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.
• REIT Returns Outpace Gains in Broader Market During First Quarter by Sarah Borchersen-Keto of REIT.com.
“Returns on equity REITs far outpaced gains seen in the broader market during the first quarter of 2014, and analysts expect solid fundamentals to continue to support the sector.
Total returns for the FTSE NAREIT Equity REITs Index gained just under 10 percent in the first quarter, compared with the 1.8 percent gain seen in the S&P 500 Index in the same period. Gains for the FTSE NAREIT All REITs Index stood at 8.6 percent in the first quarter.”
• Let’s Go Offline: E-tailers Launch Brick-and-Mortar Stores to Drive Sales by REBusinessOnline.com.
“While retailers are expanding their web and mobile sites, and building strong logistics systems, e-tailers are now clamoring for physical space. There are benefits to physical retail space that can’t be imitated online with current technology, and these stores have unique qualities to capture consumers’ attention.
Online-offline stores typically showcase goods and offer consumers a unique experience that’s difficult to replicate by using sensory appeal and high-tech gadgets. Many retailers are doing it the right way.”
• Construction-to-Perm Market Continues to Heat Up by Lindsay Machak of Multifamily Executive.
“Developers have an array of construction-to-perm financing options on the menu, and they’re just as hungry as they were last year.
Michael Gigliotti, a director of debt placement for commercial real estate capital intermediary HFF, says there are growing options for a developer to tap into for specific deals. But Gigliotti, who works in New York for the Pittsburgh-based company, says each lender is keeping the lessons learned on the table and proceeding with caution.”
• Rising Steel Costs Affect Construction Prices Globally by Michael Gerrity of World Property Channel.
"According to IBISWorld, steel prices are forecast to increase at an annualized rate of 2.2% over the next three years because of growing demand from the recovering construction industry and from high-growth real estate markets around the world like Shanghai, Beijing, Tokyo, Dubai, Abu Dhabi, New York and Miami. This increased demand is now putting pressure on pricing, leading to a rise in steel-related construction products.
As a primary input for many construction and industrial equipment products, steel exhibited a significant degree of price volatility in the midst of the Great Recession. As the construction and industrial industries tanked, demand for steel followed suit, with prices plunging 25.1 percent in 2009. Steel prices bounced back strongly the following two years; however, the recovery was short lived. As a result, IBISWorld expects steel prices to decline overall at an annualized rate of 3.8 percent from 2011 to 2014.”
• Follow the Money: What You Need to Get Hotel Financing by Sean Downey of Lodging Magazine.
“‘As their balance sheets return to health, banks are selectively looking for development financing opportunities,’ says Angelo Stambules, head of the capital markets group at Hunter Hotel Advisors. He notes that bank debt is still in the 60 to 65 percent range of construction financing. ‘On CMBS, you can get up to 80 percent provided you’re willing to incorporate a mezzanine loan into that deal.’ If you’re looking to quickly get in and secure an asset, then you may opt for a balance sheet loan.”