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Build Smarter: Seven Ideas for Containing Construction Costs

Posted on June 29, 2018

By Clay Edwards

Though the real estate industry has seen a development rebound over the past decade, rising construction costs are weighing down the buoyant market. The persistent skilled labor shortage makes staffing and maintaining sites expensive. Materials are pricier, and now tariffs on steel, aluminum and lumber imports may only make the problem worse. At the same time, interest rate growth is converging with all these issues, making project financing more difficult to obtain and more costly.

recent survey of top construction lenders conducted by Construction Lender Risk Management Roundtable found that almost two-thirds said they saw projects running over budget either more often or much more often, and 87 percent said they saw projects running behind schedule, driving up the risk of project defaults and unfinished sites.

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General Assembly Winds Down, with Both Wins & Some Unfinished Business for Real Estate Industry

Posted June 27, 2018

As the North Carolina General Assembly winds down an unusually short Short Session in Raleigh, Realtors®, home builders, property managers and developers are looking at some legislative victories — along with some unfinished business.

First, the wins …

  • HB 948 – Building Code Regulatory Reform — Clarifies existing language allowing licensed architects and engineers to certify components or elements of a building, without the need for a city or county inspection; gives builders the ability to request inspections from a state program in the event a local inspection can’t be provided within 48 hours; and, provides greater flexibility to the State Qualifications Board to grant provisional licenses to code enforcement officials. Thanks to Representative Mark Brody for his leadership in sponsoring this bill!
    Status: On Governor’s Desk
  • SB 224 — Landlord Recovery Expenses — Allows landlords to recover legal fees and other out-of-pocket expenses in summary ejectment cases. The legislation was introduced in response to a recent Superior Court decision that required a landlord to reimburse a tenant nearly $200 in eviction expenses after he paid his past-due balance.
    Status: On Governor’s Desk
  • HB 826 – Clarify System Development Fees — Clarifies and streamlines the water/sewer capacity fee authority approved for local governments in 2017. Thanks to Senator Paul Newton for his work on this important legislation.
    Status: On Governor’s Desk
  • SB 99 — Appropriations Act of 2018 — The state budget includes a crucial provision that allows contractors who pay tax on materials covered under the Repair, Maintenance & Installation (RMI) sales tax provision to pay those taxes at the retail level and receive credit from the Department of Revenue.
    Status: Session Law 2018-5

Now the unfinished business …



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City Council Approves Budget with $50M in Affordable Housing Bonds

Posted on June 26, 2018

pproved a budget for FY 2018/2019 that includes an historic investment in Affordable Housing bonds — assuming voters approve them in a November referendum.

The $50 million in Affordable Housing Bonds are part of a $223 million bond package that also includes $118 million for streets and sidewalks, and $55 million for neighborhood improvements. Voters will be asked to approve the bonds on November 6th, and REBIC will partner with the Charlotte Regional REALTOR® Association and the Charlotte Chamber to advocate for their passage through a wide-ranging community campaign.

The budget approved by Council also includes the following:

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General Assembly Approves Building Code Reform Legislation

Posted on June 25, 2018

The North Carolina General Assembly approved last week's legislation that would make substantive reforms to local building permitting and inspection processes both Mecklenburg County and statewide.

HB 948 – ‘Building Code Regulatory Reform‘ was sponsored by Rep. Mark Brody (Union), and makes some very beneficial changes to the permitting and inspection process that would benefit both home builders and commercial developers. They include:

  • Clarifies existing language allowing a licensed architect/engineer to certify a component or element of a building, without the need for a city or county to inspect and approve that component.
  • Gives the State Department of Insurance the statutory authority to assign Marketplace Pool inspectors to conduct an inspection in the event the local officials cannot provide one within 2 business days of a request.
  • Provide greater flexibility for the State Q-Board to grant provisional licenses to Code Enforcement officials who are certified and in good standing in other states, which will help address the growing issue of inspector vacancies across North Carolina.

