NATIONAL REAL ESTATE INVESTOR
(MARCH 22, 2014) Excerpt
When we think of LEED, we typically think in terms of class-A office buildings in the CBDs of our nation’s top-tier cities, such as New York, Los Angeles or Chicago. But what about the vast stock of existing buildings outside of that profile? What are the sustainability options for class-B assets in the outskirts of St. Louis, or an existing multifamily property in Oklahoma City? Where do they fit within the relatively narrow spectrum of potential LEED ratings and programs?
The fact is that LEED certification fails to address our nation’s huge inventory of multifamily buildings. Neither does it allow for many assets that are not class-A or better.
In fact, our research shows that, of the total commercial real estate stock in the United States—roughly 84 billion sq. ft., according to CoStar, not counting specialty, sports and entertainment facilities—LEED certification addresses only 3 percent of the inventory. That essentially excludes something on the order of 81 billion sq. ft. nationwide and renders the program of no relevance to the vast majority of industry practitioners. LEED was and remains groundbreaking. But its scope is narrow and the math is inescapable.
via The New Age of Green: No Building Left Behind | Property Management content from National Real Estate Investor.
The U.S. apartment market continued to see robust growth in 2013, but investors are keeping a wary eye on looming changes going into 2014, including the impact from rising supply, rising interest rates and the prospects of restructuring the nation’s two biggest government-sponsored enterprises (GSE’s) Fannie Mae and Freddie Mac.
via CRE Industry Faces Dramatic Changes in Multifamily Supply, Financing Environment – CoStar Group.
When supply increases; demand decreases. Buyers should remain sensitive to overpaying for multifamily properties in low cap markets, as the market continues to turn.
Companies are aggressively tapping the public markets this year, but no industry is as gung-ho about selling stock as real estate.
Including IPOs, follow-on offerings and equity conversion deals, the real-estate sector has raised $29.3 billion this year, up more than 90% from the prior year and the highest volume on record through late May, according to Dealogic.
Real-estate investment trusts have been the biggest driver of activity.
Of the 83 deals that had priced, 79 were REITs, with equity REITs making up slightly more than half and mortgage REITs the remaining, according to the data provider.
via It’s a REIT Bonanza Out There: Equity Volumes at Record Rates – MoneyBeat – WSJ.
Apartment vacancy rates, now at a decade-low of 5.2 percent, never fell below 8 percent, even during the lowest point of the commercial property rout, according to data from Reis Inc. The office vacancy rate was 17.3 percent in the fourth quarter, while vacancies at shopping centers average 11 percent in the fourth quarter, unchanged from the previous three quarters.
“It’s a lot easier to hang your hat on something that’s experiencing good fundamentals where values are being supported than if somebody handed you a retail building that sits 60 or 70 percent occupied,” said Ryan Severino, senior economist at Reis.
via Recovery of Commercial Property Fueled by Apartments: Mortgages – Bloomberg.
In a press release issued yesterday by Walt Molony from the National Association of Realtors, the commercial real estate market there is a prediction that commercial markets will be depressed due to, “A sustained lack of credit and the economic slump.” Molony cited Chief Economist at the NAR, Lawrence Yun saying that,"’The credit crunch has especially hammered down some components of NAR‘s commercial leading indicator,’ he said. ‘A lack of commercial credit is a serious threat to the overall economy. The Federal Reserve needs to use the Term Asset-Backed Securities Loan Facility (TALF) to provide liquidity and support for commercial mortgage-backed securities.’"
Click below to read the entire press release:
Commercial Real Estate Activity Continuing To Decline
by Walt Molony from the National Association of Realtors.
I should note that the tightening of the commercial credit markets opens up opportunity in the form of equity financing. Those with access to equity financing will find unprecedented buying opportunities as cap rates rise and commercial property inventories continue to increase over the next 12 to 24 months.
Economic Crash of 2009: According to one Economist it will be Greater than Great Depression