Archives for July 2018

Commercial Real Estate International Business Trends

July 10, 2018 by CARNM

Download (PDF: 982.92 KB) | News Release
In contrast to the large cap commercial market transactions reported by RCA (aggregated at $10 million and above), most REALTORS® who specialize in commercial real estate managed investment deals averaging less than $2.5 million per deal, frequently located in secondary and tertiary markets. The Commercial Real Estate International Business Trends 2018 focuses on this significant segment of the economy and real estate markets.

Highlights

59% of respondents closed commercial real estate deals in 2017
Respondents who closed a transaction had a median of 6 transactions, and an average of 9 commercial transactions.
18% respondents closed a sale involving international clients/investors
Over the past five years, 35% of survey respondents experienced an increase in the number of international clients
Respondents who closed transactions with international sellers had a median of two seller-side international sales (two in 2016).

By: NAR
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Is Workforce Housing a Dying Breed in Today’s Multifamily Development Landscape?

July 9, 2018 by CARNM

There is a major void in the workforce housing space: one that is impacting millions of Americans each year.

The traditional image of a renter household has undergone some changes over the last 10 years. Renter households are now drawing in those who are older, wealthier and with children. Developers have responded to this demographic demand shift by changing the supply that they’re bringing to market. Rather than continuing to develop a mix of affordable and luxury properties, they’ve shifted to luxury and single-family homes. This leaves a major void in the workforce housing space: one that is impacting millions of Americans each year.
According to Harvard University’s Joint Center for Housing Studies (JCHS), there are currently 43.3 million renter households in the U.S., which account for nearly 37 percent of all households, a number that is continuing to grow at an average rate of roughly one million per year since 2010. Of those renter households, almost half—21 million—are cost-burdened, meaning that their rent accounts for more than 30 percent of their income. Moreover, of those cost-burdened households, 12 million (approximately 28 percent) are spending over 50 percent of their income on rent.
Since 2000, there has been a 9 percent decline in class-B and -C multifamily units as a percentage of total stock. In 2001, 63 percent of new rental housing supply on the market was comprised of units priced below $1,100/month. In stark contrast, only 35 percent of new supply in 2016 was priced below $1,100/month. Moreover, newly built units renting for $1,500/month and above soared from 15 percent to 40 percent during the same period.
More recently, developers shifted their strategy to target the wealthier renter household demographic. Consequently, the median asking rent for newly completed multifamily units increased by 27 percent between 2011 and 2016, to $1,480/month, while the median renter income increased by only 16 percent over the same period. The share of cost-burdened renters continues to grow at an alarming rate.
According to JCHS projections, the number of renter households will increase by nearly 500,000 annually over the 10 years from 2015 to 2025. Within that growth, demand for lower income multifamily housing will continue to grow by an estimated 150,000 units per year. Yet, despite a clear need for more affordably priced housing, regulatory and construction cost burdens motivate developers to build mostly luxury housing, further shrinking its supply.
Construction costs are rising much faster than inflation, giving developers little economic incentive to build more affordable housing units. In fact, between 2012 and 2017, the price of developable multifamily sites spiked by 62 percent. Over the same period, the combined costs of construction labor, materials and contractor fees rose by 25 percent, far quicker than the general inflation rate of 7 percent. According to America’s Rental Housing Report 2017, which cites RS Means, the costs of building a basic, three-story apartment building increased by 8 percent from 2016 to 2017 alone. The report also states that tight land use regulations also add to costs by limiting the land zoned for higher-density housing and entailing lengthy approval processes.
However, we might soon see an increase in affordable housing units, despite the current state of the market. Because there is such a dire need to increase the supply of affordable housing units, the Federal Housing Finance Agency is now requiring Freddie Mac and Fannie May, which helps ensure a reliable and affordable supply of mortgage funds throughout the country, to increase mortgage financing for affordable housing preservation. In the first quarter of 2017 alone, Freddie Mac financed 159,000 multifamily units, 91 percent of which were affordable to families earning either at or below 120 percent of the area median income. Freddie Mac also offers bridge financing opportunities to help preserve affordable units through a new Low Income Housing Tax Credit Program (LIHTC) syndication and lets borrowers lock in borrowing costs for up to two years prior to a LIHTC re-syndication.
Fannie Mae financed 202,000 multifamily units in the first quarter of 2017, 85 percent of which were affordable. They also expanded their offerings for Green Financing Loans, which provide lower interest rates and loan proceeds when builders include green initiatives in their developments.
In New York City, developers are incentivized by the 421-a tax abatement program, or Affordable New York, to develop affordable multifamily homes on land that is “vacant, predominantly vacant or underutilized.” The use of this incentive is important given the general high cost of housing in New York, and more specifically, the lack of quality affordable housing.
Institutional and private investors alike are also recognizing the potential for strong returns in the acquisition of middle-income workforce housing communities. Due to their risk-adjusted profile, investments in the workforce housing space tend to outperform other market-rate products while offering inherent advantages over higher class luxury properties—particularly during economic downturns when renters become increasingly price-sensitive and seek out higher value propositions. As institutions continue to look for opportunities to invest in the current stock of workforce housing communities, developers might be more inclined to build them.
By: Elie Reiderz (National RE Investor)
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Clint Eastwood’s ‘The Mule’ to Film in Las Cruces