HB 948 is now awaiting Governor Cooper’s signature. Thanks to the North Carolina Home Builders Association (NCHBA) for their leadership on this critical piece of legislation.

Matthews Considering Small Area Plan Zoning Overlay Districts

Posted on June 22, 2018

The Matthews Town Board this week held a public hearing on a proposal to create a new Zoning Overlay District that would make the land use and development policies in three Small Area Plans enforceable on all new development, regardless of whether or not a rezoning is involved.

REBIC spoke against the proposal, as did a small group of property owners who shared our concerns about the restrictions the Overlay would place on their property. The Overlay would impact all parcels in three Small Area Plans adopted by the Town between 2014 and 2017:

While a Land Use Plan serves a policy guide, a zoning overlay district has the force of law on all property in its defined geography, and supersedes any zoning rights in the underlying district. The proposed Overlay District would incorporate policies ranging from building design to lot setbacks, and apply to both new development and redevelopment in all three Small Area Plan geographies.

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Recognition for Foundation-sponsored Research

Posted on June 21, 2018

Emil Malizia, Ph.D., former NAIOP Distinguished Fellow, was featured in Planning magazine's July 2017 "Research You Can Use" column for his NAIOP-sponsored study, Preferred Office Locations: Comparing Location Preferences and Performance of Office Space in CBDs, Suburban Vibrant Centers and Suburban Areas.

Dustin Read, Ph.D., former NAIOP Distinguished Fellow, received a prize for research based on Case Studies in Innovation District Planning and Development, a NAIOP report he authored in 2016. His paper, entitled "Innovation Districts at the Crossroads of the Entrepreneurial City and the Sustainable City," won best paper in the mixed-use development category at the 2017 American Real Estate Society meeting.

The Tech-enabled Future of CRE

Posted on June 20, 2018

NAIOP Research Foundation Visionaries and other members of the Foundation’s Industry Trends Task Force had the opportunity to participate in a discussion with IBM Vice President Frank Cuevas, who oversees the company’s global real estate strategy and operations, at the 2018 National Forums Symposium in New York City. Cuevas leads IBM’s global real estate portfolio, which encompasses nearly 80 million square feet worldwide, including data centers, research labs and office space, housing some 380,000 employees.

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Amenitize to Survive: Why traditional amenities are no longer enough

Posted on June 19, 2018

Years ago, the key to attracting and retaining a talented workforce was to relax the rules a bit: Casual Fridays, flexible work hours and teleworking were the employee perks du jour.

Now, the competition for top talent is driven by the demand for amenities of the less tangible type. The highly specialized labor force seeks a “more interactive, collaborative and socially vibrant office environment,” with “amenities that enliven the workplace and create the elusive concept of community,” according to NAIOP Research Foundation report, Activating Office Building Common Spaces for Competitive Advantage.

Click here to read more.

Welcome New NAIOP Charlotte Members

Posted on June 11, 2018

We are proud to introduce our new association members! The following is a list of individuals who have joined NAIOP Charlotte since March 15, 2018:

  • Jon Allen, Griffin Brothers Companies
  • Bita Asgari, Bank of America Merrill Lynch
  • Laura Beaver, Gensler
  • Michael Clark, Wells Fargo Bank
  • Robert Day, Kimley-Horn
  • Colee Haisten, Holder Construction Company
  • Brian Harrison, Greer Walker
  • Robert Jones, Crescent Communities, LLC
  • Anna Karageorgiou, Monroe-Union County Economic Development
  • Lisa Kincaid, Alfred Williams & Company
  • Alan Lewis, The Keith Corporation
  • Emily Reynolds, K&L Gates
  • Austin Watts, Kimley-Horn
  • Philip Wesbury, Builtech Services, LLC

Retirees Reshaping Residential

Posted June 18, 2018

Millennials are not the only demographic influencing the housing market; demographers estimate that the age 65-and-over population in the U.S. will double between 2010 and 2060, and this shift will most certainly impact real estate. According to the Curbed article, “The Changing Face of Retirement: Apartment Living, Active Lifestyles and Rural Homes,” retirees want different retirement amenities than previous generations. Traditional retirement communities that are isolated and offer not much more than golf are losing favor to urbanized independent living communities that have “clubhouses, fitness centers, lap pools, and walking trails.” Older adults do not want to be placed on “islands of old age,” the article states, and prefer age integration over segregation in their activities.

