REIS Q2 2015 First Glance Commercial Real Estate Industry

REIS 3rd Quarter 2015 Commercial Real Estate Sectors Overview

Apartment Trends

green-bulletMultifamily vacancies inched upward by 10 basis points in Q3 to 4.3%.
green-bulletDespite a pullback in new construction in Q3, vacancies still rose.
green-bullet100,000 new units are expected to come online over the next 6 months.
green-bulletAsking and effective rents increased by 1.4% and 1.5%, respectively.

Office Trends

green-bulletOffice vacancies hit 16.5% in Q3, down 10 basis points.
green-bulletAsking and effective rents increased by 0.6% and 0.7%, respectively.
green-bulletMuted supply growth should produce slow and steady declines in vacancy and increases in rents over the next year or two.

Retail Trends

green-bulletNeighborhood and community center vacancies remainder unchanged at 10.1%.
green-bulletAsking and effective rents increased by 0.5% for neighborhood and community centers.
green-bulletClass A malls also stalled; vacancies didn’t move from 7.9%.
green-bulletMuted new supply coming online has balanced tepid demand for this property type.

Industrial Trends

green-bulletIndustrial properties outperformed most other property types.
green-bulletWarehouse/distribution vacancies fell 10 basis point to 10.7% in Q3.
green-bulletAsking and effective rents rose by 0.4%.
green-bulletFlex/R&D vacancies fell by 20 bps to 12.1%.
green-bulletAsking and effective rents grew by 0.3% and 0.4%, respectively.

New Construction Trends

green-bulletNew completions for each of the major property types changed relatively little versus last quarter, a sign that construction is firming.
green-bulletSurprisingly, Retail was the only sector that experienced an increase versus last quarter.
green-bulletThe Apartment and Office sectors registered declines.

Office Trends Q4 2013

REIS Reports: Q4 2013 Office Trends, Office properties continued to recover, and the retail market showed its first signs of improvement.

 

CREConsult 1

Coldwell Banker Commercial® (CBC®) professionals specialize in office properties and can develop customized real estate solutions for landlords and tenants of office properties. CBC professionals clearly understand today’s corporate business climate and work to eliminate excess, trim expenses and drive value to your bottom line. Whether you need to lease or sublease office space or buy or sell an office building, the CBC organization can develop a customized solution that meets your real estate needs. With access to colleagues in over 250 CBC companies across the globe, and completing over 10,000 office transactions in the past two years, CBC professionals can expertly provide innovative solutions to multi-market requirements.

CBC professionals come to their clients as trusted advisers with innovative and profitable ideas and solutions. Every CBC professional is client-focused and results-driven.

CBC professionals can assist you with any of these services:

  • Tenant Representation
  • Acquisition
  • Disposition
  • Capital Services
  • Investment Analysis
  • Property & Facilities Management
  • Relocation Services
  • Transaction Management
  • Lease/Own Analysis
  • Leasing Services
  • Lease Analysis
  • Lease Administration
  • Build to Suit
  • Strategic Real Estate Planning
  • Consulting
  • Appraisal and other Valuation Services
  • Market Surveys and Analysis

All office accounts are handled through a single point of contact and use web-based project management and lease administration technology that allows you to access your projects anytime, 24 hours a day, seven days a week.

Contact Us:

naperville-il

CNN Ranks Naperville in Top 100 Best Places to Live

WINNER

Top 100 rank: 54
Population: 152,600

In its list of America’s best small cities, CNN Money ranks Naperville at No. 54

Community is king in Naperville, which adds a local 1% tax on food and beverages to fund events and heritage celebrations. Come summer, residents converge on Centennial Beach, a huge quarry purchased by the city during its 1931 centennial celebration, or stroll along the 1.75 miles of brick paths on the DuPage Riverwalk in the heart of town. Top schools and lots of jobs at firms like OfficeMax and Alcatel-Lucent round out this picture of near perfection — marred only by some congestion on nearby highways and a lengthy commute for those who work in downtown Chicago.

Source: CNN Money

US Sales

Big Banks Are Lending to Bigger Small Businesses

When JPMorgan Chase released its fourth quarter earnings for 2013, it announced that it had provided $19 billion of credit to U.S. small businesses. The figure sounds impressive, but it pales in comparison with the $589 billion of credit that it provided to big corporations.

This should not surprise anyone. The country’s biggest banks ($10 billion+ in assets) actually prefer to provide capital to “small businesses” that average $10 million in revenue or more. While, it is encouraging that the spigot has opened and big bank loan approval rates for small businesses reached 17.6 percent, according to the December 2013 Biz2Credit Small Business Lending Index, many of them are primarily interested in lending to large “small businesses.” (Yes, that is an oxymoron.)

For many of the big banks, small loans are paper intensive and thus cost more to process. This is a reason why they prefer to offer non-SBA loans, which typically require more forms and documentation and, as a result, take longer to process.

