mcarristo

Dossier, Hemispheres’ Economic-Development series, created by United Airlines, features an in-depth overview of a region, including the unique initiatives that shape its industry and commerce as well as its influence on today’s global economy. United Airlines highlighted New Mexico in Dossier for the June 2014 edition. One of the many excellent articles, many of which include helpful and interesting infographics and diagrams, included is “Snapshot: New Mexico”:
Aided by a thriving research environment and one of the nation’s most advantageous climates, New Mexico is emerging as a new business powerhouse. Here’s a few of the reasons why:
Fiscal-Friendly: Following a series of substantial tax reforms in recent years, a 2014 Ernst & Young report found that New Mexico now offers the lowest manufacturing tax rate of any Western U.S. state.
Technical Prowess: The state’s reputation as a thriving R&D center is reflected in its workforce, which has the nation’s sixth-highest percentage of engineers and fourth-highest percentage of technical workers.
Energy-Rich: In addition to vast fossil fuel reserves, the National Renewable Energy Laboratory also ranked New Mexico second in the U.S. for rural and concentrated solar potential and 10th for on-shore wind potential.
Find the New Mexico-shaped infographic which includes the following break-down of New Mexico’s job industry:
17% Trade, transportation and utilities
24% Government
12% Professional and business services
15% Education and health services
11% Leisure and hospitality
4% Financial
5% Construction
3% Others
3% Mining and logging
4% Manufacturing
2% Information and IT
By: Dossier (United Hemispheres Magazine)
Read entire article here.
 
 

Is ignorance really bliss?
The number of lawsuits filed against business owners based on violations of the Americans With Disabilities Act and Federal Housing Administration accessibility requirements grows every year. The best way to avoid a lawsuit is to find and fix any violations that exist, but many property owners, property buyers, and business operators believe that they are better off not knowing the truth. If they can’t afford to fix a violation, they fear their knowledge will somehow count against them. While there is some cause for concern with respect to multifamily housing, as a general rule, ignorance can only make things worse.
Title III of the ADA, which requires accessibility for most businesses, is a no-fault statute. If a business is not accessible, the law permits a court to order that it be fixed and that legal fees be paid to the plaintiff’s lawyer, regardless of whether or not the owner knew of the problem in advance. Therefore, the owner who knowingly maintains an inaccessible business is no worse off than the innocent owner who has no idea.
Knowledge Is Power
But the owner who knows can fix problems before a lawsuit is filed and avoid litigation costs altogether. If fixing the problems is not financially possible, just having a plan to fix them can reduce litigation costs. Some courts have even dismissed ADA lawsuits on the theory that there was no point in ordering a business owner to do what he was already planning to do.
For retail stores, restaurants, shopping centers, and most other businesses that serve the public, knowledge of ADA violations is undoubtedly good. Commissioning an ADA survey will allow the owner to plan for remediation and reduce or eliminate the risk and expense of litigation.
The same should be true for owners and managers of multifamily housing. The Fair Housing Act sets accessibility standards for these properties, and like the ADA, it is usually enforced by orders to fix problems and an award of attorneys’ fees to the plaintiff.
There is one controversial difference though. Under the ADA, the liability of the original property owner is not that much different than the liability of later owners. The original owner is responsible for the property meeting all of the ADA Standards, while later owners are only responsible for “barrier removal” that is “readily achievable.” However, it turns out that most courts say that any violation of the ADA Standards is a barrier that has to be removed, and anything that doesn’t put the business in bankruptcy can be readily achieved. As a practical matter, original and subsequent owners are in the same boat.
Under the Fair Housing Act, only the original owner of a property is responsible for making sure it complies with the applicable accessibility guidelines. As most courts read the statute, later owners cannot be made to bring the property into compliance with these guidelines. The most they can be compelled to do is allow the original owner access so the original owner can do the work. This is a burden, but much less of a burden than paying for all the work to be done. If the original owner is out of business, it is no burden at all.
There are, however, a few recent decisions in which a district court found that a later owner might be liable. Most of these decisions base later owner liability on some affiliation with the original owner, but one Florida district court has ruled that an unaffiliated later owner might be liable if it had “wrongful knowledge” that the property was not in compliance with the guidelines. The court never explained what “wrongful knowledge” might be, but some purchasers of multifamily housing are worried that if they know there is a problem they will have “wrongful knowledge” and be treated like an original owner. That would turn an inconvenience into a major financial liability.
So far this position has been taken only by the Florida court, with a court in Oklahoma reserving judgment on the matter. The Florida case is on appeal to the 11th Circuit U.S. Court of Appeals. In that appeal, the plaintiff has taken the position that knowledge is irrelevant and every owner has the same liability. If the 11th Circuit agrees, then the situation will be just like the ADA, where ignorance is no help but knowledge at least allows a plan to be made.
The defendant argues that knowledge is irrelevant and that later owners cannot be liable. If the 11th Circuit agrees, then there is no liability for subsequent owners regardless of knowledge. Only in the event that it adopts some middle position will knowledge be a bad thing.
Until the 11th Circuit rules, the best advice is that the devil you know is better than the devil you don’t know. The modest expense of a survey to find FHA violations will allow an existing owner to assess its risk and make plans based on that assessment. It will allow a prospective buyer to accurately assess the risk of ownership before that risk becomes a fact. In the world of accessibility litigation, what you don’t know almost always hurts you, and hoping that ignorance will protect you is a long shot gamble.
By: Richard Hunt (Commercial Investment Real Estate)
Click here to view source article.
 