July 9, 2018 by CARNM

New Mexico will soon have some Hollywood heavy hitters – and it’s all happening in Las Cruces.

According to the New Mexico Film Office, Oscar winner Clint Eastwood’s latest project, “The Mule,” will film in the City of the Crosses in late July. The production is completing its work in Augusta, Ga., before heading to New Mexico.

Starring alongside Eastwood are Bradley Cooper, Michael Peña, Taissa Farmiga, Laurence Fishburne, Jill Flint, Dianne Wiest, Ignacio Serricchio and Alison Eastwood.

“We’re thrilled to welcome another production to New Mexico,” said Nick Maniatis, state Film Office director. “We’re proud to see the film industry continuing to grow in and around Las Cruces and throughout southern New Mexico.”

The film is directed by Eastwood, and the screenplay was written by Nick Schenk. The pair worked together on 2008’s “Gran Torino.”

It is from Warner Bros. Pictures and Imperative Pictures.

According to the studio, the film focuses on Earl Stone, played by Eastwood, who is a man in his 80s and broke and alone. He is facing foreclosure of his business when he is offered a job that requires him to drive. He soon discovers that he signed on as a drug courier for a Mexican cartel, and Cooper plays a DEA agent hot on his tail.

“Las Cruces is excited to welcome Clint Eastwood and his new movie, ‘The Mule,’ to our community,” Las Cruces Mayor Ken Miyagishima said

According to the state Film Office, the production will employ about 85 New Mexico crew members and about 200 New Mexico background talent workers.

By: Adrian Gomez (ABQ Journal)
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Two Manufacturing Projects Promise More Than 150 New Jobs

July 9, 2018 by CARNM

On Monday, officials and community leaders celebrated two economic development projects focused on the manufacturing sector that are expected to bring more than 150 jobs to the area in coming years.
In the South Valley, the non-profit Partnership for Community Action officially announced the creation of a 22,000-square-foot Social Enterprise Center on Isleta Boulevard.
The building’s anchor tenant will be the Southwest Creations Collaborative, an Albuquerque nonprofit that employs 36 women in an industrial cut-and-sew factory and uses some of the proceeds from those operations to fund several social services.
The project was funded by a $1 million grant from the U.S. Department of Commerce Economic Development Administration, a $1 million grant from the W.K. Kellogg Foundation and support from several other organizations.
PCA and Southwest Creations estimate the center — which will include a manufacturing area, offices and conference rooms, educational facilities and a childcare center — will provide 77 new jobs. They estimate the center will help train more than 250 childcare providers over the next nine years through its home-based childcare network program.
“This is about reinvesting in a community that has long been divested from,” said Javier Martinez, PCA’s executive director.
Susan Matteucci, executive director of Southwest Creations, said she had long wanted to collaborate on such a project, but the issue took on additional urgency a year ago when she learned the building that houses the manufacturing operation would be sold.
A few miles away near the Los Volcanes neighborhood, Gov. Susana Martinez participated in the ground breaking of a $7 million expansion of Vitality Works, which manufactures vitamin and homeopathic products.
Martinez said in a statement that the expansion is indicative of the state’s efforts to “make New Mexico a great place to do business.”
The project was supported by $550,000 from state Local Economic Development Act funding, tied to a promise of 80 new jobs created by the company.
Vitality Works was also approved for up to about $133,000 in Job Training Incentive Program reimbursement for training associated with 33 jobs. Also, the company received a $7 million industrial revenue bond package from Bernalillo County, which acts as a property tax abatement mechanism.
Vitality Works CEO Mitch Coven said in a statement that the state’s economic development tools have helped the company grow in New Mexico.
“We look forward to continuing to give back to the Albuquerque community,” he said.
By: Marie C. Baca (ABQ Journal)
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