Southern US Cities Gaining Population

Posted on June 15, 2018

The U.S. Census’ newest population estimates reveal that eight out of the 15 U.S. cities with the largest population gains are in the south, with three of the top five located in Texas. San Antonio topped the list with an increase of just over 24,000 people between 2016 and 2017. Some of the other cities with the largest population gains were Phoenix, Arizona (24,000); Dallas, Texas (18,900); Fort Worth, Texas (18,700); Los Angeles, California (18,600); Seattle, Washington (17,500); and Charlotte, North Carolina (15,600). Fort Worth, Texas, surpassed Indianapolis, Indiana, to become the fifteenth-largest city in the U.S., with a population of 874,168. The list of the top 14 largest U.S. cities has not changed since 2016.

Tackling the Trucking Pain Point

Posted on June 14, 2018

Trucking moves about 70 percent of freight in the United States. The boom in e-commerce transactions has increased volume, which requires speed and accuracy in freight shipping. However, according to a C3 Solutions white paper, Leveling Up: Navigating the New Trucking Landscape, the trucking market has been at 100 percent capacity since 2004, resulting in driver shortages and rejected orders. Additionally, new regulations that address driver and food safety have further constrained delivery times. The report encourages trucking companies to seek solutions by diversifying their workforce (the industry is 94 percent male), and advises shippers to reduce driver time spent at drop-off facilities, use technology for better scheduling, and maintain good relationships with carriers. The researchers state autonomous or semi-autonomous trucks will help alleviate shortages, but implementation is still years away. The report concludes: “While the capacity crisis may be unprecedented, there are many operational improvements you can make to ease the pain it is causing your business. Making changes to adapt to the new [trucking] landscape should not be seen as an 'if', but rather a 'when'."

Cannabis Industrial REIT Revenue Up

Posted on June 13, 2018

Innovative Industrial Properties (IIP), a Maryland-based REIT specializing in the acquisition, ownership and management of industrial properties leased to medical cannabis facilities, reports in New Cannabis Ventures that its revenue jumped 107 percent in the first quarter of 2018. Rental revenues were approximately $2.7 million in the quarter, with a net income of $607,000. The company owns six properties located in Arizona, Maryland, Minnesota, New York and Pennsylvania totaling 706,000 rentable square feet, which were 100 percent leased at the end of Q1 with an average remaining lease term of 14.4 years. IIP recently acquired an 89,000 square foot medical-use cannabis cultivation and processing facility in a sale-leaseback transaction with a subsidiary of Vireo Health, Inc. Pennsylvania for “an aggregate consideration of $8.6 million (excluding transaction costs), which includes an approximately $2.8 million tenant improvement allowance available for additional improvements at the property.”

San Francisco Regulates Electric Scooters

Posted on June 12, 2018

The lack of regulation on dockless electric scooters has led to the devices being left on sidewalks and in front of building entrances, creating safety hazards in U.S. cities. To address this issue, San Francisco recently passed an ordinance establishing a regulation and permitting process for rentable scooters. Fortune reports that the San Francisco Municipal Transportation Agency has approved a one-year pilot program that will grant permits to five scooter companies. The permit cap “sets the stage for existing scooter operators Bird, Lime, and Spin—as well as host of other newcomers—to battle it for a chance to operate in the city.”

Top Office Obstacles: Parking and Technology

Posted on June 11, 2018

According to a new Cushman and Wakefield report, Space Matters: Key Office Trends and Metrics, two important trends in office space include technology amenities and parking. Common amenities – such as fitness centers and cost-effective food options – remain very important but there is ample opportunity for growth in how technology-related amenities are leveraged by occupiers and landlords. Despite advances in technology, researchers found many office building owners continue to struggle with some of the most basic offerings such as seamless, high-speed internet and cellular service.

