Real Estate Research Corporation’s (RERC’s) investment conditions ratings for the institutional apartment and central business district (CBD) office sectors each jumped a full point during second quarter 2010, making them the two highest-rated property types that RERC surveys.
The findings are included in the RERC’s new summer report, Riding the Edge of Success.
The investment conditions ratings are based on a scale of 1 to 10, with 10 being higher and most favorable.
For the apartment sector the rating increased to 7.1 during second quarter 2010 from 6.1 during the first quarter. The investment conditions rating for the CBD office sector increased to 6.0 during the second quarter, up from 5.0 for the first quarter.
“These high ratings reflect the increased investment prospects we are seeing for commercial real estate in general,” said Ken Riggs, RERC president and CEO. “Institutional investors skittish about the slowing economy and the volatility and risk exhibited in the stock market are finding the diversification, stability, and higher absolute returns of the commercial real estate asset class increasingly attractive.”
Although the apartment sector, long-recognized as the commercial property type that generally possesses better risk-versus-return characteristics, has often presented an investment conditions rating higher than those for other property types RERC rates, it has not had a rating this high since second quarter 2001, when the rating was 7.4 on the same scale.
Basically, that means that apartment investments are proving to be safer bets during slowed economic times and are meeting the strategic initiatives of most investors.
“I wouldn’t say the apartment sector is ‘recession-proof,’ but it is the sector that is regarded as ‘most safe’ and also seems to garner the most demand when times are tough, whether it is in this recession or the last one,” said Riggs.
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Aug 23, 2010 10:26 AM, By Ben Johnson, NREI Contributor
Wednesday, September 15, 2010
Second-Quarter Loan Originations Flat Year Over Year
Commercial and multifamily mortgage loan originations in the second quarter were 1% higher than the same period a year ago and 35% higher than the first quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.
“Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to,” says Jamie Woodwell, MBA's vice president of commercial real estate research.
"Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."
The report shows that originations for life insurance companies and CMBS conduits increased dramatically on a percentage basis. Meanwhile, originations for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac fell by more than half from 2009 levels.
The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties. When compared with the second quarter of 2009, the increase included a 183% increase in loans for industrial properties; a 180% increase in loans for office properties; an 18% increase in loans for hotel properties; a 76% decrease in loans for health care properties; a 25% decrease in multifamily property loans, and a 9% decrease in retail property loans.
Among investor types, loans for conduits for CMBS saw an increase of 173% compared with last year's second quarter. There was also a 148% increase in loans for life insurance companies, and a 12% decrease in loans for commercial bank portfolios. The dollar volume of loans for Fannie Mae and Freddie Mac saw a decrease of 55%.
Among investor types, loans for conduits for CMBS saw an increase in loan volume of 106% compared with the first quarter; loans for life insurance companies saw an increase in loan volume of 57% compared with the first quarter; originations for GSEs increased 21% from the first quarter to the second quarter of 2010; and loans for commercial bank portfolios decreased by 2% during the same time span.
Compared with the first quarter, second-quarter originations for hotel properties saw a 405% increase. There was a 114% increase for industrial properties; a 107% increase for health care properties; a 56% increase for office properties; a 38% increase for multifamily properties; and an 11% decrease for retail properties.
Jul 29, 2010 10:46 AM, By NREI staff
“Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to,” says Jamie Woodwell, MBA's vice president of commercial real estate research.
"Life insurers, CMBS conduits and others are back in the market and lending, and rates are at extremely attractive levels. However, low volumes of property sales, depressed property values, stressed cash flows and modest loan maturities are all keeping borrowing to a minimum."
The report shows that originations for life insurance companies and CMBS conduits increased dramatically on a percentage basis. Meanwhile, originations for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac fell by more than half from 2009 levels.
The 1% overall increase in commercial/multifamily lending activity during the second quarter was driven by increases in originations for office and industrial properties. When compared with the second quarter of 2009, the increase included a 183% increase in loans for industrial properties; a 180% increase in loans for office properties; an 18% increase in loans for hotel properties; a 76% decrease in loans for health care properties; a 25% decrease in multifamily property loans, and a 9% decrease in retail property loans.
Among investor types, loans for conduits for CMBS saw an increase of 173% compared with last year's second quarter. There was also a 148% increase in loans for life insurance companies, and a 12% decrease in loans for commercial bank portfolios. The dollar volume of loans for Fannie Mae and Freddie Mac saw a decrease of 55%.
