Archives for March 2019

Thanks to all of the brokers, sponsors, and guests who attended the March 2019 CCIM NM Deal Making Session and to those who shared the March 2019 CCIM NM Properties.

Click here to view source PDF.
Click here to view the Thank Yous.

	Name	Property, City	Type	Price
1.	Keith Meyer, CCIM, SIOR Jim Wible, CCIM Riley McKee	3520- 3540 Pan American Fwy Albuquerque	Industrial/ Flex	$4,250,000
2.	Riley McKee Keith Meyer, CCIM, SIOR Jim Wible, CCIM	3421 Stanford Dr NE Albuquerque	Industrial	$725,000
3.	Marguerite Haverly Jason Lott Tom Jenkins, CCIM	5300 Homestead Rd NE Albuquerque	Office	N/A
4.	Tom Jenkins	Albuquerque Flex Portfolio Albuquerque	Industrial/ Flex	$5,049,855
5.	Randall Parish Isaac Romero	SWC 57th St & Quail Rd NW Albuquerque	Retail Land	$311,454
6.	Steve Kraemer, CCIM Isaac Romero	403 Aztec Rd NW Albuquerque	Multifamily	$852,500
7.	Dave Vincioni Tai Alley	2516 Southern Blvd SE Rio Rancho	Retail	Bldg: $525,000 Land: $551,000
8.	Martha Carpenter	320 Osuna Rd NE Albuquerque	Office	$524,440
9.	Shelly Branscom, CCIM	6817-6819 Academy Pkwy West Albuquerque	Industrial/ Flex	$2,944,440
10.	Jim Smith, CCIM, SIOR Breken Mallette	7309 Jefferson St NE Albuquerque	Industrial/ Flex	$910,000

The reasons: institutional demand for commercial real estate is much stronger than in the past and there is a growing acceptance of using as less leverage to finance deals.

The Federal Reserve’s recent shift in interest rate policy has been met with a sigh of relief by the commercial real estate industry. After all as rates rise so do borrowing costs as well as cap rates. Or so the conventional wisdom has gone. In a recent report the Chicago-based Quantum Real Estate Advisors decided to investigate the correlation between cap rates and interest. It found that it may be weaker than many had believed.
This may come as a surprise to economic historians who can point to a historical correlation stretching back some twenty years. The difference between then and now, however, is that institutional demand for commercial real estate is much stronger and there has been a shift in the acceptable level of leverage to finance deals. The result, Quantum Founder Chad M. Firsel tells GlobeSt.com, is that cap rates and borrowing costs have become far more insulated from one another, which has not been the case in prior years. “Interest rates have become pari passu with cap rates,” he says.
Indeed, data from the report show that US cap rates remained stable and flat in recent years, with deal volume growing slightly — despite the eight Federal Reserve interest rate increases since 2015 across all property types. “This stability correlates with the stability of the 10-year Treasury note. CRE and 10-Year Note spreads remain wide, and margins are less at year end 2018.”
The report also noted that there has been a general increase in the 10-year Treasury rate since 2016 and cap rates have been lowering yet steady. Over the course of the last 10 years, the cap rate spreads to the 10-year treasury yield has narrowed to the same range as 2003-2006. “The current spread is a healthy cushion against rising interest rates. The 10-year rate is depressed but is still ahead of inflation and the consumer price index.”

A Nuanced View

To be sure, this opinion comes with some nuance. If, for example, borrowing costs rise, Firsel believes that cap rates will move as well — but not in lockstep as they have in the past.
Commercial real estate demand is the driver behind this trend, he continues. “The allocation by investors to commercial real estate on a percentage basis has increased significantly especially in recent years. Now there is too much capital chasing deals. This demand puts pressure on pricing.”
So if rates were to rise to 4%, Firsel speculates, demand would drop but it would still be somewhat insulated because there is more cash in the market.
By: Erika Morphy (Globe St)
Click here to view source article.

Major brands including Uber, Lyft, Slack, Pinterest, and Airbnb are predicted to IPO this year which could result in new wealth, not only for cities where these companies are headquartered but surrounding cities as well.

The knowledge and tech economy — universities, start-up industries, innovation hubs, and parks — have always been key drivers of future growth. For decades now, Silicon Valley has been considered the center of the tech world when it comes to innovation. This has resulted in Silicon Valley housing being one of the highest priced real estate markets in the United States, if not globally. And it looks like 2019 may exacerbate that.

