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.
• Stores of Value by The Economist.
“The advent of e-commerce — which now accounts for 6.2 percent of all sales in America — has shaken up the commercial-property business almost as much as it has retailing. Real-estate funds have long relied on shopping centers, and rents at well-located malls with entertainment amenities have proved resilient. But second-tier facilities are floundering, as their tenants lose market share to online rivals with wider selections and lower prices. Even at successful bricks-and-mortar retailers, goods that once sat in the back of centrally located shops are now held in suburban warehouses, as those firms expand their home delivery and click-and-collect offerings.”
• Commercial Real Estate's Surprising Loan Shortfall by Joe Gose of Investor’s Business Daily.
“But CMBS activity so far [in 2014] is well short of meeting expectations. Issuances totaled $40 billion through the first half, a year-over-year drop of about $2 billion, according to the Commercial Real Estate Finance Council, a trade group representing lenders, bond investors and other CMBS industry participants. The dip came even as underwriting standards relaxed, partly due to competition from other lenders.
The disappointing performance is raising questions as to whether the market will be prepared to help refinance $350 billion in 10-year CMBS loans maturing through 2017. That's about 14% of the roughly $2.5 trillion in outstanding commercial real estate debt in the U.S.”
• Study Shows Substantial ROI on EPA’s Brownfield Cleanup Efforts by Jonathan H. Todd of Urban Land Magazine.
“Even with use of the most conservative assumptions — the lowest potential price increase (4.9 percent), a small radius around the cleanup site (2,040 meters [6,700 ft]), and only using property value gain for homes that sold within five years prior to the start of the cleanup — the program more than pays for itself. The authors found the program garnered ‘. . . an average benefit value of $3,917,192 per site, with a median of $2,117,982. Although the smallest of our benefits estimate is below the estimated cleanup costs (17 of 51 brownfields have estimated benefits less than [the estimated cleanup cost of] $600,000), the benefits for the majority of the cleaned sites still far exceed the cost.’”
• U.S. Apartment Market Vacancy Rates at 13-Year Lows by Michael Gerrity of World Property Channel.
“According to Freddie Mac's mid-year multifamily outlook, the U.S. multifamily market is very strong with vacancy rates at a 13-year low. Additionally, a large cohort of young adult renters and potential renters, coupled with continued existing demand for apartments is expected to meet the new supply of units being constructed.
Steve Guggenmos, Freddie Mac's senior director of multifamily investments and research said, ‘The multifamily market will continue to be favorable into 2015 as multifamily fundamentals move towards historical norms. The strong demand in this sector is partly due to employment gains, particularly among young adults.’”
• Breaking Down Walls by Mike Ratliff of Multi Housing News.
“College life has changed tremendously over the past half century. Institutions first had separate campuses for the opposite sexes, and then separate buildings. The trend moved to separate floors for men and women in the same dorm, to the current model of co-ed student housing. Progress never ceases, and we are now conquering the separate room model.
Gender neutral housing (or gender inclusive housing*), can be defined as housing options tailored for transgender students, non-gender-conforming students or students looking to room with members of the opposite sex. The number of schools offering such living arrangements has grown tremendously in the past five years, largely in response to the needs of transgender or transitioning students.”