WASHINGTON, D.C. – October 22, 2012 With the election only weeks away, many commercial real estate professionals are considering the current state of the market and searching for signs of recovery as they contemplate their final electoral decisions. According to historical data trends from BOMA International’s annual Experience Exchange Report ® EER, while market growth has been slow, income has increased and expenses have dropped, allowing these professionals to rest assured that commercial real estate is recovering and indeed better off now than it was four years ago.
via Is Commercial Real Estate Better Off Now Than Four Years Ago? EER Data Says “Yes We Are” (BOMA).
News Date: 06/12/2012
Tightening occupancy and increasing effective rents, especially among class B and C properties, have contributed to a 48.5 percent year-over-year increase in new multifamily construction permits, according to Axiometrics. Its April report also found that national effective rents are up 2.5 percent year to date.
Class C multifamily properties showed the most momentum, posting a 2.7 percent year-to-date increase in effective rent and an occupancy rate of 91.9 percent. Improvements in class C occupancy account for much of the 33-basis-point increase in occupancy across all multifamily property types from March to April, according to the report. Class B properties followed closely with 2.7 percent year-to-date growth, while class A effective rents increased nearly 2.5 percent. The U.S. surpassed its previous peak for national effective rents, but occupancy has not reached the 2000 peak of 95.7 percent.
via Class B and C Multifamily Rents Rise | CCIM Institute.
Although record sale prices of high-quality properties have occurred in some of the nation’s top markets over the past few months, most commercial properties still garner little to no investor interest. Bifurcation remains evident in the sales volume and prices of trophy properties versus other properties.
Even among institutional properties in the nation’s top metropolitan areas, there is a wide differential of return on capital investment. (See Exhibit 3.) Out of the nation’s top 44 markets, the five metro markets with the highest post-recession capital return averaged a 13.4 percent return over the past five quarters, according to NCREIF. However, the remaining 39 metros yielded a return of only 4.8 percent, for an average of 5.7 percent for all metros. This flight to quality by investors caused demand to increase in the best markets; thus, values for the best institutional markets have increased at a much faster rate than in secondary markets.
Unfortunately, the lack of demand in most secondary markets, along with the increased supply of distressed or foreclosed properties, has reduced property values in those areas. However, the pressure on institutional properties should prompt investors to move out on the risk spectrum to smaller properties and smaller markets. The movement of both these extremes is necessary in the real estate recovery process, and this trend will continue throughout 2011.
via The Risk Factor | CCIM Institute.
Since mid-2010, Master Lock, a manufacturer of padlocks and other security products, has brought 100 jobs back to Milwaukee that had previously been off-shored. Obama used the factory to discuss his Blueprint for an America Built to Last, which seeks to incentivize further creation of manufacturing jobs within the U.S. while removing deductions for shipping jobs overseas.
Other, larger examples dot the industrial landscape.
Japanese automaker Honda has plans to invest $98 million in its largest auto engine plant in Anna, Ohio. Heavy equipment manufacturer Caterpillar is opening an 850,000-sq.-ft. facility in Victoria, Texas, in the process of shifting production from Japan back to the U.S. In February, the firm announced it would also shutter a 62-year-old plant in London, Ontario that makes locomotives and move production to Muncie, Indiana.
via Made in the USA Again: What Onshoring Means for Commercial Real Estate.