Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Below are links to five stories that caught our eyes in recent days.
• In “Good” Suburbs, Apartment Investment Returns Match the Urban Core by Jay Parsons of Property Management Insider.
“Our view is that over the next few years, ‘good suburbs’ will outperform CBDs with better rent growth due to less supply pressure and equally strong demand tailwinds. Long term, if you assume reversion to the mean, the two groups could perform in line with each other but with less volatility in ‘good suburbs.’ The point, then, is that for institutional investors eager to expand investment options without adding risk, these ‘good suburbs’ are worth a deep look.”
• ULI—Healthy Real Estate Markets Through ’17 by Dees Stribling of Commercial Property Executive.
“The winning-est property types from 2015-17, according to the ULI survey, will be hospitality and industrial. For instance, hotel RevPAR is expected to grow an average of 5.3 percent annually over the three-year period, while industrial rents will be up 3.6 percent — both considerably higher than historic norms. Hotel occupancy rates are forecast to rise from 64.4 percent in 2014 to 65.6 percent in 2016 and ’17. Industrial availability rates are predicted to drop from 10.3 percent in 2014 to 9.6 percent for 2016 and ’17.”
• Net Lease: Alt Funding May Become Mainstream by Rayna Katz of Globe St.
“With an increased interest in 1031 exchanges, that evolution is starting to take place, contends Brad Watt, EVP, net lease investments, Behringer. ‘The combination of recovering real estate values, increased tax rates on investment income, and aging demographics have created heightened interest for 1031 exchanges. By utilizing a qualified 1031 structure, investors who invest in commercial real estate may be able to reap the multiple benefits of tax efficient income plus compounded wealth through tax deferral.’”
• U.S. Commercial Sector Starts 2015 on Positive Footing by Michael Gerrity of World Property Journal.
“‘Continued improvement in office vacancy will be dependent on the pace of hiring,’ said Jeffrey Havsy, Americas Chief Economist for CBRE. ‘We believe March's relatively weak job growth was a pause, but should that trend continue several markets with heavy construction activity could see a reversal in the recent trend toward lower vacancy.’”
• ICSC Survey Shows That Tax Refunds Could Be a Boon to Retail Spending in 2015 by the Center of Shopping.
“It’s tax season and Americans are scrambling to file before the deadline. The good news is that after the stress of sorting through forms and complicated deduction calculations, 66 percent of U.S. consumers expect to receive a tax refund this year, according to a consumer survey sponsored by the International Council of Shopping Centers (ICSC). These consumers were then asked how they plan to use their refunds. Of the possible options, spending this money on goods and services, including apparel, electronics and convenience items, was selected by 47 percent of consumers.”