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.
• 7 Bold Commercial Real Estate Predictions by Robin Micheli of CNBC.
“Over the next 25 years, say Linneman and other key players in the industry, commercial real estate will be buffeted by changes in demographics, technology, globalization, economic and environmental realities, and a host of other trends. Some pieces of the trillion-dollar global industry will adapt; others will fall away. It will still be a cyclical business, but no matter how it changes, commercial real estate is expected to be thriving in 2039.”
• Wealthy Families See Attractive Opportunities in Commercial Real Estate by Elaine Misonzhnik of Wealth Management.com.
“Overall, the amount of capital RMA has under management has jumped from a little more than $800 million in 2007 to $1 billion today, an increase of 25 percent. That reflects a broader trend in wealthy private investors’ view of real estate. A survey completed this February by Morgan Stanley’s wealth management unit found that 77 percent of investors with $100,000 or more in assets now have a direct stake in real estate properties, while another 34 percent own REIT stocks. That makes real estate the most popular alternative asset class out there, with only 34 percent of surveyed investors owning the next most popular alternative asset, collectibles.”
• When Selling Your Self-Storage Facility, Timing Is Critical to Maximize Investment Return by Ben Vestal of Inside Self-Storage.
“Real estate prices have been gradually increasing over the last several years, and self-storage has continued to be the shining star of ‘niche’ real estate sectors. In these very optimistic times, many facility owners are giving some thought to selling their property rather than waiting out the market. Trying to squeeze out every last penny comes with the risk of going on the always bumpy ride of the next real estate cycle.”
• A Slow Move Toward Potential Oversupply by Jay Denton for Multifamily Executive Magazine.
“What’s also missing in today’s market is the home-buying frenzy that took place a decade ago. During the early to mid-2000s, enticements from ‘no money down’ to low interest rates were dangled before residents, prompting them to forsake renting for owning. Thanks to the subprime mortgage collapse, people are more skeptical about home ownership.
Even with the differences between today’s apartment market trends and what took place more than 10 years ago, there is some reason for concern. It’s true that permitting for projects containing five and more units dropped 13 percent from December 2013 to January 2014, a blip mainly due to weather. But permitting for the five-plus projects actually increased by 2.7 percent in a year-over-year comparison.”
• Shopping Center Spin-Offs Driven by 'Pure-Play' REIT Craze by Randyl Drummer of CoStar Group.
“Simon on Monday announced progress towards the spinoff of Washington Prime Group, filling four senior management positions and four independent director slots on the board. Simon named Mark Ordan CEO of the proposed company in February.
Simon Property's strategy with the spinoff is expected to occur in the second quarter and have an enterprise value of about $6 billion. In doing so, Simon said it hopes to create value by focusing on operational efficiency within a smaller group of assets. Washington Prime Group expected to own or have an interest in 54 strip centers and 44 malls in 23 states.”