Archives for 2016

Publication Explores Walkable Neighborhoods

The latest edition of On Common Ground, NAR’s semi-annual publication about smart growth issues, focuses on the impact of the growing demand for walkable neighborhoods on the real estate industry.

Walkability is Becoming a Necessity

Demand for walkable neighborhoods is increasing and this demand is changing real estate. People of all ages are recognizing the benefits of living in a place where they can walk to nearby shops, restaurants, recreation, and public transportation. The benefits are many – convenience, reduced time spent driving, and the health benefit of building walking into your day. But more than that, being walkable may be a major factor in your community staying economically competitive.
Walkable neighborhoods are driving economic growth as employers and businesses recognize the value of locating in these places to attract employees and customers. And walkable neighborhoods are not just in the big cities. They can be in smaller cities and towns, older suburban communities, or newly built suburban developments.
REALTORS® are experiencing this interest in walking from their clients, and have responded by providing information to buyers about the walkability of neighborhoods. Many REALTORS® websites and Multiple Listing Services (MLSs) include this information, such as providing a WalkScore (www.walkscore.com) for properties (see article on page 10). Some REALTOR® associations have seen the benefit of improving the pedestrian environment of their cities and towns, such as the Coastal Carolina REALTORS® Association, which was used a NAR Smart Growth Grant to fund a walkability study in Myrtle Beach, S.C. (see page 58). Many cities and towns are looking at a new type of zoning (Form-Based Codes) so that new development will foster walkable neighborhoods (see page 18).
Communities and REALTORS® who want their cities and towns to remain competitive – in business attraction, jobs, and the residential and commercial real estate markets are making walkability a part of their economic development strategy.
Ed: Joseph R. Molinaro (On Common Ground)
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Some of the priciest shopping districts are experimenting with pop-ups, offering retailers discounts to test the waters before they fully buy in. The pop-ups are temporary stores that can give retailers a feel for the space and the business they could generate, but at a fraction of the cost since the leases tend to be only a few months. Landlords hope the retailers will then decide to become long-term tenants. The pop-ups are also opening the door to more startups to jump in.
In Manhattan, landlords are increasingly turning to pop-ups as the retail market there softens.
“This kind of phenomenon only comes when there is a considerable amount of availability,” Joanne Podell, a vice chairman at real estate services firm Cushman & Wakefield, told The Wall Street Journal. “Now, there’s a proliferation of them.”
Retailers are showing greater desires for shorter leases and are becoming more leery about adding stores due to the rapid competition from online shopping, Greg Portell, lead partner in consulting firm A.T. Kearny ’s retail practice, told The Wall Street Journal. But even with the proliferation of online shopping, many retailers still consider it important to have a brick-and-mortar operation too.
For example, Everlane, a fashion brand, describes the company’s approach as “digital first” but opened a pop-up in SoHo last spring and another one a few months later in a different location within Manhattan.
“Not only is the retail real-estate market down, but we are finding that as more landlords understand the concept of temporary shops, they are becoming more comfortable with shorter-term leases,” Everlane founder and chief executive Michael Preysman said.
By: REALTORMag
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JLL anticipates low-interest rates and more warehouse demand fueled by infrastructure investment

CHICAGO – Low-interest rates, healthy consumer spending, and strong e-commerce are forming perfect conditions for industrial and logistics real estate growth in 2017, says JLL. Potential investment in infrastructure and continued company expansion are also expected to fuel demand for warehouses and distribution centers despite global economic uncertainty.
“We are leaving 2016 on a record high, with industrial real estate demand reaching new heights, with leasing in excess of 250 million square feet,” said Craig Meyer, President of JLL’s Industrial group. “Many companies continue to expand while others adapt and perfect their supply chains to be closer to urban cores and their customers, driving record low vacancy rates even further and increasing leasing rates in response.
“With new construction still trailing demand, not only will we see ground up development across major markets, but we will see creative and adaptive re-use of assets, a rise of infill development and the introduction of multistory construction in or near urban locations,” he added.
Five Factors Driving Demand in 2017
Even with positive insights for 2017, JLL’s Chief Industrial Economist Walter Kemmsies said, “The only safe prediction for 2017 is that many things are going to change. There are numerous factors that could impact the freight movement industry next year and beyond, ranging from changes in trade policies and regulations to specific issues that affect how goods are transported. However, the need for infrastructure investment and the continued proliferation of e-commerce will keep industrial real estate booming.”

