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New Report: Demand for Industrial Space Will Remain Robust

Posted on August 30, 2017

By: Dr. Joshua Harris

Current Forecast: Third Quarter 2017 Report

The NAIOP Industrial Space Demand Forecast is based on a predictive model that forecasts demand for industrial space at the national level on a quarterly basis for eight consecutive quarters.

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Labor Shortages May Threaten Future CRE Development

Posted on August 29, 2017

The law of supply and demand hasn’t been repealed, and that’s causing commercial real estate construction prices to jump, especially in the mid-Atlantic, Texas and Louisiana.

The problem is there aren’t enough skilled laborers for all of the new construction builders would like to do. The scale of the problem increases for larger projects, which require more skill and teamwork. “There aren’t enough companies with the workforce required for such complex projects,” Perryman Construction CEO Angelo Perryman tells Forbes.

The article adds that: “Multifamily buildings from eight to 24 stories tall have increased in construction cost by $23.40 per SF from 2013 to 2016, according to a Fannie Mae study, and they are forecast to jump another $15 per SF in 2017.”

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JLL Reports on Office Market in Second Quarter

Posted on August 28, 2017

The office market absorbed 8.8 million square feet of space in the second quarter, according to a report from JLL. More than half of that growth came from two markets: Seattle-Bellevue and Dallas.

“There were 11.7 million square feet of new deliveries in Q2, which helped push vacancy up to 14.8 percent,” according to JLL’s latest outlook. “Even as demand stabilizes, asking rents for new product have risen 3.2 percent over the year and by 4.9 percent for CBD Class A space.”

“Moving into the second half of 2017 and into 2018, we expect the wave of new supply to deliver over the next six quarters will markedly alter the office landscape, increasing competition among landlords for tenants and stabilizing rents in the process,” the report states.

The STEM Gender Gap by State

Posted on August 21, 2017

By: Hazel Garcia

STEM careers, also known as careers involving Science, Technology, Engineering, and Math, are some of the best paying jobs available. Requiring only a Bachelor’s degree for most for most of them, they are one of the better education bargains as well. The high pay that comes with these jobs combined with the smaller amount of education required helps minimize student loan debt as well, which leads to a better quality of life.

In the past couple of decades, more women are entering STEM programs to get the education required for these high-paying positions. While the number of women entering STEM programs has grown considerably, it’s still a male-dominated industry. Depending on which state you live in, there might as many as 4.5 times more men working in STEM than women.

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Alternative Use for Industrial Space: The Marijuana Market

Posted on August 17, 2017

The co-founder of one of the nation's first funds to provide real estate acquisition and private debt servicing to cannabis-related ventures spoke at I.CON '17: Trends and Forecasts in June. Access the presentation and session recording on the marijuana market as it relates to industrial space, risks to landlords, structuring leases with marijuana tenants and more on the conference resources page. 

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CRE Lending Explodes in Second Quarter

Posted August 15, 2017

Loan originations for commercial and multifamily properties in the second quarter of 2017 jumped 20 percent from the second quarter of 2016, according to data from the Mortgage Bankers Association. Such loan originations were 28 percent higher than in the first quarter of the year.

“The second quarter saw a 91 percent year-over-year increase in the dollar volume of loans for industrial properties, a 33 percent increase for office properties, a 21 percent increase for multifamily properties, a 14 percent increase for hotel properties, a 7 percent increase in health care property loans, and a 9 percent decrease in retail property loans,” MBA reports.

It finds that the jump in loan originations comes despite a slowdown in the volume of sales transactions.

Investors Eying the Suburbs, Again

Posted August 14, 2017

As more millennials enter the workforce, property owners and operators are responding to their demands by reshaping office spaces. In “Special Report Suburban Office Challenging CBD,” Marcus & Millichap notes that many companies are moving to downtown locations in large cities. But the report adds that suburbs are adjusting as well, and explains how they’re being successful.

“Numerous suburban office locations have become increasingly competitive, however, by clustering in walkable villages featuring many of the amenities and services of urban environments,” the report notes. “These locations are generally more affordable than their urban counterparts while remaining attractive to employees seeking a variety of offerings that are within walking distance.”

The report finds that almost one-quarter of commercial real estate transactions in 2014 involved urban properties. “Since then, investors have once again begun to focus on suburban options, restraining downtown activity to 21.7 percent of 2016 office sales. The flow of capital reflects the convergence of opportunity, yield, and perceptions of future growth, and it appears investors’ attention is once again moving beyond the core.”

Building for Resiliency

Posted August 10, 2017

A recent report prepared for the Energy, Kresge and Barr Foundations finds that adoption of building resiliency standards – which provide guidance for preparing buildings, infrastructure, and other systems for natural or man-made hazards – isn’t as widespread as it could be.

“[M]ost of the standards are in pilot phases or with their first customers, and many organizations are involved. Moreover, interviews and focus group conducted for this project revealed that facilities managers, participants in the real estate sector, and coordinators of business associations and on-the-ground projects had little awareness of the standards,” the report finds.

