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CL&LR Marks Important Week for NAIOP Federal Advocacy

Originally published on February 5, 2025, by Aquiles Suarez for NAIOP.

 

[Last week] NAIOP members from the U.S. and Canada attended NAIOP’s Chapter Leadership and Legislative Retreat (CL&LR) in Washington, D.C., with U.S. members scheduling meetings with their senators and representatives to educate elected officials on the issues important to the commercial real estate industry. Our annual CL&LR is an important event and is the kickoff to what is certain to be a consequential year for commercial real estate in terms of federal legislation. Just as important as the substance of the issues that will be at the center of the discussion during NAIOP’s Capitol Hill meetings are the relationships that exist and are fostered between elected representatives and their local NAIOP constituencies. The message coming from NAIOP members who are also constituents tends to leave a lasting impression on elected officials and their staff.

On their Hill visits, NAIOP members will bring up specific local issues and matters important for their senators and representatives to know regarding their markets. However, all chapters will also deliver a common message regarding the top legislative priorities at the federal level. This year, NAIOP’s federal legislative priorities, which will be a focus of our meetings, are:

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CRE Leaders: What’s on Our Minds for 2025

Originally published on February 10, 2025, by Brielle Scott for NAIOP.
Mark Zandi, chief economist at Moody’s Analytics, shared an overview of the macroeconomic environment and potential policies of the new administration on a recent webinar hosted by Marcus & Millichap. A panel discussion followed, and NAIOP President and CEO Marc Selvitelli joined Zandi, along with Jeffrey D. DeBoer, president and CEO of The Real Estate Roundtable; Hessam Nadji, president and CEO of Marcus & Millichap; and Sharon Wilson Géno, president, NMHC, to discuss key trends for commercial real estate.

 

Key takeaways from their discussion:

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    New Report: 2025 Economic Impacts of Commercial Real Estate

    Originally published in January 2025 by Brian Lewandowski, Adam Illig, Ethan Street, and Richard Wobbekind, Ph.D. by the NAIOP Research Foundation.

    The NAIOP Research Foundation has published the annual Economic Impacts of Commercial Real Estate, 2025 U.S. Edition, research study. The combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2024 resulted in direct expenditures of $898.5 billion and the following impacts on the U.S. economy:

    • Contributed $2.5 trillion to U.S. GDP.
    • Generated $862.5 billion in personal earnings.
    • Supported a total of 14.2 million jobs.

    Other highlights from the report:

    • Each $1 of construction spending generated a total value of $2.95 for the economy, reflecting the cumulative effects of the initial construction expenditures as they cycle.
    • The U.S. Census Bureau estimates that private data centers represented 28.7% of office construction value in 2024, an increase from 19.7% in 2023. This is the first year the organization has separated data center construction from financial and general office construction.
    • Industrial (manufacturing) and warehousing starts are down but still significantly above pre-pandemic levels. Much of the new online construction can be attributed to recent reshoring efforts in the U.S., including the CHIPS Act and Inflation Reduction Act.
    • Demand for retail space in 2024 remained strong and shifted toward smaller, more creative spaces. Successful retailers offered experiential shopping with a more personalized touch or other activities, such as dining, for consumers to engage in between shopping. While larger department stores struggled, retail as a whole proved resilient.
    • Some cities have experienced a larger recovery in office attendance than others. New York, for example, reached 82% utilization as of October 2024 and 91% for top-tier office buildings, indicative of a shift in demand to high-quality office properties. See data by State.
    Download the Report

    The Country’s Largest Urban Hot Spots Embrace Adaptive Reuse in Self-storage

    Originally published on January 9, 2025, by Maria Gatea for NAIOP.

    Self-storage construction has been on an upward trend since 2020 as the sector has become increasingly popular with American consumers, offering flexible solutions for life’s many transitions. While new construction has dominated the industry for decades, a significant shift is occurring: Existing industrial and retail buildings are being converted into self-storage facilities. This trend is optimizing urban real estate and meeting the growing demand for storage in densely populated areas.

