Monthly Archives

August 2013

Real Estate Trends, Retail Real Estate, Think Outside The Box

Storefront Links Short-Term Space with Pop-Up Shops

Storefront, a San Francisco-based startup, describes itself as a marketplace for short-term retail space. The company helps small businesses find retail space for temporary “pop up shops,” typically for periods of a few weeks. Storefront facilitates the process by listing available short-term spaces, a flexible booking system, and a streamlined legal process with standardized lease and insurance agreements.

Storefront does not charge commission on their lease transactions. Instead, the company’s revenue comes from referral fees charged on purchases that it facilitates after space has been leased, such as for fixtures, signage, insurance, and temporary staff.

Much of Storefront’s success has come through providing temporary space for established online retailers. Their reasons for establishing short-term “offline” stores vary. Some  use temporary stores as a way to increase connectivity with customers and build their brands. Others use temporary stores to test new markets without the long-term commitments and expenses associated with a traditional lease.

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Storefront founders and Minnesota natives Erik Eliason and Tristan Pollock were motivated to start the company after learning of friends’ difficulties in transitioning from online retail sales to brick and mortar locations. In an interview with Inc., Eliason and Pollock noted that despite the fast growth in online retailing, offline retail still has advantages such as tactile experiences and the opportunity to build deeper relationships with customers.

Since starting up in December of 2012, Storefront has already brokered over 3 million square feet of space for more than one hundred tenants. Earlier this summer, the company raised $1.6 million in venture capital to fund expansion. Storefront recently launched in New York City where it already has 100 spaces listed. Additional expansion are planned in the future. According to Eliason, Storefront hopes to “make opening an offline store as easy as an online store. That’s our overarching goal.”

Economics, Industry News, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate, UST Real Estate in the News

St. Thomas Real Estate Housing Report For July

Highlights from the Minneapolis / St. Paul Residential Real Estate IndexMarket Report

  • Median sale price declines for the first time this year.
  • New home construction continues to improve
  • Condo market showing early signs of recovery

 Is the decline in the median sale price from June to July a cause for concern?

 Probably not, according to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business. In his analysis for the month of July, Herb Tousley, director of real estate programs at the university, said that while the median sale price did decline and the volume of closed sales was flat, we are still well ahead of last year’s prices and sales levels.  The decline in the median sale price is part of the normal seasonal cycle as we move through the summer towards fall.

 There are other indications that the housing market in the Twin Cities continues to improve. Part of the recent rise in median sale prices can be explained by examining the prices of the homes being sold. The mix of home prices has changed over the past year. There are now a greater percentage of higher priced homes being sold compared to this time a year ago (see attached chart). This is another sign of the market’s return to good health since it indicates that there are fewer lower priced distressed properties being sold.

Sale Price Mix

 The proportion of distressed sales (foreclosures and short sales) continues to decline. In July, only 20 percent of closed sales were distressed; that’s the lowest percentage since January 2008.

 Overall, the median sale price for a Twin Cities home decreased 2.7 percent from June to July, marking the first monthly decrease of the year. The median price of a nondistressed home in July 2013 was $224,950; that’s up 3.66 percent over July of 2012 and is only 6.2 percent less than the all-time high of $239,900 that was recorded in June 2006, prior the burst of the housing bubble.

 “It appears that the inventory of homes for sale, while still historically low, is slowly improving. It bottomed out in January 2013, at 12, 919,” Tousley said. “It has increased every month since then, ending in July at 15,768 homes for sale.”

 New condominium development is showing early signs of a comeback. After 5 years of declining values, excess units, and no new construction there are the beginnings of new condo development activity in certain areas. The successful presale of a few early projects will likely encourage more development that will test the depth of the market. Increasing home prices, relatively low interest rates, and rising rental rates are causing more people to consider a condo purchase.

 Minneapolis / St. Paul was one of the top 20 markets in 2012 for new housing starts in the nation. –  The low inventory of existing homes for sale continues to create favorable conditions for new home builders. According to the Keystone Report, construction permits for new single-family homes in the metro area are up 30 percent year to date over the same period a year ago. While permits are running far behind levels seen in 2005 and 2006, homebuilders are in the midst of a third year of steady growth.

 The St. Thomas’ real estate index uses nine data elements to measure the health of the market. In July it showed year-to-year increases for the three categories of sales. For traditional sales, the July index is up 7.98 percent over last year; for short sales, the index is up 11.31 percent; and for foreclosure sales, the index is up 14.02 percent.