In many urban submarkets, parking supply is a challenge and high prices have been forcing innovative solutions. According to the report, the predominant reason people utilize ride-sharing services such as Uber and Lyft is to avoid parking. In some cases, this has led owners to provide valet or shuttle services to connect offices with off-site parking, including garages in different parts of a city.

See NAIOP's Strategic Direction

Posted on June 8, 2018

NAIOP's 2018-2020 Strategic Plan will guide the activities of the association, focusing on five Strategic Drivers that center around NAIOP's mission and vision, including:

  • Talent Development 
  • Vetted Knowledge 
  • Policy & Regulation 
  • Chapter Relations 
  • NAIOP Resiliency

NAIOP members can access each Strategic Driver and view the initiatives for each below.

Mission 

What We Do

NAIOP provides advocacy, education and business opportunities by connecting members in a powerful North American network in the commercial real estate development and investment industry.

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Elevating Workplace Architecture and Design

Posted on June 7, 2018

By Marie Ruff

Office architecture and design have incorporated various popular influences in recent years: smart office tools, the open-ceiling industrial-chic aesthetic, and the “experiential office” trend, to name a few. The field has been slower, however, to adopt findings from positive psychology into office form and function.

Positive psychology, the scientific study of the condition and strengths that enable individuals and communities to thrive, provides tools that can be used to enhance worker’s well-being, said architect Charles First, AIA, CCM, CFM. In his recently published book, “A Place to be Happy: Linking Architecture & Positive Psychology,” First drew from his more than 30 years as a registered architect with experience in architecture, project management and owner-side office culture.  The book incorporates results from his own workplace studies, and along with findings from researchers across the U.S., establishes criteria for shaping spaces for the benefit of the people who work there.

Click here to read more.

New Login for www.NAIOP.org

Posted on June 7, 2018

With a new database launch, you now have a different member login.  This powerful new database will provide a more user-friendly experience for all members, making it easier for you to update your member profile, register for courses and conferences, and more.  Watch for an email with your new www.NAIOP.org website login and update your profile.

Note:  this does NOT effect your local NAIOP Charlotte login.

NAIOP NC Visits Raleigh

Posted on June 6, 2018

On May 30, 2018, the three chapters of NAIOP North Carolina, visited capitol hill to advocate.  A special thanks to Jason Moore (Charlotte Legislative Committee Chair) and Joe Padilla (REBIC) for helping coordinate visits with legislators to speak about the commercial real estate perspective.  While this is a short session (this means the time of the session is short, but also that new legislation cannot be introduced), it is of critical importance the state senators and representatives know who NAIOP is and what we represent. 

The key areas of discussion are around regulatory reform, economic development and tax reform.  To view the NAIOP NC 2018 Legislative Priorities, click here.  A special thanks goes to the following legislators that took their time to meet with us directly:

  • Chris Thomas
  • Jason Moore
  • George Lyles
  • Jim Gamble
  • Tim Robertson

   

New Office Space Demand Forecast: Signs of a Structural Shift

Posted on May 31, 2018

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q2 2018.

Key Takeaways

  • The U.S. office markets absorbed just 1.3 million square feet on a net basis in the first quarter of 2018, according to CBRE. 
  • This performance represents a significant conundrum, as every economic indicator used to forecast absorption performed at or above the forecast level. 
  • While the first quarter reading may be a one-time anomaly, it cannot be discounted that a structural shift in the office space market has or is occurring
  • The forecast for net absorption of office space has been reduced to 8.4 million square feet per quarter for the remaining three quarters of 2018.

On a positive note, many developers, lenders, and even tenants are not over-expanding or being overactive, meaning that there is a low likelihood that there will be excess space that they will need to vacate in a downturn.

View the Q2 2018 Forecast