Small banks, which typically do not have the same type of brand recognition, cannot afford to be as choosy. Often, they are a secondary choice as consumers tend to go to the names they know first. Further, because of the amount of advertising that big banks have invested in advertising to promote their small business loan-making, entrepreneurs are going to the bigger players.

Unfortunately, although big bank lending approval rates are currently at post-recession highs, they do not approach the percentage of loan applications granted by small banks (almost 50 percent). Alternative lenders, comprised of microlenders, cash advance companies, are approving more than two-thirds of their requests.

Here Is How Things Can Change:

1) As they continue to be thwarted by big banks, borrowers will continue to comparison shop and seek alternatives to the big banks. Many will use the Internet to find the best deals. Small business owners will secure capital from community banks, alternative lenders, and increasingly, institutional investors that are hungry to make deals.

2) Big banks can improve and upgrade technology. It is still astounding that many of the biggest financial institutions in the country do not allow for online loan applications or eSignatures. What makes this so perplexing is the fact that the large, name brand banks have more vast resources to invest in upgrades.

One can look at the mercurial rise of alternative lenders as proof that when there is a void in the marketplace, the hole is quickly filled. Accounts receivable and cash advance lenders used their technological advantage and made capital more readily accessible. In many cases, speed is often more important to borrowers than low interest rates.

For instance, if you need working capital to make payroll, you cannot wait three months for an SBA loan. Employees want to be paid in a timely fashion and likely won’t wait around for a long period of time without payment.

A number of the large banks, such as TD Bank, Union Bank and others, are investing in upgrades and becoming more active in small business lending. Look for others to follow suit in 2014.

Source: Smallbiztrends Jan 26, 2014 by Rohit Arora

CREConsult 1

The Top 10 Challenges Affecting Real Estate

While housing marches to the slow, steady drumbeat of recovery, the grass is getting greener and optimism is creeping back into the hearts and minds of both real estate professionals and homeowners. But the wild ride isn’t over, and hiccups remain as the sector struggles to find its footing yet again.

At the National Association of Realtors (NAR) Conference and Expo in San Francisco, real estate consultant Scott Muldavin outlined what he believes the top 10 issues affecting real estate currently are, and by issuing a statement to the press on the topic, NAR agrees.

1. Interest Rates. Muldavin indicated, and our recent news coverage supports, that the top issue affecting real estate is interest rates. They were historically low for so long that as rates begin to rise, capitalization rates are likely to follow, which could spark anxiety about investing in real estate.

2. The Aging Population. As the population ages, there will be greater demand for senior housing, requiring a change in the configuration and size of available housing, and for greater medical care, resulting in an expansion in medical facilities.

3. Tight Credit. The capital market resurgence has positively impacted real estate – credit has become less restrictive for the commercial sector and transaction volume is up, and while underwriting remains a challenge for residential markets, interest rates are low and affordability remains high.

4. New Developments for Future Homeowners. Future housing demand from echo boomers, the 80 million Americans born between 1982 and 1995, will also impact real estate markets, he said. “We are the only developed country that has had an echo boom, and that’s a positive thing if the country can react and respond to it,” Muldavin said. This segment of the population prefers an active urban lifestyle, relies on public transit and often chooses location over size – suburbs are catching up, Muldavin notes, with better mass transit, new bike paths and the like.

5. Climate Change and More Extreme Weather Patterns. These will also continue to have a strong impact on coastal homes and many other properties across the country. Muldavin cited the impact of recent storms like Hurricanes Katrina and Sandy, and how property owners in these markets are now dealing with changes in code and zoning standards and paying significantly higher insurance premiums.

6. Global Events, Including Crises. Like weather and geologic events, major global events can also impact real estate markets, such as acts of terrorism, war, the global debt crisis and financial and economic downturns, he said. “The risk of future events is high, and while it’s always hard to anticipate these risks, they need to be considered because their impact is often great,” Muldavin said.

7. The Gas and Oil Industry. Natural gas and oil production is on the rise in the U.S., and though that is creating greater employment opportunities and reducing U.S. dependence on foreign oil, it’s also contributing to climate change, environmental degradation and contamination.

8. Other Countries’ Economies. Muldavin also cited globalization, foreign investment and the economies of other countries as variables that will continue to have a greater impact on the U.S. economy and real estate market.

9. Tech. Another issue is how technology will continue to impact office spaces. Muldavin said many corporations are employing work-from-home policies and other mobility solutions that are allowing individuals to work when and where they want, significantly reducing office space requirements.

“Many people are replacing physical items with electronics and free or virtual products, such as e-books and smartphones enabled with cameras, GPS and flashlights. This means businesses will continue to require less retail space, so I believe the trend in the future will be for fewer and smaller stores,” he said.

10. The Demand for Actual Storefronts. Muldavin said the impact of the Internet on bricks-and-mortar retail stores is also a growing issue. He said retail demand is down across the country due to an increase in Internet sales, which are expected to rise from the current 6.5 percent to nearly 15 percent by 2020.

Source: ChicagoAgent Tara Steele, 2013