Further, it says real estate industry associations aren’t doing enough to promote information about resilient building techniques or the existence of standards. “The National Institute for Building Sciences, RELi, FORTIFIED, and other entities are leading efforts to quantify the costs and benefits of resilience, which can support effective policy design and encourage investment. Such research efforts could lead to more targeted, performance-based outcomes for resilient buildings, and a clear articulation of resulting monetary returns,” the report concludes.

Millions of New Apartments Needed in the Decades Ahead

Posted on July 31, 2017

The U.S. will need to build some 4.6 million new apartments between now and 2030, according to a forecast by Hoyt Advisory Services. That’s about 328,000 per year. Hoyt carried out the research for the National Multifamily Housing Council and the National Apartment Association.

The forecast expects much of the growth to be in the South. “Southern states driven by economic growth, low costs and diversified demographic growth continue to lead demand forecasts with metropolitan markets in Texas and Florida ranked in 5 of the top 6 places,” it states.

The report notes that many things could change the forecast over the coming decades. For example, federal housing policies could be altered, and it’s impossible to predict exactly how many people will immigrate to the U.S. in the years ahead. Those factors, and others, could drive down the need for apartments.

Office Sector Booms in Second Quarter 2017

Posted on July 28, 2017

The U.S. office sector bounced back in the second quarter of 2017, absorbing 12.8 million square feet of space, according to Cushman & Wakefield. That’s more than twice the 6.3 million square feet taken up in the first quarter and the highest level since the third quarter of 2016. Cushman & Wakefield expects solid absorption in the near future as well.

“Even eight years into the cycle, office-using job creation remains healthy and solid in most markets,” the company’s chief economist Kevin Thorpe says. “Moreover, the leading indicators, such as job openings, suggest that business expansion will remain healthy, and by extension, so will demand for office space.”

Cushman & Wakefield finds that rents jumped to a new high nationally, and that construction is ramping up to meet demand. The company says “16.1 msf of new office space was completed across the U.S., the largest amount of space completed since the second quarter of 2009.”

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Improving the Human Experience Makes Workers Happier

Posted on July 13, 2017

Nearly three-quarters of employees say being happy at work is the key to a good work experience. But how can companies create a happier work environment?

JLL spent a year surveying workers at 40 companies in a dozen countries. More than 7,000 people responded. “Our research shows that a positive workplace experience leads to happiness and that, in turn, improves productivity and quality of life,” says John Forrest, JLL’s Global and Americas CEO, Corporate Solutions. “Companies should think about how their real estate offers the right locations, technology, and design in order to capture the best from their employees.”

The report zeros in on three major areas: engagement, empowerment, and fulfillment. It also makes specific recommendations, such as changing the layout of a workspace.

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Mecklenburg County Code Enforcement Releases Results of Customer Satisfaction Survey

Posted on June 26, 2017

During Tuesday's meeting of the Building Development Commission (BDC), Ed Gagnon, a consultant with Customer Service Solutions, Inc. provided a presentation detailing the results of a recently conducted customer satisfaction survey.  Responses indicated those surveyed were generally more pleased than they had been during a similar survey conducted in 2014.  However, the top areas of concern (ability to reach the right person, timeliness of permit request process, and timeliness of inspections) are the same as they were three years ago and appear to be more significant concerns.  For a summary of the results, please click the following link:

LUESA Customer Service Survey 2017

Commercial Real Estate Terms and Definitions

Posted June 15, 2017

The NAIOP Research Foundation has released a new glossary titled "Commercial Real Estate Terms and Definitions." It contains more than 220 terms relating to development, investment, leasing, office, industrial, retail and more.

New terms added this year include:

Bookmark this resource for future use and utilize other reports published by the Foundation. For the latest news about the Foundation, read the current newsletter or visit naiop.org/foundation.

View the Glossary

Office Space Demand Forecast: Second Quarter 2017

Posted May 30, 2017

The NAIOP Office Space Demand Forecast (released semiannually in Q2 and Q4) gives an efficient, accurate forecast of future and current conditions in the U.S. office real estate market for use by NAIOP members and the real estate community.

The current forecast calls for approximately 39.7 million square feet to be absorbed in 2017 – about 10 million square feet per quarter – similar to the 41.4 million square feet actually absorbed in 2016.

Read the Office Space Demand Forecast, Second Quarter 2017 online, and learn more about how you can support the work of the NAIOP Research Foundation.

View the Current Forecast

Sentiment Index: Growing Optimism for U.S. Commercial Real Estate Market Over Next 12 Months

Posted May 18, 2017
NAIOP has released the latest Sentiment Index based on a survey of member developers, owners and investors on whether their 12-month outlook for commercial real estate development is positive, neutral or negative.
 
The Spring 2016 Index is 0.56. The overall composite Index has increased for the first time in two years. The current survey indicates that there is more optimism in the CRE market than there was six months ago.
 
View graphs and observations for each of the 10 questions about jobs, the space markets, construction costs and the capital markets.
View the Report
To share your feedback or inquire about participating in the next Sentiment Index survey (Fall 2017), contact [email protected].