When tech Unicorn startups, like Uber, finally go public, they will likely be worth over $100 billion, putting at least $10 million in stock for every early employee, advisor, and investor. In addition to the startup ecosystem, the real estate landscape will also be affected. Back in 2004, Google’s IPO played a role in the 11% increase in prices in the San Francisco and Bay Area. The economic success of the region, especially it’s recovery after the great financial crisis, has generally tended to push prices up. Another example is Facebook. It’s IPO helped its employees make significant down payments on mortgages and early employees invested in more than one single-family homes. While Facebook chose a historically poor area for its HQ, the prices of the neighboring Palo Alto and Menlo Park went soaring after the company went public.

The post-IPO availability of cash is in stark contrast with the continuing cooling down of the U.S. real estate market as a whole. Along with IPOs, company expansions in certain areas can also affect the real estate price and rental momentum. Interest and property prices in New York saw a significant increase in Long Island City when in November the news broke that Amazon would build a vast campus for its headquarter. But what we may expect after the company recently announced their decision to drop the expansion plans in New York? Following the euphoria and the tremendous property searches, now sellers are worried whether the market will react negatively, and agents, on the other hand, feel insecure for the deals already in progress.

While 2018 was a rather crazy and fast “seller’s market,” it is expected that things will be a little different in 2019 as buyers and sellers adjust to the new realities. Meanwhile, if the upcoming IPOs happen before Q3, new cash buyers will target not only prime Silicon Valley areas, such as Atherton but also vacation places like Tahoe and even affordable European properties. One thing is for sure, 2019 will be one of the most exciting and dynamic years for Silicon Valley real estate.

By: Natalia Karayaneva (Forbes)
Click here to view source article.

Knock focuses on building a CRM and analytics platform to minimize tenant turnover and maximize NOI in this competitive environment, and recently raised $10 million in Series A funding to fuel growth.

With multifamily housing development reaching new heights and more people renting now than at any point in the last 50 years, the multifamily housing market is larger and more competitive than ever. This requires having a competitive edge and unique renter offerings.
One Seattle-based company is offering that leg up through CRM and communications to improve the marketing and sales performance of apartment buildings. This company, Knock, is currently used by clients including Milestone, FPI, ZRS and the Carroll Organization. The platform also serves as a partner to management software companies, including Yardi, RealPage, Entrata, ResMan, AMSI and MRI.
“More people are renting now more than ever before and multifamily development is at an all-time high, which means greater competition among multifamily property managers to attract and retain tenants,” Tom Petry, Knock co-founder and CEO, tells GlobeSt.com. “Knock has focused on building a CRM and analytics platform that is essential to effectively minimize tenant turnover and maximize NOI in this competitive environment.”
The tech firm recently raised $10 million in Series A funding. The round was led by Madrona Venture Group and brings the company’s total capital raised to $15.5 million. Knock will use the investment to scale its go-to-market organization and accelerate investments in product, engineering and data science.
The new capital will also support Knock in accelerating its investments in data science and analytics features to help property managers improve rental yields. Tenant turnover prediction and yield optimization are examples of areas where Knock can help property managers make better decisions to improve occupancy and profitability.
“Attracting and retaining the best tenants is crucial to the financial success of an apartment building, and yet, before Knock, property managers did not have access to the modern CRM tools available to their peers in other industries,” said Scott Jacobson, managing director at Madrona Venture Group, who joined the Knock board in conjunction with the financing. “The Knock team deeply understands the nuances of the multifamily housing market and has developed industry-leading CRM and communications technology that help property managers improve their business and their tenants’ experience.”
The funding comes on the heels of a growth period for the company. During the past two years, Knock has experienced 11 times revenue growth, tripled its team and moved to a new headquarters in Seattle’s Ballard neighborhood.
Last year, Knock hired former A Place for Mom executive Ted Ellis as chief technology officer and rolled out a national field-sales organization nationwide in Seattle, the Bay Area, Los Angeles, Dallas, Houston, Miami, Chicago, Washington, DC and Boston. Knock plans to double its employee headcount in 2019 to fuel further growth.
The company touts itself as the only multifamily housing platform to provide marketing, automated communication, real-time performance management and messaging capabilities all in one place. Knock provides property managers with the tools needed to convert leads into prospects, prospects into leases and leases into renewals. As a result, property managers can better manage relationships with prospects and tenants, and ultimately, boost profits.
“Multifamily sales and marketing is complex and multifaceted,” said Petry. “Apartment owners and managers need more insights into their sales performance, while renters expect easy communication.”
To be sure, more multifamily marketers will utilize a wide variety of lifestyle data to understand statistics such as residents’ energy usage, how often they use a car or public transit or where they’re spending the most time in the complex. This kind of data gives actionable insight to marketers that can either impact the building’s footprint or marketing efforts in general, according to LCP360.
By: Lisa Brown (Globe St)
Click here to view source article.