Archives for February 2021

Investors Foresee Best ROI in Medical Facilities, Opportunity Zones

February 5, 2021 by CARNM

What will the real estate investment market look like this year? A new survey by Millionacres, a Motley Fool news service, surveyed 250 of its readers and real estate investing experts to learn their 2021 predictions.

Investors are particularly bullish on medical buildings, with 39% of survey respondents saying such facilities will become the hottest type of commercial real estate property this year. Industrial follows at 32% as well as self-storage properties at 18%. But due to the pandemic, investors continue to express concerns about the office and retail sectors. “The pandemic is de-emphasizing the unnecessary conventional office model, and there will be an increasing number of people realizing they don’t have to live in crowded cities to be gainfully employed and can have a better quality of life elsewhere,” says one survey respondent.

Still, investors believe that retail properties will slowly bounce back as the pandemic comes under control. As of Nov. 30, 2020, an estimated 8,379 stores closed this year, according to Coresight Research. Analyst Maurie Backman told Millionacres that mall operators are struggling as they lose tenants and anchor department stores. She offers an idea to spark more foot traffic from shoppers: walk-in health care clinics and diagnostic centers. “It may be a little unconventional to sandwich a doctor’s office between a clothing store and an accessory shop,” Backman said. “But if it brings in the revenue malls need, so be it.”

Opportunity zones could be another area ripe for growth with investors in 2021, according to the survey. While only 16% of survey respondents say they’ll definitely invest in an opportunity zone in 2021, 40% say they’ll consider it. Analyst Tyler Crowe told Millionacres that holding periods of at least 10 years, which would enable investors to ride out market volatility, could make opportunity zones more appealing. He added that all investments are seeing a lower rate of return during the pandemic, so the standard rate of return for opportunity zones may be more appealing to investors. “There are still monumental tax benefits for real estate investors in qualified opportunity zones, but investors should still look for quality deals with proven developers rather than chase a risky bet simply for the tax advantages,” Crowe says.

Other findings from Millionacres’ 2021 investment survey:

· Venture capital opportunities—particularly around real estate technology—could be big.

· 40% of investors believe housing prices will remain high.

· Urban rents likely won’t return to pre-pandemic levels this year, 73% of survey respondents say.

Source: “Investors Foresee Best ROI in Medical Facilities, Opportunity Zones“

February 2021 CCIM Deal Making Session Properties

February 5, 2021 by CARNM

Thanks to all of the brokers, sponsors, and guests who attended the February 2021 CCIM NM Deal Making Session & Forum, and to those who shared their properties.

Click here to view source PDF.

Click here to view the Thank Yous.

	Name	Property, City	Type	Price
1.	Austin Tidwell Daniel Kearney	3300 San Mateo Blvd, Albuquerque	Retail	$5,216,450
2.	Anne Apicella Kate Potter	4111 Barbara Loop Se, Suite D-1, Rio Rancho	Office	$225,000
3.	Anne Apicella Kate Potter	8150 Paseo Del Norte, Albuquerque	Office	$1,600,000
4.	Keith Bandoni, CCIM Wesley Baiett	Northern Blvd & Edinburgh St, Rio Rancho	Vacant Land	$499,459

How the Pandemic Is Changing CRE Through Innovation

February 4, 2021 by CARNM

Facing a once-in-a-century pandemic might’ve felt like backs against the CRE wall, but instead the industry has gone back to the future.

ATLANTA —The pandemic showed commercial real estate professionals how vital a role technology can play. As tech becomes more commonplace, it too is growing to the dynamic needs of CRE. GlobeSt.com reached out to Tony Clark, SVP of technology and innovation at Colliers International, to discuss how CRE has found ways to use technological innovation to not only persevere through a pandemic but also pursue new horizons of performance.
“Efficient use of space and reliability are two areas that are definitely influencing technology,” Clark said. “Another key theme I’m seeing is an increased focus on ease-of-use tools. CRE as a business has found ways to continue to function and support employees and customers through remote-work utilities.”
Yes, the first goal after the COVID-19 shock wore off was to get back up to speed to support contractual obligations, which meant adapting processes around accounting, valuations, service management and remote service provisioning. Access control for lockouts and the dashboarding of live building information became more critical, whether tenants were working from home, employing a hybrid shift schedule, holding limited meetings on site or needing WFH backup.
Increased efficiency and reliability are always key goals in the built space, but especially as CRE operations adjust to pandemic realities and doing more with less. Machine learning elevates building performance by analyzing wear items and monitoring performance variables like vibration to detect and determine when maintenance is necessary. This innovative capability to track occupant use patterns increases efficiency and increasingly will integrate with building infrastructure such as the variable frequency drives that ensure smooth startup of motors like those found in HVAC systems.
“We are living in an increasingly digital and physical world where tools to digitally mirror physical assets or that provide visualization of relevant data are rapidly becoming mainstream,” Clark said. “ESG technology (environmental, social and governance) can ensure energy and cost efficiency for reduced occupancy of spaces. Another interesting trend is energy smoothing, the process of storing electricity on site at times when it is cheapest and releasing it during peak hours, much like Con Edison does with its local generators program.”
In many ways, the past pandemic year didn’t so much cause versus accelerated trends toward increased automated and virtual value. Brokers can create even higher-quality 3D property walkthroughs, including 4K resolution photos, detailed floor plans and videos for clients, and furnish interactive maps for on-demand info about listings. Though the IT iterations come and go, the tools elevating convenience and connectivity are here to stay — on the up and up.
“Expect more video and instant collaboration products,” Clark added. “Anything that can be digitalized will be, especially with innovations like Wi-Fi 6 and 5G that deliver real-time speeds.”
Source: “How the Pandemic Is Changing CRE Through Innovation“

