Archives for June 2014

The multifamily market continues to post strong gains, despite warnings from analysts as early as 2011 saying that the sector was heading for a cool-down from competition over recovering home prices, The Wall Street Journal reports. As mortgage lending continues to be constrained in the single-family housing market, the multifamily market and number of renters continues to soar.
Nationally, rental apartment values are up 14 percent from 2007, according to the Green Street Advisors index, which tracks the performance of listed rental-apartment landlords. Rents and occupancy rates are pressing upward too. In the first quarter, rents rose 0.6 percent – up 13 percent since rents began their upswing in 2009, according to Reis Inc., a real estate data firm. Vacancies have dropped to 4 percent.
One of the strongest rental performers lately: Denver. The city is benefiting from a high-tech and startup scene that has helped press its job growth 2.8 percent in the past year, higher than the 1.7 percent growth nationwide. Its growing job market has promise for its rental market.
For the past five years, Denver’s rents have been on the rise, increasing 20 percent since peak 2007 levels. Still, landlords realize that while the market is hot, they can’t expect to get 10 percent rent increases every year, says Dan Fasulo, managing director of Real Capital.
Also, some analysts worry that oversupply in upscale housing will eventually catch up to the market. As such, some developers are refocusing on adding “workforce housing,” in which monthly rents range from $1.20 to $1.35 a square foot. Workforce housing has less risk than upscale apartments since there is less supply. “If the overall economy does improve, you’ll basically reap the benefits,” says Mike Moran, who leads Allstate’s real estate investment group.
By: Daily Real Estate News (National Association of REALTORS)
Click here to view source article.

A few days ago, Stephanie Spear,  NAR’s Policy Representative for Commercial Real Estate attended the 3rd Annual Washington DC Federal Property & Public/Private Partnerships Summit put on by Bisnow.  As Stephanie was kind enough to share her notes, a quick report follows on the three sessions, each dedicated to a different aspect of public/private partnerships.

Take it away, Stephanie:

GSA is undergoing a cultural shift in terms of how they approach space and how space is used. This is a result of the Total New Workplace initiative and the executive order to Freeze the Footprint. There are enough large sized, high profile P3 projects that have been successful that it is reasonable to expect more P3 opportunities in the future.

Bottom line for commercial members is that while government funding isn’t increasing, it’s staying steady and there are many opportunities to do business with the government through traditional landlord/tenant relationships and the emerging P3 arrangements. Building owners/lessors who can accommodate the changing needs of the modern workforce will have a better chance of a successful working relationship with the GSA.

Session Notes

Panel 1:  GSA Operations Now And The Future, featuring the Commissioner of the GSA Public Buildings Service and the director of the GSA’s National Capital Region office.

• Freeze the federal footprint – is happening but is creating more opportunities for private industry partners (landlords, building owners) because agencies have to be more creative with how they use space
• Market is more competitive because agencies are signing shorter leases so there is more churning going on
• GSA wants to have agencies be more forward-thinking about the end of their leases and work with landlords to think about it well in advance, work with landlords to get new needs met, concessions, manage the progress from upstream
• Increased emphasis on reducing the number of lease holdovers being held by GSA
• Agencies are being responsive to funding challenges and cooperating with shrinking footprint efforts because they understand that it frees up more money for running the actual program
• “Total New Workplace” – GSA encouragement of new building designs for a remote workforce, hoteling spaces and cooperative work spaces
• GSA personnel, telework, technology, IT priorities all go into the shrinking footprint and what exactly the remainders look like
• GSA transparency goals
• Making a lot of use of Section 14/412 construction/swap authority to be creative about using space, rebuilding, etc
• Many success stories of P3 projects – The Yards, Old Post Office, St Elizabeth’s – hope to be a model because private industry partners are where the money is – govt doesn’t have, won’t have access to huge cash needed to do these big deals
• GSA surplus property
• Trying to be more mindful of using govt resources, part of a larger data-driven effort to be more efficient
• Property Disposal Unit – 669% increase in properties sold in FY2013 over Fy2012

Panel 2: Talked about a P3 project in DC – was very interesting but hyper-local to DC

Panel 3: Perspectives on Leasing with GSA

• Cultural shifts from GSA are having an impact on the way agencies use space – ‘total new workplace’ goals are main culprit
• Skepticism about whether this new style of work will stick around, we have seen it come and go in private sector
• Competition for contracts has focused on price only instead of best value
• Structural requirements in procurements are challenging to accommodate in leases
• Avoiding holdover leases
• Working with tenants in advance of the lease termination to avoid vacancies
• Shorter leases will favor new buildings because old buildings can’t be prepared fast enough to accommodate tenants’ needs

By: Wayne Grohl and Stephanie Spear (The Source)
Click here to access the source article.