    Conversions account for 9% of the country’s self-storage inventory

    Approximately 9% of the U.S.’s total self-storage inventory – nearly 191 million square feet – now consists of converted spaces, according to recent StorageCafe research. These conversions are spread across more than 2,300 facilities nationwide...

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    New Podcast Episode with Mark Rose, Chair and CEO, Avison Young

    Originally published on August 21, 2023, by the NAIOP Podcast: Inside CRE.

    Mark, meet Marc. Mark Rose, chair and CEO of Avison Young, joins Marc on the podcast for a discussion about building a workplace culture that matters; what his experience tells him about challenges in the current economic climate; the rumor he’s heard about the Fed; and why he “couldn’t be more optimistic” about the office sector. Mark shares recent data about longer-term leases that may surprise you, talks about actively mentoring 14 professionals, and why he believes office space will return to the days when it was a key part of a company brand. Recorded on August 2, 2023.

     

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    Advance Your Career with the National Forums Program

    Forums members engage in candid conversations about project challenges, business opportunities, and more in a confidential and non-competitive setting.

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    Meet Kim Snyder, 2023 NAIOP Chair

    Originally published on January 3, 2023 by NAIOP E-Newsletter.

    “NAIOP has done a great job of recruiting the best of the best in our business to get involved,” said Snyder in a message to NAIOP members. “It shows a commitment, it shows a dedication to our industry, that you don't see every day. So, I'm super excited about this coming year and working with all the volunteers and helping to guide the outcomes to a positive place.”

    Snyder is president, west region, for Prologis, Inc. His career spans more than 30 years in industrial real estate, and he is responsible for all Prologis development, acquisitions and operations in key markets including the Inland Empire, Los Angeles, Seattle and the San Francisco Bay Area.

    He has been a NAIOP member since 2004, has contributed as a member of the executive committee, and is a longtime member of NAIOP’s National Forums program. He is a member of the NAIOP Inland Empire and NAIOP SoCal chapters.

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    Can Industrial be a Good Neighbor in Residential Areas?

     

     

    Industrial

    By Trey Barrineau

    Industrial properties are often built near neighborhoods, but that isn’t always popular with the residents, who have legitimate concerns about noise, traffic and pollution from the increased volume of trucks and vans.

    A recent NAIOP online panel discussion examined how developers can work with local communities to address these worries through outreach and engagement, as well as with design and technological innovations.

    “Education is key to establishing that relationship early on,” said Sven Tustin, executive vice president with Conor Commercial, who moderated the panel. “The developer has to listen to concerns. Residents look at a site plan that shows 200 dock doors, and they assume that there will be 200 trucks coming in and out 24/7.”

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    CommercialEdge: Charlotte Office, National Sales and Vacancy Rates Up in Midyear 2022

    By Eliza Theiss 

    Two and a half years after the pandemic began, the short-term future for the office sector remains uncertain, with record vacancy rates adding to the industry’s woes, according to a recent office report from CommericalEdge. And as hybrid and work-from-home business models continue to take hold — and rising inflation rates further deter workers from returning to traditional office settings — the sector’s long-term prospects are also murky.

    Top Markets for Highest Listing Rate Growth

    The average full-service equivalent listing rate in the top 50 U.S. office markets was $37.58 per square foot in June — up two cents from the previous month, but down 2.6% from the previous year.

    With a 15.6% gain year-over-year (Y-o-Y), Charlotte, North Carolina, continued to lead the market in price growth, increasing its average full-service equivalent listing fee to $33.45 per square foot. Prices in this market grew at progressively faster rates for the fourth straight month.

    Similarly, Miami office space ($47.23/square foot) had a gain of 8.4% over the previous year and continued to be one of the fastest-appreciating office markets. But Boston still outperformed it with a 12% increase, thanks to the city’s thriving life sciences industry.

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    Mitigating Environmental Risks in Life Science Leases

    Dangerous chemicals and infectious diseases are among the many hazardous materials that are handled inside life science facilities. Getty Images
    By Michael Pollack

    A lot of hazardous material passes through these facilities, so caution is necessary.

