June 6, 2012

The Wednesday Wrap: June 6, 2012

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

Post Properties Hartman Simons Commercial Real Estate blog• “Apartment Upturn Lifts Post Properties” – by Dawn Wotapka of The Wall Street Journal.

What a difference a few years has made for apartment REIT Post Properties. In 2008, the firm unsuccessfully put itself up for sale and its shares dropped below $10. However, a focus on fixing its balance sheet and recent trends in homeownership have turned the company around, Wotakpa reports.

Under a weakened economy, millions of people were no longer willing or able to be homeowners, significantly boosting the rental market. Analysts and investors told Wotapka they’re confident the firm will continue to thrive when the housing market inevitably improves, in part because Post’s communities have the kinds of amenities that appeal to younger workers, who will continue to look to rent instead of own.

The good news for Post was that it had already started building new rental communities before many competitors decided to as well. “We expect they’re going to have their properties out of the ground faster and be able to capitalize on this upswing,” said Brendan Lee, a portfolio manager with TIAA-CREF’s Real Estate Securities Fund.

In the meantime, Post’s stock price is now near $50, and the firm carries one of the apartment sector’s lowest debt loads.

• “More Room for Ideas in a Smaller Office – by J. Michael Welton of The New York Times.

In an effort to reduce office space costs in a tighter economy, many companies are looking to reconfigure their offices to use less square footage. Often, this means reducing the number of private offices for a more open layout.

The result? According to Welton, companies are reporting not only a reduction in office expenses, but higher collaboration and efficiency among employees.

One example he cites is the ad agency 22squared in Atlanta, which previously had three floors of space, but decreased to two floors with the help of architecture firm Gensler and commercial real estate services developer Carter USA. Walls were torn down in favor of less private offices, and collaborative work areas now dot the space. Glass walls for writing were constructed, and natural light is utilized across the space. According to Gensler’s Workplace Performance Index, collaboration has increased by 22 percent at the firm since the renovation.

• “Fast Times for Student Housing – by Bendix Anderson for National Real Estate Investor.

States aren’t building new dorms fast enough for today’s rising college student population, says “Surging Student Populations Stress On-Campus Housing,” a new white paper from the National Multi-Housing Council (NMHC).

“That presents a huge opportunity for private developers,” said Jim Arbury, vice president of student housing for NMHC.

According to a report from College Planning & Management magazine, 42 percent of campus housing officers reported too little housing for students.

Anderson’s article cautions developers to not rush into the student-housing market but to make sure they are aiming for schools with strong demand and little supply available or in the pipeline.

• “Industrial Sector Is Silver Lining in Subpar May Jobs Report – by Matt Valley of REBusinessOnline.

Employment numbers for May overall were not as strong as expected, but last month showed a healthy increase in jobs in the industrial sector, Valley reports. The manufacturing, wholesale trade, and transportation and warehousing sectors added 63,500 jobs in May versus 3,600 in April.

“The surprising surge in jobs important to industrial real estate indicates the continued health of the manufacturing sector and the strong volume of goods flowing through corporate supply chains,” Bob Bach, chief economist for Grubb & Ellis, told Valley.

Overall, though, nonfarm payroll jobs counted 69,000 additions last month, way below the expected 150,000 jobs, pushing the unemployment rated up to 8.2 percent. Economists had predicted a slowdown in job creation, but not this quickly, said Victor Calanog, director of research for Reis.

May is now the fourth consecutive month in which payroll job growth has slowed.

• “Retail Recovery Boon for Atlanta Architects – by Jennifer LeClaire of GlobeSt.com.

Atlanta’s recovering job market is encouraging expansion by retailers and restaurants, LeClaire writes. According to Marcus & Millichap’s latest Retail Research Market Overview, retailers like Publix and Kroger are looking to open new stores, not just renovate existing ones, while Walmart is looking at introducing its smaller concept stores in the area. Restaurants like Dunkin’ Donuts, McAlister’s Deli, Taco Mac and Newk’s Express Café are also looking at expanding.

However, while Marcus & Millichap is very optimistic, Kevin Cantley, president and CEO of Cooper Carry, says the retail market is still relatively quiet. He says some property owners are looking at renovating shopping malls and building some new single-tenant retail sites as well.

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