed-used neighborhood areas last year.  

While supply expansion has driven up vacancies in suburban markets as well, with the 113,000 new units delivered last year to be joined by another 207,000 units under construction in the suburbs, vacancies should remain lower in the suburbs compared with secondary core areas, CoStar senior economist Ethan Vaisman said. 

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.

 

Posted in Apartment buildings, Apartment houses, Apartments, Business, Cities and towns - Growth, City planning, Construction industry, Market conditions, Metropolitan areas, Multifamily housing, Real Estate, Rental properties, Suburban homes | Leave a comment

Apartment Rents, Occupancies Edge Higher

While rental rate growth likely peaked at last year’s 6% spike levels, apartment rents are still projected to increase by a strong 4% in 2016, with landlords still able to aggressively push rates in certain markets, especially in tech-concentrated areas of Portland, the San Francisco Bay Area and Seattle.

“Builders may scoff a bit at 4% rent growth after the 6% average increase we saw last year, but 4% is still really good,” said CoStar senior economist Ethan Vaisman, who added that their counterparts in office and retail sectors are quite envious of a 4% average annual rent increase.

If the average rent increase projection for the year holds, 2016 would join 2015 and 2012 as the only years since 2001 to post average rent gains of 4% or greater for the U.S. multifamily sector.

buildings Apartment houses Apartments Nebraska Real EstateOnly two of the more than 600 U.S. submarkets with inventory of more than 5,000 units saw average apartment rents decrease over the last year. Four Seattle submarkets, Snohomish County, Bothell/Kenmore, Everett and Federal Way, are among the top 20 submarkets for annual rent growth. Five Portland submarkets in the top 20 include Hillsboro, the strongest in the nation at 12.2% rent growth, which has benefited from the opening of Intel’s new 530-acre Ronler Acres campus.

The U.S. vacancy rate edged slightly higher in the first quarter to 4.35% as the impact of all the new construction begins to be felt, especially at the top end of the market. However, vacancy rates remain tight by historical standards at below 5% for the 19th straight quarter in the first three month of the year, Vaisman said.

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.

Posted in Apartment buildings, Apartment houses, Apartments, Nebraska Real Estate, Real Estate | Leave a comment

Apartment Construction Hits Peak Year

Multifamily developers continue to churn out record levels of new supply ahead of what is expected to be a peak year for apartment construction in 2016. The number of new apartments under construction is at its highest level since the 1980s, and double the annual historical average seen over the last 34 years.

Apartment buildings houses Apartments Omaha Business Construction industry Market conditions Multifamily housing Real Estate

Almost 205,000 units delivered over the four quarters ending March 31, 2016, a 2% annual increase, including 46,000 units added during the seasonally slow first quarter. With more than 240,000 units expected to deliver across the top 54 U.S. markets this year, CoStar projects 2016 to be the peak year in the current cycle for new apartment construction.  

More than a half a million units are under way across the country, nearly twice the historical average since 1982.  

While fewer apartment units are projected to be built next year, the construction wave isn’t expected to recede quickly. Another 220,000 units are projected to be built in 2017. If that holds, 2017 would be the fourth consecutive year that annual new supply exceeded 200,000 units, the first such period of extended building activity since Ronald Reagan was in the White House.  

The large number of new units reaching completion this year and next started construction in 2015. According to U.S. Census Bureau data, quarterly construction starts of apartments have fallen over the past two quarters after peaking in third-quarter 2015 at more than 112,000 units. While starts in the first quarter were below the historical average, quarterly permit data suggests apartment-building may trend back up over the remainder of the year.

Apartment buildings houses Apartments Omaha Business Construction industry Market conditions Multifamily housing Real Estate2

Year to date, multifamily starts have fallen 2.3% from the same period in 2015. However, the Commerce Department provided evidence of an uptick, reporting that starts of multifamily buildings with five or more units, including apartments, townhouses and condominiums, rose by 10.7% in April.  

While the new construction accounts for a large number of units, it accounts for about 4.5% of U.S. apartment stock today, and is therefore considered to have a much more manageable impact today than 30 years ago, when the supply of new apartments peaked at nearly 9% of total apartment stock.  

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.

 

 

Posted in Apartment buildings, Apartment houses, Apartments, Apartments in Omaha, Business, Construction industry, Market conditions, Multifamily housing, Real Estate | Leave a comment

Commercial Sales Fall in First Quarter

After a booming 2015, the pace of commercial transactions in the first quarter of this year dropped and failed to keep up, according to the National Association of Realtors®’ Commercial Real Estate Outlook: 2016.

Large commercial real estate deals plunged 20 percent year-over-year, totaling $111 billion in the first quarter, according to Real Capital Analytics.

Sales volume may have dropped but prices continued to rise, particularly driven by strong appreciation in prices of retail and apartment properties. Retail properties saw an 11.8 percent price increase while apartment properties posted an 11.2 percent increase. Prices for office properties in central business districts rose 10.5 percent.