Among investor types, loans for conduits for CMBS saw an increase in loan volume of 106% compared with the first quarter; loans for life insurance companies saw an increase in loan volume of 57% compared with the first quarter; originations for GSEs increased 21% from the first quarter to the second quarter of 2010; and loans for commercial bank portfolios decreased by 2% during the same time span.
Compared with the first quarter, second-quarter originations for hotel properties saw a 405% increase. There was a 114% increase for industrial properties; a 107% increase for health care properties; a 56% increase for office properties; a 38% increase for multifamily properties; and an 11% decrease for retail properties.
Jul 29, 2010 10:46 AM, By NREI staff
Wednesday, September 1, 2010
Sperry Van Ness Announces $7.85MM Sale of Texas Skilled Nursing Facility
The sale was handled by Grant Edwards, National Director of Sperry Van Ness’s Healthcare Real Estate Team. Transactional support was provided by Jake Corrigan, Advisor with Sperry Van Ness Healthcare Real Estate Team and Steve Fithian, Managing Director of Sperry Van Ness / Visions Commercial in Fort Worth, Texas.
Commenting on the sale, Grant Edwards said, “As always, the Sperry Van Ness Healthcare Team utilized it considerable resources to fish for Buyers with a wide net, while at the same time preserving confidentiality throughout the process. And yet, this transaction showcased more specifically our ability to help structure complex transactions for the benefit of all parties. That’s another important advantage of our team’s adherence to a set of core covenants, which ensures a client-first approach to senior care brokerage.”
Tuesday, August 10, 2010
New Concepts are Back on the Agenda for Some Retailers
Landlords on the prowl for new tenants have reason for optimism.
Although vacancy rates in all retail property types continue to creep higher, retailers that were knocked down by the recession are pulling themselves off the floor and restarting the expansion pipeline. Moreover, there is a growing cadre of up-and-coming retailers that operate handfuls of stores today, but are looking to make the leap to becoming larger chains.
As a result, the attitude has changed a bit in leasing circles. Recently, most emerging and expanding retailers sold necessity products or were value oriented, says Doug Healey, senior vice president of leasing for the East Coast with the Macerich Co., a Santa Monica, Calif.-based regional mall REIT. But the tenants coming onto the scene now increasingly sell discretionary goods, Healey says.
For example, some retailers have succeeded by going after parents’ wallets with concepts aimed at preschoolers and tweens. Among these is the new Crazy 8 chain from the Gymboree Corp. and P.S. from Aeropostale from Aeropostale Inc.
Then there are concepts that might sell stuff for kids, but also offer relief for stressed-out parents. For instance, WONDER!, a new-to-market emporium that will sell everything anyone needs for a child under seven years of age, was originally conceived as a stress-free place where parents could do all of their shopping and grab a bite while their children run around an in-store playground.
Meanwhile, a much smaller, but relative in spirit concept, has emerged in the form of Little Monkey Bizness, a new chain of playgrounds that also sell gourmet coffee and snacks. Little Monkey Bizness recently signed leases for its seventh and eighth stores in Wheaton, Ill. and Tampa Bay, Fla.
Among the fastest growing categories in the next year or two will be fast-food operators that take spaces under 5,000 square feet, according to the June edition of a monthly retailer demand report put together by Rich Moore, an analyst with RBC Capital Markets, that includes data from Retail Lease Trac.
One such retailer is Freshii, a newcomer to the quick service sector that concentrates on fresh, healthy, custom-built menus. Freshii’s founder, Matthew Corrin, hopes to eventually have a North American fleet of at least 1,000 stores. The chain opened its first location in Toronto in 2005, but it’s already considering expanding worldwide. It currently operates stores in the U.S., Canada, Austria and Dubai. “If Subway has 30,000 [stores], I believe we can achieve 10 percent of that number,” Corrin says.
To continue reading, please clck the link.
Although vacancy rates in all retail property types continue to creep higher, retailers that were knocked down by the recession are pulling themselves off the floor and restarting the expansion pipeline. Moreover, there is a growing cadre of up-and-coming retailers that operate handfuls of stores today, but are looking to make the leap to becoming larger chains.