    Life science industries span a range of uses — clinical research and trials; biologics; medical devices; pharmaceuticals; vaccines research, development, manufacturing, and distribution; plant and animal technology; and veterinary products, to name just a few. Leases for life science facilities can present unique challenges and considerations for building owners. Besides the particular demands life science uses place on electrical capacity, HVAC, floor loads, and waste removal, the activities within these facilities can pose many other risks.

    Inherent in many life science facilities is the utilization, storage, and/or distribution of hazardous or toxic materials under applicable environmental laws. Of course, most common leases will contain standard indemnification clauses allocating responsibility to the tenant for losses resulting from its activities. 

    When it comes to environmental issues, though, there are unique concerns for owners of life science properties. These include the ecological indemnity the principal owners provide to their lender (which typically comes from a well-funded source other than the property owner). There’s also the strict liability imposed under federal law on anyone in the chain of title for additional cleanup costs, whether or not they caused the contamination. 

    Also, another lingering fact involves the owner would typically only have recourse from the tenant for a breach of the lease’s environmental restrictions.

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    What the Urban to Suburban Shift Means for the Office Sector

    Office

    By Marie Ruff

    Since the start of the pandemic, sleepy small towns and suburbs have taken on new luster as people have migrated en masse from the urban core, drawn by the lower cost of living and with the flexibility afforded by increased remote work options. Will this be the new normal, or will people move back to the major metropolises once we put the pandemic behind us? What does it mean for office real estate in the short and long term?

    In a recent NAIOP webinar, experts from Marcus & Millichap shared their research and insights into how these trends are shaping the investment landscape for urban and suburban office spaces. They began by examining the broader economic context underlying the urban to suburban shift before discussing recent office sale trends, the impact of demographics and what’s ahead for this sector.

    U.S. Office Supply and Demand Trends

    Office vacancy rates have been elevated since the onset of the pandemic; however, office rate absorption has also been positive for five consecutive quarters. “Although it is soft, it is not as soft as some people perceive,” said John Chang, senior vice president, national director research services, Marcus & Millichap. There was only a brief period of net negative office space absorption in 2020 and have been making a recovery, albeit sometimes slowly, since.

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    Industrial Space Demand Forecast, Third Quarter 2022

    NAIOP research

    By: Hany Guirguis, Ph.D., Manhattan College and Michael J. Seiler, DBA, William & Mary

    Amid lower pressure on global supply chains, increasing inventory carrying costs, a cooling economy and a decrease in the rate of e-commerce expansion, retailers and logistics firms have slowed the rate at which they acquired additional industrial space this year. Net absorption of industrial space in the first two quarters of 2022 was 151.2 million square feet, down sharply from 2021’s record pace but still notably higher than in prior years (see Figure 2). The authors expect the still-hot industrial market to cool, and they forecast that the net absorption rate will continue to decline until it returns to the pre-pandemic trend. Total net absorption of industrial space in the second half of 2022 is forecast to be 112.4 million square feet, and full-year absorption in 2023 is forecast to be 209.4 million square feet (see Figure 1 for quarterly projections).

    The Industrial Market

    Supply chain congestion eased during the first half of 2022, as illustrated by the decline in the Federal Reserve Bank of New York’s Global Supply Chain Pressure Index from 4.35 in December 2021 to 2.41 in June 2022. As a result, retailers and logistics firms have shown less interest in leasing or buying industrial space before it is needed, a trend that contributed to higher absorption in 2021. Amazon’s decision to substantially scale back its expansion plans is the most prominent example of this shift in demand for industrial space. Nonetheless, smaller e-commerce firms, and even traditional retailers, continue to lease more distribution space despite slowing e-commerce growth as more consumers return to shopping at bricks-and-mortar retail. Industrial vacancy rates remain historically low as the ability to supply new space continues to face physical and political limitations in land-constrained markets. These low vacancy rates continue to cause asking rents, and ultimately transaction prices, to increase. Premium prices are being paid for properties with soon-to-expire leases and even vacancies as they allow owners to lease out more space at record-high market rates.

