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.
• Talking Points by Diana Mosher of Multi-Housing News.
“It’s no secret that one of the advantages of being a renter by choice is not having to mow the lawn. But that doesn’t mean multifamily residents want to skip the outdoor experience altogether …
Urban infill sites, of course, have much less space for outdoor amenities, but the results are frequently just as impressive. ‘In New York City, as you well know, there isn’t much park space; we make up for that by creating outdoor amenity spaces for our residents, and that’s mainly the rooftops of the buildings,’ says Jason Gohari, director of leasing at Stonehenge, which owns and manages more than 25 properties in Manhattan, many of them luxury rentals.”
• I.CON Special Report: Robust Industrial Market Ahead for Much of North America by Paul Rosta of Commercial Property Executive.
“Through 2018, the PPR/CoStar forecast indicates that U.S. industrial rents will reach unprecedented levels. Meanwhile, although speculative construction has returned, today’s development pipeline of 110 million square feet is only about 60 percent of the typical 160 million to 170 million square feet of new product. These trends are also affecting asset values. Cap rates average about 7 percent overall, and in an increasing number of markets, rates for Class A industrial properties hover around 4 percent.”
• Length of Time To Dispose of CMBS REO Properties Increasing by Mark Heschmeyer of CoStar.
“REO hold times have increased to 15.8 months as of Dec. 31, 2013 from 12.9 months as of Dec. 31, 2012.
The growth in the number of REO assets stands in contrast to the continued pace of loan resolutions and broader commercial real estate market recovery driven by improving property performance and market liquidity.”
• Americans Aided by Fed Favoring Record REITs: Real Estate by Alexis Leondis and Charles Stein of Bloomberg.
“Sellers of exchange-traded funds that focus on commercial real estate should thank the U.S. Federal Reserve.
The Fed’s policy of keeping the federal funds rate near zero since 2008 while signaling that it won’t climb quickly has helped attract investors to real estate investment trust ETFs, because their payouts are better than investors can get from fixed income.”
• Balancing Act: Rehab Strategies That Won't Break the Bank by John Caulfield of Multifamily Executive.
“Property owners must balance their ambition to attract a better class of tenant with their trepidation that an extensive upgrade could overshoot what a market will bear in higher rents.
‘We’ve made the mistake in thinking improvements that [individually] boost rents by $50 would, if done together, increase rents by $150. They don’t,’ says Jerry Davis, COO of Colorado-based UDR. ‘If you blow through the [rent] ceiling of what a submarket will take, you’re not going to get the cumulative return.’”