Archives for February 2014

The commercial real estate outlook in marketing fundamentals is positive but moderating, as they continue to improve but at a slower pace, according to the National Association of Realtors® quarterly commercial real estate forecast.
Lawrence Yun, NAR chief economist, said fundamentals are still on an uptrend. “Growth in commercial real estate sectors continues at a moderate pace from a very slow pace of absorption, despite job additions to the economy. Companies appear hesitant to add new space,” he said.
“Office demand is expected to see only slow and gradual improvement. Demand for retail space is benefiting from improved household wealth, while industrial real estate is stable with increasing international trade, which requires warehouse space. Of course, the apartment market fundamentals are the strongest, as nearly all of the new household formation in the past 10 years has come from renters, and not homeowners,” Yun said.
National vacancy rates in the coming year are forecast to decline 0.2 percentage point in the office market, which has the highest level of empty space, 0.1 point in industrial, and 0.3 point for retail real estate. With rising apartment construction, the average multifamily vacancy rate will edge up 0.1 percent, but this sector continues to experience the tightest availability and strongest rent growth of all the commercial sectors.
NAR’s latest Commercial Real Estate Outlook¹ offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.

Office Markets

Vacancy rates in the office sector should decline from an expected 15.8 percent in the first quarter of this year to 15.6 percent in the first quarter of 2015.
The markets with the lowest office vacancy rates presently (in the first quarter) are New York City, with a vacancy rate of 9.5 percent; Washington, D.C., at 10.2 percent; Little Rock, Ark., 11.6 percent; Birmingham, Ala., 12.7 percent; and San Francisco and Nashville, Tenn., at 12.8 percent each.
Office rents are projected to increase 2.3 percent in 2014 and 3.2 percent next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 44.6 million square feet this year and 50.0 million in 2015.

Industrial Markets

Industrial vacancy rates are anticipated to fall from 9.0 percent in the first quarter to 8.9 percent in the first quarter of 2015.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 3.7 percent; Los Angeles, 3.8 percent; Miami, 5.8 percent; Seattle at 5.9 percent; and San Riverside/Bernardino, Calif., at 6.1 percent.
Annual industrial rents should rise 2.4 percent this year and 2.6 percent in 2015. Net absorption of industrial space nationally is seen at 106.1 million square feet in 2014 and 110.6 million next year.

Retail Markets

Retail vacancy rates are expected to decline from 10.2 percent in the first quarter of this year to 9.9 percent in the first quarter of 2015.
Presently, markets with the lowest retail vacancy rates include San Francisco, at 3.1 percent; Fairfield County, Conn., 3.8 percent; Long Island, N.Y., 4.8 percent; San Jose, Calif., 5.2 percent; and Northern New Jersey and Orange County, Calif., at 5.3 percent each.
Average retail rents are forecast to rise 2.0 percent in 2014 and 2.3 percent next year. Net absorption of retail space is likely to total 14.6 million square feet this year and 20.9 million in 2015.

Multifamily Markets

The apartment rental market – multifamily housing – should see vacancy rates edge up from 4.0 percent in the first quarter to 4.1 percent in the first quarter of 2015, with additional supply helping to meet growing demand. Generally, vacancy rates below 5 percent are considered a landlord’s market, with demand justifying higher rent.
Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.1 percent; Minneapolis and New York City, 2.3 percent; and Oakland-East Bay, Calif., and San Diego, at 2.5 percent each.
Average apartment rents are projected to rise 4.3 percent this year and 3.5 percent in 2015. Multifamily net absorption is expected to total 204,900 units in 2014 and 112,500 next year.
The Commercial Real Estate Outlook is published by the NAR Research Division. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial community includes commercial members; commercial real estate boards; commercial committees, subcommittees and forums; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.
Approximately 83,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 283,000 members offer commercial real estate services as a secondary business.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
By: Walter Molony (National Association of REALTORS)
Click here to view source article.