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    Top Five US Metros for Life Sciences In 2022

    Life sciences

    TOP FIVE US METROS FOR LIFE SCIENCES IN 2022

    By 

    Growth in the life sciences sector has driven demand in recent years for both commercial real estate space and labor to accommodate this specialized sector. A new study by commercial real estate platform CommercialCafe set out to identify the best metros for life science companies in 2022 and assessed more than 40 metropolitan statistical areas (MSAs) in terms of regional talent pool and workforce; accessibility of local office markets; the degree of availability of existing dedicated property; as well as the state of the local pipeline aiming to expand local life sciences capacity.

    Boston took the number one spot on the list, with San Francisco in second place, then San Diego third, New York fourth, and Washington, D.C., rounding out the top five.

    A longtime “flagship market” for life sciences, the Boston metropolitan area remains a leader in the sector. The MSA stood out for several key indices scored in the ranking: Boston boasts the largest labor pool among the metros analyzed, as well as the largest life sciences real estate market — nearly 25 million square feet of existing dedicated property, of which just under 14 million square feet was LEED-certified space. What’s more, with an additional 23.8 million square feet of new life sciences developments in the pipeline — under construction, as well as in the planned and prospective stages — Boston seems firmly placed at number one for the foreseeable future.

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    The Unexpected Challenges (and Solutions) of Multilevel Warehouse Design

    Costco
    • By Russ Hazzard, Jonathan Chang, Development Magazine (photo of Vancouver, B.C. Costco by Raef Grohne)

    Experiences in Canada and Asia provide case studies for building these complex properties.

    Over the past 15 years, multilevel warehouses — particularly those used for retail purposes — have been a growing trend across Asia and, more recently, in the United States. However, some challenges accompany their design and construction that are not encountered in the traditional approach to large-format retail. With operational criteria at the top of the list, these challenges vary heavily based on several factors, including location, footprint, environment, jurisdictional requirements, and cultural and community influences.

    The increase in demand for and construction of multilevel warehouses has unearthed numerous unique considerations not present in traditional warehouse environments. These challenges — each intricate in their own right — have required creative solutions and careful programming to successfully bring each project to life.

    Parking and Vehicle Flow

    One of the most critical design challenges for vertical warehouses is the traffic flow of vehicles and the structure’s parking. While the goal is to keep the sales level on a single floor for ease of operations and the consumer’s shopping experience, parking for multilevel warehouses can reside either above or below grade. Both options have pros and cons: Below-grade parking requires excavation, which can increase costs and complications. However, it provides a solution for lot coverage or height restrictions in situations where those apply. Above-grade or rooftop parking is preferred as it saves both construction time and money.

    Customized resolutions to optimize vehicle traffic flow and increase ease of parking have also been employed, varying from warehouse to country to country. For example, in Sinjhuang, Taiwan, indication lights for open parking spaces are used to determine capacity at a glance. In Suzhou, China, car ramps at the entrance steer customers directly up to each floor, allowing them to bypass complete levels. Larger-than-regulation parking spaces — typically very compact in Asia — are also used, granting customers peace of mind. There is no need to worry about maneuvering around tightly packed vehicles in the garage. As an added benefit, large spaces also increase vehicle flow; running in and out of an area is completed in one move vs. two or three.

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    City Council Members Meet with NAIOP Charlotte for LWAL

    Last week, NAIOP members met with City Council Candidates Dimple Ajmera and Marjorie Molina to discuss important issues impacting Charlotte’s CRE industry.

    LWAL two

    The Lunch with a Leader series provides NAIOP Charlotte members an exclusive opportunity to meet and interact with key leaders in our community. Look for upcoming NAIOP Charlotte fall events here.

    LWAL one

    Construction Sites Build a Circular Economy

    Genesis Marina

     Phase 3 Real Estate Partners’ Genesis Marina, a 550,000-square-foot life science development south of San Francisco, is the nation’s first precertified TRUE zero-waste project. Photo courtesy of Phase 3 Real Estate Partners

     

    By NAIOP Development writer Alice Devine

     

    Zero-waste efforts attract greater attention, including a new certification program. 