As a result, the attitude has changed a bit in leasing circles. Recently, most emerging and expanding retailers sold necessity products or were value oriented, says Doug Healey, senior vice president of leasing for the East Coast with the Macerich Co., a Santa Monica, Calif.-based regional mall REIT. But the tenants coming onto the scene now increasingly sell discretionary goods, Healey says.
For example, some retailers have succeeded by going after parents’ wallets with concepts aimed at preschoolers and tweens. Among these is the new Crazy 8 chain from the Gymboree Corp. and P.S. from Aeropostale from Aeropostale Inc.
Then there are concepts that might sell stuff for kids, but also offer relief for stressed-out parents. For instance, WONDER!, a new-to-market emporium that will sell everything anyone needs for a child under seven years of age, was originally conceived as a stress-free place where parents could do all of their shopping and grab a bite while their children run around an in-store playground.
Meanwhile, a much smaller, but relative in spirit concept, has emerged in the form of Little Monkey Bizness, a new chain of playgrounds that also sell gourmet coffee and snacks. Little Monkey Bizness recently signed leases for its seventh and eighth stores in Wheaton, Ill. and Tampa Bay, Fla.
Among the fastest growing categories in the next year or two will be fast-food operators that take spaces under 5,000 square feet, according to the June edition of a monthly retailer demand report put together by Rich Moore, an analyst with RBC Capital Markets, that includes data from Retail Lease Trac.
One such retailer is Freshii, a newcomer to the quick service sector that concentrates on fresh, healthy, custom-built menus. Freshii’s founder, Matthew Corrin, hopes to eventually have a North American fleet of at least 1,000 stores. The chain opened its first location in Toronto in 2005, but it’s already considering expanding worldwide. It currently operates stores in the U.S., Canada, Austria and Dubai. “If Subway has 30,000 [stores], I believe we can achieve 10 percent of that number,” Corrin says.
To continue reading, please clck the link.
Apartments Stage a Comeback as Renters Return in Surprising Numbers
After two years of rising vacancies and slumping rents, apartment owners have reason to be cheerier these days.
According to the latest survey of 169 markets across the U.S. by researcher Reis, the national apartment vacancy rate peaked at a record 8% in the fourth quarter of 2009 and remained unchanged in the first quarter of 2010. Asking rents increased by a scant 0.1% in the first quarter, but that was the first gain since the third quarter of 2008.
Some 20,000 apartment units were absorbed in the first quarter of 2010, which is the strongest first-quarter showing in the past 10 years, according to Victor Calanog, director of research at Reis. “The multifamily market appears to be on the cusp of recovery. If so, pricing and transaction activity will rise and the window of opportunity for landing good deals may close soon,” says Calanog.
Rental demand drove the occupancy rate for downtown Chicago apartments higher in the first quarter, to 93.6% from 91.4% in the fourth quarter of 2009, according to consulting firm Appraisal Research Counselors.
The latest results surprised long-time industry watchers, including Robert Bach, senior vice president and chief economist at Grubb & Ellis. However, Bach is concerned about the abundant supply of empty condos and single-family homes that are entering the rental market in hard-hit areas like South Florida and Phoenix. He believes they are casting a shadow over traditional apartment communities, and siphoning off potential renters.
“I’m surprised the apartment fundamentals have bottomed out this quickly, but as long as there are these shadow units out there, then it’s going to be interesting to see if the apartment market can recover independent of that,” says Bach.
The rest of 2010 will be a telling barometer, notes Calanog. “The next two quarters will offer critical perspective as to whether positive rent growth is sustainable.” Calanog does expect the vacancy rate to improve over the next five years, dropping to 6.6% in 2014.
Unemployment stings young Americans
Certainly one of the most closely watched keys to the short-term apartment market turnaround is the jobs picture. According to the U.S. Bureau of Labor Statistics, the U.S. economy added 290,000 jobs in April, the largest gain since March 2006. That followed a revised 230,000 increase in March. Still, the overall unemployment rate rose from 9.7% in March to 9.9% in April, a sign that more Americans are starting to look for jobs.
According to some observers, danger lurks at the deep end of the renter pool. The primary renter market base, people aged 20-30, comprises 70% of the total U.S. apartment market, and that segment is recovering more slowly than others.
As an example, the unemployment rate among Americans aged 20-24 was 15.8% in March, but jumped to 17.2% in April. “The unemployment rate for young people has climbed faster than it has for the labor market in general,” says Sam Chandan, global chief economist and executive vice present at researcher Real Capital Analytics.