The Great Recession began in December 2007 when the U.S. housing market was hit hard by subprime mortgage losses. The fallout led to a decline in consumer spending and business investment, which was followed by massive job losses — in 2008 and 2009, the U.S. workforce lost at least 8.7 million jobs.
According to the National Bureau of Economic Research, the recession officially ended in June 2009. While some sectors of the economy are still struggling, many cities across the U.S. have seen signs of recovery in economic indicators such as the labor market and home values.
With this month marking the five-year anniversary of the official end of the recession, NerdWallet crunched the numbers to find the cities that have improved the most. We considered the following factors in our analysis of 510 of the largest U.S. cities:
1. Labor market: To assess improvement in a city’s labor market, we measured the percentage change in unemployment in the civilian labor force from 2009 to 2012. We also calculated the change in median household income.
2. Housing market: We calculated the change in median home value from 2009-2012.
Some notable findings include:
Eight out of the top 10 cities on our list are in Texas, a state that has seen tremendous economic growth in the past few years.
The largest place among the 50 most improved cities was Washington, D.C.
Florida had eight cities in the bottom 20 of our list of 510 places—the most of any state among the “least improved” cities.
The largest city among the least improved cities was Detroit, Michigan, which placed 509th out of 510.
For more information on affordability in each of these cities, check out NerdWallet’s Cost of Living Calculator. For a full ranking of all 510 cities analyzed for this study and to download the raw data, click here.

 
1. McAllen, Texas
The median household income from 2009 to 2012 in McAllen increased almost 32%, the second-highest rate of any city in the U.S. That growth in income, along with a nearly 16% rise in median home value, is why McAllen tops the list of most improved cities after the recession. The McAllen Chamber of Commerce offers various programs to attract and encourage local business investment and growth.
2. Midland, Texas
Unemployment in Midland’s civilian workforce decreased nearly 36%, a steeper drop than in most of the country from 2009 to 2012. As well, the city saw the highest increase in its median home value in the U.S. The local oil boom has led the economic surge in Midland. According to the Midland Development Corporation, the regional economic index has recorded growth in 50 consecutive months.
3. San Angelo, Texas
San Angelo also experienced a large decrease in unemployment along with impressive growth in income and home values. The major industries in San Angelo include health care and education, trade and transportation, tourism and business services. Schools, hospitals and an air force base are among the top employers in the city.
4. Fargo, North Dakota
Fargo’s robust economy, which is based on food processing, manufacturing, trade and transportation, and education and health care, has helped fuel recent growth in the labor and housing markets. Major employers in Fargo include Sanford Health and North Dakota State University.
5. Bryan, Texas
Bryan, a city in southeast central Texas, is part of the Bryan-College Station metropolitan area. From 2009 to 2012, unemployment fell while income and home values increased, indicating local economic growth. The top employers in the region are Texas A&M University, Bryan Independent School District and Sanderson Farms.
6. Chattanooga, Tennessee
Chattanooga, the fourth-largest city in Tennessee, has seen a significant decline in unemployment since the end of the recession. According to the Chattanooga Chamber of Commerce, each year since 2009, gross retail sales in Hamilton County have steadily increased along with median income and median home values — which shows a healthy rise in consumption.
7. College Station, Texas
The median household income for College Station increased nearly 32%, the highest surge of any city in the nation from 2009 to 2012. College Station has worked with Texas A&M University and its neighbor city of Bryan to develop The Research Valley Partnership, which focuses on innovation and business growth for the local economy.
8. Odessa, Texas
Odessa, Midland’s neighbor, from 2009 to 2012 experienced the steepest drop in unemployment of all cities analyzed. Median income and home value have also increased since the recession. Residents in Odessa work in the services, mining and construction, retail, government and information industries.
9. Edinburg, Texas
Edinburg is in southern Texas, near McAllen. Since the end of the recession, the city has seen big improvements in its workforce and the housing market. According to the Edinburg Economic Development Corporation, most local jobs are in education and health services with the city’s school district and regional medical center the top employers.
10. Amarillo, Texas
Unemployment decreased more than 15% from 2009 to 2012 in Amarillo, while the median home value increased about 12%. The city located in the northern part of the state is the economic hub of the Texas Panhandle. The Amarillo Economic Development Corporation promotes business expansion and economic growth in the region, which has seen more than a 30% increase in employment over the past 15 years.
View Top 40: Recession Recovery: Cities that Improved the Most
Methodology
The overall score for each city was calculated from the following measures:
2009-2012 change in percentage of unemployment in civilian labor force from the U.S. Census Bureau American Community Survey
2009-2012 change in median household income from the U.S. Census Bureau American Community Survey
2009-2012 change in median home value from the U.S. Census Bureau American Community Survey
The changes in unemployment and median household income were half weighted.
By: Sreekar Jasthi (NerdWallet)
Click here to view source article.