April 18, 2012

The Wednesday Wrap: April 18, 2012

Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Here are five stories that caught our eyes in recent days:

Hartman Simons Commercial Real Estate blog“Retail Sales Soar, Giving Life to Stocks” – by Don Lee of the Los Angeles Times. Talk about pleasant surprises. National retail sales rose by 0.8 percent in March, an increase that “far exceeded analysts’ forecasts,” according to Lee.

“The unseasonably warm winter weather appears to have played a role in the better-than-expected numbers,” Lee added. “Spending at home and garden centers last month surged 3 percent from February, and their sales were up a whopping 14.1 percent from March 2011. Sales of cars, clothes, electronics and home furnishings also grew robustly over the month.”

“Balancing Act: Lack of New Commercial Space Overcomes Softening Demand” – by Mark Heschmeyer of CoStar.com. Demand for commercial real estate space slowed in first-quarter 2012 but an ongoing lack of new supply meant that vacancy rates improved across all property types in the first three months of the year, Heschmeyer reports. Furthermore, rental rates “generally improved from prior quarters,” he wrote.

“We may not be out of the woods just yet, but the data we’ve compiled for the first quarter certainly demonstrates an ongoing recovery and points towards future growth,” Walter Page, director of research for CoStar’s Property and Portfolio Research division, told Heschmeyer. “While the retail recovery was less pronounced than in the office and warehouse sectors, we’re witnessing positive net absorption across the board.”

“Made in the USA Again: What Onshoring Means for Commercial Real Estate” – by David Bodamer and Elaine Misonzhnik of National Real Estate Investor. Politicians may understandably trumpet the trend of U.S. manufacturers bringing jobs back from overseas, but don’t expect a dramatic impact on the nation’s industrial sector any time soon, Bodamer and Misonzhnik report.

Onshoring “is not something companies or industries are doing wholesale,” Bodamer and Misonzhnik wrote. “Sectors that produce smaller goods that carry lower shipping costs — such as ones that produce microchips or circuit boards — will be less likely to consider onshoring. Low value-added sectors that rely on low-skilled labor won’t benefit as much either.”

The commercial real estate industry doesn’t expect the trend to increase in the near future, either. “I am a little skeptical of the government’s ability to encourage onshoring,” Robert Bach, senior vice president and chief economist for Grubb & Ellis, told National Real Estate Investor. “To the extent they can provide tax breaks or lower taxes, that could help.”

“Real-Estate Redux” – by Craig Karmin and Serena Ng of The Wall Street Journal. Here’s another sign the financial sector is on the mend: American International Group Inc. (AIG) is looking to begin investing again in commercial real estate. The company, which skirted death with the aid of a 2008 government bailout, “hasn’t set specific targets on the size of its future investments in real estate, but people familiar with the insurer say that eventually it will amount to hundreds of millions of dollars annually,” Karmin and Ng wrote.

For the immediate future, the firm appears set on investing in the apartment market.

“BGC Forms Newmark Grubb Knight Frank” – by Natalie Dolce of GlobeSt.com. Following the approval of a federal bankruptcy court, BGC Partners Inc. has completed its acquisition of Grubb & Ellis and is combining the firm with Newmark Knight Frank, which BGC purchased last October. The combined company will go by the name of Newmark Grubb Knight Frank.

“Newmark Knight Frank and Grubb & Ellis each have consistently ranked among the leading companies in the real estate industry, and now these two great brands have come together as an even more impressive competitive presence in the real estate marketplace,” said Michael Lehrman, global head of real estate at BGC, in a statement.

Connect with us and experience the difference