October 10, 2012

The Wednesday Wrap: Oct. 10, 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.

Performance Slowed in Q3”
by Carisa Chappell of REIT.com.

Momentum in the apartment sector is slowing, and the office
and retail sectors are still performing sluggishly, according to a new
third-quarter report from Reis.

The national apartment vacancy rate saw its slowest
improvement since the recovery began, only dropping from 4.7 percent to 4.6
percent in the third quarter.

The weak labor market has impacted the apartment sector,
Ryan Severino of Reis told Chappell. Severino pointed out that job creation has
been concentrated in lower-wage occupations, a dynamic that is affecting the
ability of 20- to 34-year-olds, the drivers of apartment demand, to afford
higher rents.

The job market also is affecting the office sector, with
absorption rates and vacancy rates only improving slightly. The retail sector
stalled in the third quarter, with regional and super regional malls
outperforming neighborhood shopping centers, according to Severino.

Apartments Strengthen”
by Bendix Anderson for National Real Estate Investor.

Even as apartment growth slows, effective rents at Class-C
apartments are growing faster than those at Class-A and Class-B apartments,
according to a new report from Axiometrics.

“We call it the ‘filling-in’ effect,” said Jay Denton of
Axiometrics. “Now that occupancies are getting better, Class-Cs are getting
some pricing power.”

Average effective rents for Class-C apartments rose 4.1
percent over the last year; in Class-A apartments, they rose 3.7 percent.

Still, while class-C apartments did better in thriving
markets like Dallas, they remain weak in markets like Atlanta, Anderson noted.

Tests Same-Day Delivery”
by Stephanie Clifford of The New York Times.

Taking a cue from Amazon.com, Wal-Mart is testing same-day
delivery at a few of its locations, trying to combine the ease of online
ordering with the instant results of shopping in person, Clifford writes.

Wal-Mart’s more than 4,000 local stores, which can act as
distribution centers, put it at an advantage over other retailers in offering
same-day delivery, Clifford notes.

The tests are in addition to same-day grocery delivery that
the retailer has been testing in San Jose, Calif., and San Francisco.

Markets Are on the Mend, But Closing Deals Is No Easy Feat”
by Elaine
Misonzhnik of Retail Traffic.

Market conditions are improving in the Midwest, but landlords
and property investors still have to work extremely hard to close deals,
according to attendees at the ICSC Chicago Deal Making conference.

With limited new development and a slowly improving economy,
retailers are actively looking for new locations, according to Daniel Taub of
DLC Management Corp. But their interest is largely confined to Class-A space in
urban cores.

Memories of the recession also have landlords checking
prospective tenants’ financials more closely, according to Ginger L. Benz of
Cullinan Properties.

“Student Housing Goes Off Campus, Urban”
from Globe St.

David Adelman, president and CEO of Campus Apartments,
discusses student housing development during a recent National Multi Housing
Council conference. Adelman talked about public/private partnerships, issues
around financing and expected returns in student housing.

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