Apartment transactions made up the largest share of the first quarter volume, totaling $38.6 billion in sales. Office properties followed at $31.2 billion, and then retail and industrial sales at $17.9 billion and $12.6 billion, respectively.

?????????????

Small commercial real estate transactions – such as grocery-anchored shopping centers, local warehouses, small offices and supermarkets – rose 8.5 percent year-over-year in the first quarter of this year. The average sale transaction price totaled $1.1 million during the quarter, according to NAR’s data.

“With inventory shortage continuing as a main concern, prices in small commercial real estate markets rose a more moderate 5.1 percent year-over-year during the period,” according to NAR’s report. “Average capitalization rates declined to an average 7.2 percent across all property types, a 60 basis point compression on a yearly basis. Apartments posted the lowest cap rate, at 6.9 percent, followed by hotel properties with average cap rates at 7.1 percent.  Office and retail spaces tied with cap rates of 7.3 percent. Industrial transactions reported the highest comparative cap rates – 7.4 percent.”

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.

Posted in Business, Business for Sale Omaha, Financing, Nebraska Real Estate, Omaha Commercial Real Estate, Omaha Economy, Real Estate, Real Estate - Cash financing, Real Estate Asset Management Omaha, Real Estate Consulting Omaha, Real Estate Investing Omaha, Real Estate Omaha | Leave a comment

Community Meetings Help With Tenant-Landlord Communication

Corporate Culture Landlord Representation Property Management Omaha Real Estate Rental properties Tenant

We have made an effort to hold regular community meetings to get to know our tenants better and to give them another means of communicating with us about their needs and concerns.  We have found that such meetings increase tenant trust and impact the length of time tenants stay in their apartments.

 

Saturday May 21, 2016 we met with tenants at our apartment community on 702 N. 44th St. in Omaha to field questions and discuss ways they could help maintain the quality of the buildings and grounds there.  We are hopeful that much good will come out of the meeting and that we will see fewer problems and improve the quality of life for the population there.

IMG_20160521_101040  IMG_20160521_101108

We spent a good amount of time fielding requests from tenants for repairs to various items in their apartments.  However we also discussed best tools for communication with the apartment maintenance staff, how to respond to people on the grounds that shouldn’t be there, what to do in emergency situations such as a fire along with other such topics.IMG_20160521_101052

A significant percentage of the population at this location are refugees from other countries so we used what is termed in interpretation circles as “consecutive interpretation” where a short amount of information is spoken first in the main language and then time is allowed for an interpreter to interpret that amount of content before moving on.  Thankfully a couple of the residents there skilled in that department assisted us.

 

 

IMG_20160521_103116

We will be looking to schedule more of these meetings at our other apartment communities in the near future.   We believe it’s a win-win idea with nothing but benefits for all involved.

Posted in Corporate Culture, Landlord Representation Omaha, Property Management Omaha, Real Estate Omaha, Rental properties, Tenant Representation Omaha | Leave a comment

Addressing Transgender Restroom Issues

North Carolina’s so-called “bathroom law,” which requires individuals to use restrooms corresponding to the sex they were assigned at birth rather than their gender identity, has prompted questions over what responsibilities businesses and employers have to accommodate the preferences of transgender people. The legal war over the issue – North Carolina and the U.S. government have deployed dueling lawsuits over whether the state’s law violates civil rights protections – is far from being settled. Courts have rarely addressed the matter, but the legal landscape surrounding the issue is sure to change in the future.

 

So if you’re a property manager, what do you need to know about bathroom policy to ensure you’re not infringing on anyone’s rights? “There’s very little guidance on this issue right now, which makes it hard for you to decide what to do,” said Beth Wanless, senior director of government affairs at the Institute of Real Estate Management (IREM).

Attitudes Discrimination in housing public accommodations buildings Restrooms toilets

 

At least 200 cities and counties in the U.S. have banned discrimination based on gender identity in various aspects, including employment, housing and public accommodations. But few of these laws specifically address the use of bathrooms. IREM has written a white paper on the topic of restroom policy, offering what guidance it can to property managers.

 

First, research state and local laws to understand whether legal requirements exist in your jurisdiction around public restroom policy. Where no law exists, IREM suggests the following ideas to proactively address the issue in your buildings.

 

 The safest and least controversial option may be to add a third gender-neutral bathroom option alongside male and female restrooms. These gender-neutral bathrooms are typically single occupancy facilities available for anyone to use. However, it’s not always cost-effective because it could require building new bathrooms or retrofitting existing ones.

 

Another option is to modify the signage of existing bathrooms to include language welcoming transgender individuals. IREM points to signage some commercial properties are starting to use that reads: “Male, transgender people welcome” and “Female, transgender people welcome.”

 

For smaller commercial properties, like restaurants or bars that already have single-use bathrooms, a simple option is to replace male and female signage with a generic “restroom” sign that has no gender identification.

 

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.

 

Posted in Attitudes, Discrimination in housing, Discrimination in public accommodations, Public buildings--Restrooms, Public toilets | Leave a comment