Despite GDP growth stalling in Q1 due to the Polar Vortex, slower inventory accumulation and mildly lower exports, the economic recovery remains intact. The anemic performance of the US economy from January through March was aberrant, and the incoming employment, manufacturing and consumer spending data all point to an economic pickup. GDP growth the rest of the year should average 3%, with growth in Q2 closer to 3.25% as the economy rebounds from the harsh winter. In addition, reduced fiscal drag from DC, increased hiring and spending by state and local governments, and increased corporate spending on plant and equipment suggest we are finally entering a period of faster growth.
That said, economically all is not well. Wage growth remains anemic and while the unemployment rate is 6.3%, down from 10%, the fall is largely due to a decline in the labor force participation rate. The ranks of the long-term unemployed remain elevated, along with the number of those working part-time because they can’t find full time work. Add to that average overtime hours that are remarkably high and termination rates that are very low and what you have are employers very reluctant to hire. This situation cannot persist, and of late job creation numbers have been on the upswing. Therefore, net job creation will rise from 200,000/month, where it has been for the past year, to 220,000 or 225,000 by year end and unemployment will probably fall to 6.1%. I expect wage growth to start picking up steam in 2015.
The biggest drag on the 2014 economy is housing. After a promising first half of 2013, the housing market is, at best, flat. While rising interest rates and home prices, a lack of inventory and lots, shortages of materials and labor, and a lack of credit and first-time buyers play a part, weak household formation is the main culprit. After averaging over 1.2 million in the years prior to the Great Recession, household formations have been averaging 500,000 since the end of the recession. The good news – household formation will rise now that all eight million jobs lost during the recession have been finally made up. We are no longer making up lost ground. Because of this, new single-family construction activity in 2014 will reach 700,000, with multifamily adding 350,000, while existing home sales should be down slightly from last year.
As for inflation, it’s benign. No matter how measured, there is no inflation to speak of in the US. Commodity prices will remain well-behaved given weak demand due to economic slowing in China and weak growth in Europe and the developing nations. Absent some sort of geopolitical crisis, energy prices will remain where they are thanks to record US oil production. As a result, expect tapering to end in November and for the Federal Reserve to begin raising short-term interest rates by mid-2015. However, long-term rates have bottomed and 10-yr Treasuries will end the year at about 3% as the 2014 economy steadily strengthens.
In short, the 2014 economy is improving and Q1 was a speed bump. Long term rates will rise, short-term rates will remain unchanged, and housing will limp into 2015, with prices rising slightly. Most critically, household formation will strengthen and corporate, state and local government spending will rise. Lastly, the likelihood of a recession during the next six months is virtually zero.
Have a wonderful summer and see you in August! (Remember, I will not be writing an article in July).
By: Elliot Eisenberg, Ph.D (GraphsandLaughs, LLC)
Click here to view source article.
Click here to view author’s website.

Commercial fundamentals continued to strengthen in REALTOR® markets, as rental rates increased and demand for space accelerated during the first quarter. Commercial leasing rose 5.0 percent over the fourth quarter 2013, following a moderate 0.4 percent rise the prior quarter. On the supply side, new construction showed a similar acceleration, gaining 4.0 percent in the first quarter 2014, on the heels of a 2.0 percent increase last quarter.

Vacancies declined for all property types, except multifamily buildings. Office vacancies declined 90 basis points, to 16.7 percent, while industrial availability declined 150 basis points, to 13.1 percent. Multifamily vacancy reached 7.4 percent, an 80 basis point advance. Retail availability declined 190 basis points to 14.2 percent. REALTORS® expect inventory availability to remain flat over the next 12 months.

With decreasing vacancies, landlords were in a stronger position, and provided fewer rent concessions. Rent concessions declined 4.0 percent on a quarterly basis. The national average tenant improvement allowance was $4,878 per lease in the first quarter 2014.

2014.Q1 Vacancy Rates
Office	16.7%
Industrial	13.1%
Retail	14.2%
Multifamily	7.4%
Hotel	18.6%

Average rental rates rose 2.0 percent during the first quarter, following a 0.3 gain percent during the fourth quarter 2013. In terms of space requirements, tenant demand in the 5,000 square feet and below category accounted for 75.0 percent of leased properties. At a more granular level, demand for space under 2,500 feet comprised 42.0 percent of lease agreements. Lease terms remained steady, with 36-month and 60-month leases capturing 62.0 percent of the market.

Note: Vacancy rate data in this report comes from a national survey of REALTORS® who identify themselves as commercial practitioners. The data does not match the historical data used to generate NAR’s Commercial Real Estate Outlook, which is sourced from Reis, Inc.

By: George Ratiu, Economist Commentaries

Click here to view source article.