JLL identifies five factors that will impact the sector in 2017:

1. The infrastructure revival. The urbanization of U.S. cities cannot continue with functionally obsolete roads, bridges and other infrastructure; as upgrades are planned, raw materials will be needed, and warehouses to store them. Investing in the Rust Belt’s infrastructure would mean reviving dozens of Mississippi waterway terminals that served a dated American manufacturing-based economy. Already zoned for industrial use, these ports are being repurposed to transport materials needed to build infrastructure for new industries driving the U.S. economy.

2. E-commerce and urban logistics continue rapid evolution. Online shopping and consumer demand for rapid delivery is changing what, where and how many distribution centers are needed to feed the consumer e-commerce appetite. In the second half of 2016, growth in e-commerce, coupled with industrial occupiers expanding their presence in new U.S. markets, helped the national industrial market’s vacancy rate reach a 16-year low, pushing below 6 percent. This number is expected to continue declining in 2017.

3. Ports benefit from both infrastructure updates and e-commerce. The revival of America’s ports system is driven by the consumer economy and the need for surrounding warehouse and mixed-use infrastructure. The coastal ports of Los Angeles and New York/New Jersey have been the darlings of the industrial sector. However, with the revival of infrastructure and the repurposing of obsolete terminals, 2017 could be the year the Mississippi waterway reclaims its former glory in the global supply chain. Demand for industrial real estate in the region is expected to follow.

4. Institutional investor interest is higher than ever. Institutional capital still views industrial real estate as a lucrative investment opportunity. In fact, year-end industrial investment sale volumes could reach upward of $45 billion, the second-largest annual tally since 2008. This investment activity is indicative of the asset class’s ability to weather global economic, political and financial uncertainty.

5. The rise of creative industrial real estate development. As demand for industrial real estate continues, companies could employ new and creative real estate strategies. Unprecedented industrial real estate demand and the push to improve last-mile delivery services may influence development throughout the country, persuading some companies to seek space in secondary or tertiary markets such as Charlotte, Tampa Bay and Kansas City. Smaller urban core warehouses and fulfillment centers, reconverted assets and multistory warehouses could become last-mile solutions for many companies in 2017.

By: Joanne Bestall & Lisa Karel (JLL)
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An aerial view of Sandia Science & Technology Park shows the 340-acre park.
ALBUQUERQUE, N.M. — A public-private partnership between Sandia National Laboratories and several other organizations has generated $315.2 million in economic impact across the state over two years, according to a new report by the Mid-Region Council of Governments.
The report estimated Sandia Science & Technology Park, a 300-acre technology research park near the national laboratory and Kirtland Air Force Base in southeast Albuquerque, has brought in $2.6 billion worth of economic activity since its inception in 1998.
The results were announced by Sandia representatives and local officials at a news conference Friday at the National Museum of Nuclear Science & History.
“This is how we grow jobs,” said Albuquerque Mayor Richard Berry, one of the speakers at the event. “When we talk about diversifying our economy, it’s things like the Science & Technology park that are the right way to do it.”
The park consists of 42 companies and 2,163 employees, and represents partnerships between Sandia and organizations including Albuquerque Public Schools, Public Service Company of New Mexico and Lockheed Martin.
Since 1998, the park has produced more than $103 million in state tax revenue and $15.2 million for the city of Albuquerque, according to the report. In 2014 and 2015, the park generated $13.6 million in state tax revenue and $2.3 million for the city.
Sherman McCorkle, chairman and CEO of the corporate entity that runs the park, pointed out that the salary of an employee working at the park is “far beyond” the state’s average. According to the report, the average annual wage is $83,100, versus $43,000 across New Mexico. Total wages in the two-year period totaled $635.1 million.
Sandia Labs employees account for about half of the jobs at the park. The report found that the park’s activities have led to the indirect creation of more than 4,000 jobs in the regional economy.
Berry said much of the $375 million investment in the park since its founding has come from private sources, about $285.6 million.
“This is the type of place every city in the United States dreams of having,” he said.
By: Marie C. Baca (The Albuquerque Journal)
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