    New buildings can create architecturally pleasing skylines and yet leave construction debris in their wakes. In fact, the U.S. Environmental Protection Agency estimates that construction and demolition debris accounts for more than twice the amount of generated municipal solid waste in the U.S. 

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    Class A Buildings Push Office Market Stabilization

    Office market vacancy rates kept surging for the 10th straight quarter to start 2022, according to the NAIOP Research Foundation. The group recently published its Office Space Demand Forecast for Q2 2022. You can read the full report here
    Office building
    The group boasted that Class A buildings are key in many parts of the country, bolstering net absorption rates in areas like the Sun Belt. These work spaces are key in brining in skilled employees. The group said "suburban markets and life sciences hubs are recovering better than the national average as more employers embrace a return to the office and the pandemic eases."

    Other key takeaways mentioned 

    • Leasing activity is up year over year, which signals that firms are more comfortable making longer-term commitments to office space. Property owners have been willing to offer greater tenant improvements to encourage signing, indicating that tenants still have the upper hand in lease negotiations. These signals indicate a move toward a more stable equilibrium as the office market finds its balance.
       
    • Given these trends and signs of a slowing – but still growing – economy, net office space absorption in the remaining three quarters of 2022 is forecast to be 46.9 million square feet, essentially unchanged from the previous forecast for these quarters (46.6 million square feet).
       
    • Total net absorption in 2023 is forecast to be 47.3 million square feet, with an additional 6.5 million square feet absorbed in the first quarter of 2024.

    Apply for NAIOP’s National Forums Program

    The National Forums program brings together industry professionals in select groups to share industry knowledge, develop successful business strategies and build strong relationships in a confidential and non-competitive setting. Learn more about this unique opportunity and apply for appointment today. 

    The Forums provide a unique opportunity for members to openly discuss project challenges, business opportunities and lessons-learned in a confidential and non-competitive setting. Over time, fellow members become a trusted circle of advisors.

    The National Forums are an excellent way to become involved, stay in touch and develop new connections with key industry leaders.

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    NAIOP NC Conference Moved to 2021

    We Can't Wait to See You in Pinehurst
    Thursday, March 25 - Friday, March 26, 2021

    In light of the coronavirus pandemic and the uncertainty about the meeting conditions for the remainder of the year, NAIOP NC is cancelling the 2020 NAIOP NC Conference originally scheduled for March 26-27, 2020 at Pinehurst Resort in Pinehurst. At the heart of this decision: we cannot in any way risk the health of our attendees by convening a large group and possibly creating an opportunity to transmit the virus back to member communities.
     
    We had an awesome conference scheduled for this year and are excited to carry over the conference to March 25-26, 2021 at Pinehurst Resort.
     
    Conference Registration
    What do you need to do with your existing conference registration? Absolutely nothing! We have transferred all registrations to our 2021 NAIOP NC Conference March 25-26, 2021. If for some reason you’re unable to make these dates or make a substitution, please email us at [email protected].
     
    Hotel Reservations
    If you reserved a room at Pinehurst Resort as part of the NAIOP NC block, the hotel cancelled your reservation and refunded your deposit. The room block for the 2021 NAIOP NC Conference will open soon.
     
    We look forward to seeing you at the 2021 NAIOP NC Conference!
     
    For questions and concerns contact NAIOP Piedmont Triad Chapter at [email protected] or 336-379-0603.
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    NAIOP Corporate Operations Remain Open

    Today, NAIOP President and CEO Thomas Bisacquino shared the following statement with NAIOP members regarding the operating status of the organization during the COVID-19 situation.

    The unprecedented COVID-19 situation is affecting every aspect of our businesses and lives. While NAIOP member benefits and services will not be impacted, the NAIOP Corporate office is adjusting our normal business practices to protect the health and well-being of our staff.

    Beginning Monday, March 16, NAIOP Corporate will operate on a virtual basis. Staff are completely reachable during regular business hours (8 a.m.-5 p.m. ET) via phone and email, which you can find on our Contact Us page.

    You can renew or modify your membership online, and you can communicate with a membership specialist by emailing [email protected].

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