According to Chandan, the rental pool is not being supported by new entrants of young people graduating with jobs. “We need job growth among the younger age groups to drive apartment demand. There’s got to be some replacement there.”
Compounding the situation, one of the biggest challenges to recovery in this market is older, more skilled workers who are willing to take lower paying jobs just to find work. Typically this segment is more inclined to own rather than rent. “This is an issue that’s going to weigh on the performance of the apartment market,” says Chandan.
Jun 23, 2010 7:56 AM, By Ben Johnson, NREI Contributing Writer
According to the latest survey of 169 markets across the U.S. by researcher Reis, the national apartment vacancy rate peaked at a record 8% in the fourth quarter of 2009 and remained unchanged in the first quarter of 2010. Asking rents increased by a scant 0.1% in the first quarter, but that was the first gain since the third quarter of 2008.
Some 20,000 apartment units were absorbed in the first quarter of 2010, which is the strongest first-quarter showing in the past 10 years, according to Victor Calanog, director of research at Reis. “The multifamily market appears to be on the cusp of recovery. If so, pricing and transaction activity will rise and the window of opportunity for landing good deals may close soon,” says Calanog.
Rental demand drove the occupancy rate for downtown Chicago apartments higher in the first quarter, to 93.6% from 91.4% in the fourth quarter of 2009, according to consulting firm Appraisal Research Counselors.
The latest results surprised long-time industry watchers, including Robert Bach, senior vice president and chief economist at Grubb & Ellis. However, Bach is concerned about the abundant supply of empty condos and single-family homes that are entering the rental market in hard-hit areas like South Florida and Phoenix. He believes they are casting a shadow over traditional apartment communities, and siphoning off potential renters.
“I’m surprised the apartment fundamentals have bottomed out this quickly, but as long as there are these shadow units out there, then it’s going to be interesting to see if the apartment market can recover independent of that,” says Bach.
The rest of 2010 will be a telling barometer, notes Calanog. “The next two quarters will offer critical perspective as to whether positive rent growth is sustainable.” Calanog does expect the vacancy rate to improve over the next five years, dropping to 6.6% in 2014.
Unemployment stings young Americans
Certainly one of the most closely watched keys to the short-term apartment market turnaround is the jobs picture. According to the U.S. Bureau of Labor Statistics, the U.S. economy added 290,000 jobs in April, the largest gain since March 2006. That followed a revised 230,000 increase in March. Still, the overall unemployment rate rose from 9.7% in March to 9.9% in April, a sign that more Americans are starting to look for jobs.
According to some observers, danger lurks at the deep end of the renter pool. The primary renter market base, people aged 20-30, comprises 70% of the total U.S. apartment market, and that segment is recovering more slowly than others.
As an example, the unemployment rate among Americans aged 20-24 was 15.8% in March, but jumped to 17.2% in April. “The unemployment rate for young people has climbed faster than it has for the labor market in general,” says Sam Chandan, global chief economist and executive vice present at researcher Real Capital Analytics.
According to Chandan, the rental pool is not being supported by new entrants of young people graduating with jobs. “We need job growth among the younger age groups to drive apartment demand. There’s got to be some replacement there.”
Compounding the situation, one of the biggest challenges to recovery in this market is older, more skilled workers who are willing to take lower paying jobs just to find work. Typically this segment is more inclined to own rather than rent. “This is an issue that’s going to weigh on the performance of the apartment market,” says Chandan.
Jun 23, 2010 7:56 AM, By Ben Johnson, NREI Contributing Writer
2010 National Multi Housing Council's Top 50
National Real Estate Investor is pleased to present the 21st annual NMHC 50, the National Multi Housing Council’s authoritative ranking of the nation’s 50 largest apartment owners and 50 largest apartment managers. For more than two decades, the NMHC 50 has been a key resource for industry observers. The top owner and manager lists, and the analysis that accompanies them, have provided the only historical benchmark against which to measure industry trends and concentration.
Download the Full 2010 National Multi Housing Councel's Top 50
Apr 12, 2010 5:33 PM - National Real Estate Investor
Download the Full 2010 National Multi Housing Councel's Top 50
Apr 12, 2010 5:33 PM - National Real Estate Investor
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