On May 24, the President signed into law S. 2155, the “Economic Growth, Regulatory Relief, and Consumer Protection Act.” Among other provisions, it includes language clarifying implementation of Basel III “High Volatility Commercial Real Estate” (HVCRE) risk-weight rules, and its exemptions. Read NAR’s letter of support to learn more about how S. 2155 could help your business.
Click here to view the PDF.
By: Elizabeth Mendenhall (NAR)
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Archives for June 2018
6 Steps to Successful Multifamily Property Renovation
Who says a tight labor market and high material costs have to stand in your way?
In many respects, the decision to renovate an apartment community has never been easier. The boom of new, market-rate multifamily projects has seen to that. You step up or fall away.
The tricky part is what comes next.
For REITs and other national and regional owners, those next-step questions have taken on a new urgency: How do you profitably reposition an asset? How do you do that with labor in historically short supply? How do you budget for surging building-materials costs?
A growing number of public and private owners believe they have found an answer that rewrites the multifamily renovation playbook. The new approach promises:
- More affordable property repositioning. The road map from a Class C to a Class B property or Class B to A has never been more direct and easier to attain.
- Better preservation of NOI in battleground markets. The new renovation strategy carefully calibrates the project to achieve maximum tenant retention without needless overbuilding.
- Stable, predictable materials costs. The pricing trend line of lumber and other project materials is sky-high, with no end in sight. Breakthrough purchasing power promises to minimize pricing surprises.
- Nationwide uniform, consistent construction quality. Why face uncertain labor issues market to market? The new approach disrupts traditional local-market contractor recruitment and retention with unmatched project certainty.
- True coast-to-coast renovation service area. Looking at renovation projects in Boston? Washington, D.C.? Tampa? Dallas? Phoenix? Seattle? Now, one call is all it takes to put renovation projects in those markets and many others in motion.
- Comprehensive renovation services from initial design to final walk-through. Whether the need is a deep, down-to-the-studs renovation or cosmetic kitchen and bath updates, the solution easily scales to the need.
The exciting part? It works. So reports Steven Bolos, president of the Renovation Division of Katerra, a turnkey, vertically residential construction company. “We’re working on a 1,000-unit project in California, turning about 100 units a month. With our global network of suppliers and our own products, we’re capable of saving millions of dollars in material costs,” Bolos says.
Bolos explains the savings in two words: Purchasing power. “Katerrahas made a huge investment in U.S. and overseas manufacturing facilities and distribution centers, and built a massive supplier network. This volume reduces costs for all our customers.”
As for labor concerns, Bolos says Katerra doesn’t have that problem. “They want to team up with us because we really take care of subcontractors. We’re a respected national player, we pay well, and we’re very organized. Subcontractors love to work for companies like that.”
Bolos also understands price gets his company in the door. Then quality, performance, and timely execution must take over to earn their shot on the next project. Bolos points to projects in New Jersey, Chicago, Dallas, and elsewhere to illustrate the point. “We’re scaled to take on renovation projects from $6,000 to as much as $50,000 a door. Garden style. Three-story. Two-story. Mid-rise. High-rise. You name it.”
For multifamily property owners, the “what comes next” in apartment renovation projects may not be nearly as challenging as once thought.
By: Katerra (MFE)
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ABQ Ranked No. 3 Among Best Small Cities
Albuquerque scored a No. 3 spot on a new ranking of America’s 50 best small cities.
Resonance, a British Columbia-based tourism, real estate and economic development consultant, gave Albuquerque its top ranking for “product,” a category that covers key institutions, attractions, infrastructure and housing affordability. The report ranked the city particularly high on cultural assets, some of which are covered in the product category and some in the “programming” category, in which Albuquerque earned a No. 2 ranking.
That apparently offset its lackluster 68th ranking on “prosperity,” covering such areas as employment, gross domestic product, numbers of corporate headquarters and other metrics. But the report said the city is “aggressively recruiting entrepreneurs and young families” in an effort to improve the economy.
It also noted the city’s investment in the Albuquerque Rapid Transit, though mistakenly claims it launched earlier this year. ART has been beset by problems. The most recent projections from the city administration is that it could begin running sometime this fall.
In other categories, the report gives Albuquerque a 32 ranking on “place,” 43rd on “people” and sixth on “promotion.”
By: ABQ Journal News Staff (ABQ Journal)
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Bricks Vs Clicks? It’s Not ‘Us Against Them’
Transwestern’s Nick Hernandez says it’s time to stop the “us-against-them” mentality many retailers feel toward e-commerce. Adapt or die.
It’s time to get over it, says Nick Hernandez. He’s managing director of Transwestern’s national retail services. And the “It” he refers to is the ongoing belief on the part of many retailers—and their real estate representatives—that there’s a struggle with online shopping.
In fact, there is no struggle, he says, but there is adaptation, and the retailers who recognize that will be the winners. He even takes that idea one step farther: “Not only do many Amazon products come from brick-and-mortar retailers,” he tells GlobeSt.com, “but I would bet good money that in 10 to 15 years, Amazon will be one of the world’s largest brick-and-mortar retailers.”
[Editor’s note: A video interview is available at the end of this article.]
The problem, says Hernandez, lies not in the stars of e-commerce, but in the retailers themselves and the very old-school problem of bad management. “Most of the experts point to the management teams in place,” he says. “They’re afraid of change, so they deteriorate. Look at stores like JCPenney or Toys ‘R’ Us.”
On the flip side, he points to Macy’s turnaround story or the latest India venture from Walmart. He refers to the retailer’s $16-billion purchase of Flipkart, India’s leading e-commerce platform. “They’re forward-thinking,” he says simply.
And today, he says, that means many things. It means “omni-channeling, evaluating the size of their boxes and their merchandise mix and experimenting with same-day delivery. Successful retailers today are making the entire process work, from sale to delivery.”
Those success stories are set against a retail landscape that’s fairly robust. “Development is very conservative,” he says, “so rents are holding steady and vacancies are at all-time lows. If the rumors come true and there is some sort of slowdown next year, I believe retail is fairly well-positioned to endure it.”
That too, he says, is a sign of adaption to new market conditions. “Retail is an ever-changing landscape,” he says. “But it always has been. As retailers continue to adapt, we’ll see who the winners and losers are.”
By: John Salustri (GlobeSt)
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