More than 2,000 local retailers, developers and franchisees gathered at the Gaylord National last week to discuss the changing retail industry as part of the International Council of Shopping Centers’ annual Mid-Atlantic Conference. Here are five retail trends to watch in 2014.
1. Outlet malls
Outlet malls have expanded rapidly in recent years, making them the fastest-growing segment in retail, and that’s not about to change, according to Jay Klug, principal of the JBG Cos., a Chevy Chase-based real estate developer.
“Outlets clearly are the darlings of retail right now,” Klug said.
There are currently more than 225 outlet centers in the United States, with at least 40 new openings since 2006, according to ICSC.
Long built on the outskirts of town, outlet centers are moving closer to major cities.
Tanger Outlets opened in National Harbor — just four miles from downtown Alexandria — in November. Simon Property Group, the largest outlet mall developer, is in the process of building an outlet mall in upper Montgomery County. Clarksburg Premium Outlets at Cabin Branch is scheduled to open as early as 2015.
2. More fitness centers as retail anchors
Big-box retailers and grocery stores have long been among the most sought-after anchors for shopping centers. But that is quickly changing, as developers look to large gyms and fitness centers to help draw a stream of regular customers.
“It used to be that [fitness centers] were thought to be an ugly use of space,” Klug said. But now “fitness is a huge category.”
Gyms such as Equinox, which has locations in Tysons Corner and Bethesda, and L.A. Fitness have become coveted mainstays. As more and more consumers shop online for clothing and other household needs, fitness centers are one of the last remaining businesses that can draw regular crowds on a daily — or perhaps, weekly — basis, industry insiders said.
3. Mobile capabilities being used in new ways, not just by retailers, but also by entire shopping centers
A number of brands, from Aston Martin to Zara, have their own apps. Now shopping centers and malls are joining the fray.
“This is the year of the mobile phone,” said Michael Kercheval, president and chief executive officer of the International Council of Shopping Centers. “It is the new gatekeeper.”
A mobile app by Simon Property Group, for example, reminds customers where their cars are parked, provides a mall directory and alerts them to discounts at nearby stores. Westfield’s app, meanwhile, directs shoppers to the closest bathroom or food court.
“Shopping center managers now have the opportunity to speak directly to shoppers as they walk in,” Kercheval said, adding that smaller developments should create similar apps to help guide customers.
4. Same-day delivery services
Verizon this month announced that it would provide same-day delivery to Washington area residents. A number of other companies, from grocery stores to florists, have taken similar measures, and Kercheval said he expects delivery services to grow steadily this year, even among smaller retailers.
Mobile apps such as Deliv, which pairs nearby vetted drivers with stores, have made it possible for mom-and-pop shops to provide same-day deliveries without hiring new staffers.
“What this means is that stores now double as distribution centers,” Kercheval said. “It is very likely that the shopping centers and retailers [will provide] the fastest distribution of goods to consumers in the future.”
5.More attractions and service-oriented businesses
It increasingly takes “an experience” — not just run-of-the-mill retail — to draw customers, said Kent Digby, senior vice president of operations for National Harbor.
To that end, National Harbor is adding a 175-foot tall Ferris wheel to lure new visitors. When it opens in May, the Capital Wheel is expected to bring in approximately 600,000 people annually to the sprawling development.

“The time was right to add this component to our project,” Digby said in an interview. “We wanted to create something unique and eclectic for the whole family.”
The National Children’s Museum and a carousel also serve to draw families who are looking to spend time together, he added.
On a smaller scale, many developers are looking to add hair salons, specialty restaurants and other businesses that cannot be easily replaced by the Internet. The popular Union Market in Northeast Washington, for example, has carved out a destination with its collection of gourmet food stands.
“In Washington, nothing is single-story anymore,” said Robert Bach, director of research for Newmark Grubb Knight Frank, a commercial real estate firm based in New York. “We’re always mixing retail in with something else.”
By: Abha Bhattarai (The Washington Post)
Click here to view source article.

Speaking generally and in nationwide terms, the commercial real estate market has been undergoing steady, uneven improvement for at least three years. What are the indicators of this recovery?  CIT in association with Forbes Insights has an answer in the form of a handy real estate infographic and report detailing the “cautious real estate recovery” – check it out below. (Click here for full report)

By: Wayne Grohl (The Source)
Click here to view source article.

IMPORTANT ANNOUNCEMENT FROM NAR 
The Midyear Legislative Meetings & Trade Expo has a new name!
Introducing the REALTOR® Party Convention & Trade Expo. Click here to learn more about this exciting change. And visit the REALTOR® Party Convention & Trade Expo website today for travel information and the event schedule to help plan your visit to Washington, DC.
The REALTOR® Party Convention & Trade Expo – formerly the Midyear Legislative Meetings & Trade Expo – will be held May 12-17 in Washington, D.C. The branding change is a reflection of the advocacy nature of this event; the term “REALTOR® Party” signifies the non-partisan movement to protect and promote the dream of homeownership and property investment.
Each year, thousands of REALTORS® attend the May event to participate in important policy discussions, get updates on NAR’s top advocacy issues and engage in face-to-face sessions with Members of Congress or their staff on Capitol Hill. While the House of Representatives is scheduled to be out of session during this year’s event, your attendance is as important as ever! Members will be meeting with lawmakers’ staff on issues critical to real estate, including ensuring the availability of safe and affordable mortgage credit to home buyers.
Registration for the REALTOR® Party Convention & Trade Expo will open Feb. 19 at 12 noon Central Time. To register, have your NRDS member ID handy, and visit the website at www.REALTOR.org/RPCTE on Feb. 19.
We look forward to seeing you at the REALTOR® Party Convention & Trade Expo in May! In the meantime, if you have any questions, please email us at ConvInfo@REALTORS.org.