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:
• “Pricewaterhouse: Atlanta Office Market Still in Recession” – by Douglas Sams of the Atlanta Business Chronicle. It should come as no surprise to hear the Atlanta office market is still struggling. However, you will be disappointed to hear the market’s funk could continue for nearly three more years.
As detailed by Sams, a new PricewaterhouseCoopers report says anemic job growth will prevent the Atlanta office market from recovering until the end of 2014. Still, investors are showing a noticeable interest in buying office properties in the area.
“The investment side of the office market demonstrated a rush of sales in the fourth quarter of 2011,” the report says. “Investor appetite increased as many believe now is the time to lock in a few bets on the leasing market's recovery.”
• “Profits for U.S. Hotels Will Surge, Says PKF” – by Matt Valley of ReBusinessOnline.com. Attendees of this week’s Hunter Hotel Investment Conference in Atlanta say the immediate future of the U.S. hotel industry is extremely bright. Mark Woodworth, president of PKF Hospitality Research, said during a conference presentation that U.S. hotels rented more rooms last year than ever before.
“By anybody’s definition, you would therefore say demand has fully recovered,” Woodworth said. “Other things have not, but the demand side of the equation has fallen into place.” With new supply limited because of a tight lending market, PKF says hotel profits will grow at an average annual rate of 10.3 percent through 2014, Valley writes.
• “Jump in Retail Sales Solidifies Recovery Momentum” – by Hessam Nadji of Marcus & Millichap’s Research Brief blog. A rise in February retail sales indicates the sector is set for a noticeable improvement in real estate performance. Total retail sales increased by 1.1 percent last month when compared to January, Nadji notes.
The overall retail vacancy rate declined 30 basis points to 9.7 percent in 2011 and is on pace to drop to 9.2 percent by the end of this year, Nadji writes. Still, certain economic factors could decrease consumer confidence, curb spending and send the sector’s fundamentals heading in the other direction.
“Numerous headwinds could constrain trade, spending and the pace of economic growth, most notably mounting tensions in the Middle East creating a spike in oil prices, as well as the cyclical weakness in the European economy,” Nadji writes.
• “The Smart Grid Is the Next Big Thing in Green Building. So Why Aren’t More Buildings Connecting?” – by Susan Piperato of National Real Estate Investor. Despite the abundant talk of building commercial properties with smaller environmental footprints, the overwhelming majority of building owners are not using smart grids and demand response (DR) systems, Piperato reports. A smart grid is a digital network that connects a utility with a user, and it communicates with a DR system to automatically adjust a building’s consumption based on supply conditions.
According to a recent survey by CoR Advisors, only 19 percent of buildings have a smart grid connection and a whopping 68 percent of building owners say they have no plans to connect to a smart grid system within the next five years. “No one wants to be a guinea pig,” John Bredehorst, executive vice president with WSP Flack+Kurtz’s New York office, told Piperato.
• “Growth Slowed in Metros Where 8 of 10 Americans Live” – by Frank Bass of Bloomberg BusinessWeek. About two-thirds of the largest U.S. metro areas experienced slower population growth from 2000 to 2009 than they did in the 1990s, a new report from the Brookings Institution says. Among the markets experiencing the biggest slowdown: Atlanta.
“The Brookings Institution’s Metropolitan Policy Program found the slowdown most pronounced in Southern and Western metro areas, especially in the suburbs of cities such as Denver, Atlanta, Miami, Salt Lake City and Las Vegas,” Bass writes.
The slowdown in these markets is largely due to the usual suspects: weak housing markets and poorly performing local economies, the Brookings Institution says.