September 17, 2014

Wednesday Wrap: Sept. 17, 2014

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.

A Bigger Role For Banks In Commercial Real Estate Lending by Mary Ellen Biery of Forbes.

Key excerpt:

“Commercial real estate loans as a percentage of total loans and leases at U.S. banks have slowly increased since 2008. These loans now make up 24.68 percent of portfolios, compared to 19.55 percent as of March 2008, according to data from Sageworks Bank Information, a web-based data platform. Construction and land development loans were 5.14 percent of total loans and leases in the June-ended quarter, down from 8.88 percent in March 2008.”

 

• U.S. Hotel Development Up 13.5 Percent in August by World Property Channel.

Key excerpt:

“‘The Upscale and Upper Midscale segments continue their dominance of U.S. hotel room construction, accounting for over two-thirds of the industry total,’ said Bobby Bowers, senior VP of operations at STR. ‘August room construction increased by 40 percent or more versus the prior year across all STR Chain Scale segments except the Luxury (-22.7 percent) and the Economy (+5.3 percent) segments. With roughly one-half of final planning rooms in the Upscale and Upper Midscale segments, the two asset classes will likely continue leading U.S. construction activity in the foreseeable future.’”

 

What Overbuilding? Some Markets in Desperate Need of Supply by Lindsay Machak of Multifamily Executive.

Key excerpt:

“Although some metro areas may have a lot of new supply coming through the pipeline, others are in desperate need for housing, experts say.

Toby Bozzuto, president of the Bozzuto Group, believes overbuilding in the largest six gateway markets is a short-term threat, but isn’t killing development plans for his company.

‘A company like mine has to make decisions not based upon one week or one month or one year, but in five- to 10-year intervals,’ he says. ‘We are taking this moment in time to be slightly contrarian and actually look for opportunities with the thesis that it takes between one and two and three or four years to develop these projects.’”

 

High-Tech Demand Spilling Into Office Suburbs, Smaller Markets by Randyl Drummer of CoStar.

Key excerpt:

“Rents have taken a sharp turn upward as concessions have burned off in major CBD markets, according to CoStar's Midyear 2014 Office Review and Forecast. Charlotte, Atlanta and Detroit — which have all seen an influx of tech company expansion — are posting solid net absorption.

Premier suburban markets such as Houston, Phoenix, San Jose and Orange County logged very strong demand for office space, driven by technology and other growth industries, according to CoStar data.”

 

Fundamentally Speaking: Despite Disappointing Jobs Data, Economic Recovery on Track by Sarah Borchersen-Keto of REIT.com.

Key excerpt:

“If the August level of employment growth were to become a trend, Schnure observed, ‘then you would start to have some questions about the durability and vigor of this recovery.’ He added that the data have forced analysts to reassess their forecasts and to look elsewhere for signs that either contradict or confirm the August jobs data.

At this point, Schnure said, he sees more signs of strength than of weakness in the economy. While there have been some weak numbers, such a July retail sales data, ‘the other reports are pretty much on track.’”

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