Industrial Hits Highest Absorption in More than a Year

February 3, 2021 by CARNM

Buoyed by growth in e-commerce, the warehouse/distribution space absorbed 35.4 million square feet in Q4.

While most sectors have slowed since early 2019, the warehouse/distribution market is still growing.
Buoyed by growth in e-commerce, the warehouse/distribution space absorbed 35.4 million square feet in Q4, which was its highest mark since Q1 2019 when 70.7 million square feet were absorbed, according to Moody’s Analytics. In Q4, occupancy growth was 28.5 million square feet, while it was 24.2 million square feet in Q4 2019. The sector has gone more than a decade since it last experienced negative net absorption in 2010.
Construction for the new warehouse/distribution space fell to 25.8 million square feet in Q4 after hitting 38.2 million square feet added in Q3, according to Moody’s Analytics. The space has posted an average of 36.8 million square feet of new inventory added per quarter in the prior six quarters. With demand increasing and supply decreasing, the vacancy rate dropped to 10.5% after sitting at 10.6% in the two previous quarters. It was higher than 10.3% in the fourth quarter of 2019.
As occupancy increased, so did rents. Asking and effective rents increased 0.4% and 0.6%, respectively, in Q4. In Q3, asking and effective rents were 0.3% and 0.4%, according to Moody’s Analytics. For the year, asking rents grew 1.3% while effective rents increased by 1.5%, below the 2.1% average asking and effective annual rates in 2019.
The flex/R&D space posted positive net absorption of 1.16 million square feet after two consecutive quarters of occupancy declines that averaged -3.1 million square feet.. The vacancy rate fell from 10.3% in the third quarter to 10.2% in Q4. It was still higher than the fourth quarter of 2019’s rate of 9.7%.
Completions of flex/R&D space came in at 424,000 square feet in Q4, after 337,000 square feet completions in Q3, according to Moody’s Analytics. In 2018 and 2019, new supply averaged 2.23 million square feet and 1.16 million square feet, respectively. With little supply growth, inventory only inched up 0.04%. Occupancy growth was 0.11% in Q4. Supply growth was 0.26% for 2020, while occupancy fell 0.39%.
Asking and effective rents grew 0.5% for both asking and effective rents in the flex/R&D space. In Q3, rents rose 0.2%, and the effective rent was flat. Average asking and effective rents grew 1.2% and 0.8% to $10.41 and $9.35 per SF, respectively.
The health of warehouse and storage also showed up in jobs numbers. The sector added 78,900 jobs since the prior peak in March 2020, a growth rate of 6.5%. The rest of the economy had a net decline of 9.8 million jobs or -6.5%.
Moody’s Analytics expects construction to grow in warehouse and storage, but at a slower rate than absorption. It suggests that vacancy rates will fall very slowly and asking should keep pace with recent quarters.
Moody’s expects the warehouse/distribution and flex/R&D markets to continue to expand for a quarter or two. However, it says people will want to return to stores at a certain point, potentially hindering growth in the sector. But it points out that many retailers are struggling and could go out of business.
Indeed, a survey of retail CFOs by global accounting firm BDO notes that many retailers are planning to cut their physical footprints in 2021. Approximately 40% of CFOs surveyed said they were reevaluating their real estate footprint this year, as high unemployment rates and stalled COVID-19 vaccination strategies have brands girding for a lengthy period of reduced consumer spending.
Source: “Industrial Hits Highest Absorption in More than a Year“