 Research for the monthly reports is conducted by Tousley and Dr. Thomas Hamilton, associate professor of real estate at the university. See the entire report at:

 http://www.stthomas.edu/business/centers/shenehon/research/default.html#MSP Residential Index

 The index is also available free via email from Tousley at hwtousley1@stthomas.edu.

 

 

Minnesota Real Estate Hall of Fame, UST Program News, UST Real Estate in the News

2013 Minnesota Real Estate Hall of Fame Inductees Announced

halloffame

The Shenehon Center for Real Estate is pleased to announce
the 2013 Minnesota Real Estate Hall of Fame Inductees

Leonard Bisanz
Helen Brooks
Thomas Crowley
M.A. Mortenson, Sr
Kenneth Stensby

Join the Shenehon Center for Real Estate for the 2013 Real Estate Hall of Fame Induction Ceremony
Thursday, October 24, 2013
5:30-6:30 p.m. Reception with heavy hors d’oeuvres
6:30 – 8 p.m. Awards Ceremony
University of St. Thomas Minneapolis Campus
Cost: $50

Register for the 2013 Minnesotate Real Estate Hall of Fame

The Shenehon Center for Real Estate at the University of St. Thomas Opus College of Business has established the Minnesota Real Estate Hall of Fame to honor, preserve and perpetuate the names and outstanding accomplishments of real estate leaders who have made a significant contribution in real estate and demonstrated care and concern for improving their community as a business leader.

Minnesota Real Estate Hall of Fame Members:

David Bell
Tony Bernardi
Robert Boblett, Sr
The Dayton Family
Lloyd Engelsma
Robert Hoffman
Darrel Holt
Gerald Rauenhorst
William Reiling
Bernard Rice
Emma Rovick
Jim Ryan
Philip Smaby
Boyd Stofer
Sam Thorpe, Sr

Development, Industry News

Vulcan Real Estate Named 2013 NAIOP Developer of the Year

NAIOP, the national commercial real estate development association, has selected Seattle-based Vulcan Real Estate as its 2013 Developer of the Year. Vulcan is best known for its work transforming Seattle’s South Lake Union (SLU) district. Vulcan has completed 23 buildings with 4.8 million square feet of space in SLU and has another 1,000,000 square feet of office and residential space in the pipeline. Vulcan’s current construction activity includes 400,000 s.f. for Amazon.com’s new urban campus as well as 466 apartment units. The company will also begin construction nearby on two more office buildings totally over 600,000 s.f. for Amazon early next year.

Rendering of Amazon Phase VIII, a 12-story office building that Vulcan will develop for Amazon in Seattle’s South Lake Union neighborhood (image: Geekwire)

Vulcan Real Estate is the real estate investment arm of Vulcan Inc., which was created by Microsoft co-founder Paul Allen. The company provides a full-range of development and portfolio management services including site selection, urban planning, build-to-suit construction, leasing and asset repositioning. Vulcan’s $1.5 billion portfolio of assets includes office, biotechnology, residential and mixed-use projects. It has delivered over 6.6 million sf of space since 1998, over 80% of which has occurred within South Lake Union, such as the mixed-use 2200 Westlake project photographed below Continue Reading

Economics, Industry News, Real Estate Trends, Residential Real Estate, Residential Real Estate Index, Twin Cities Real Estate, Uncategorized

St. Thomas real estate analysis: Interest rate hikes not expected to derail robust real estate recovery

mortgages

With positive news found in nearly every aspect of the Twin Cities real estate market, interest rate hikes shouldn’t harm the recovery if they are slight and gradual.

Will the recent rise in interest rates derail the Twin Cities’ housing-market recovery?

Probably not, according to the Residential Real Estate Price Report Index, a monthly analysis of the 13-county metro area prepared by the Shenehon Center for Real Estate at the University of St. Thomas’ Opus College of Business. In his analysis for the month of June, Herb Tousley, director of real estate programs at the university, said that while mortgage rates recently have increased about 1 percent, they are still historically very low. “If rates increase slightly and it happens gradually, it should not derail the housing recovery,” Tousley predicted.  “Even with a small interest rate increase, a family with a median household income would still be able to afford a median-priced Twin Cities home.” A chart showing housing-affordability calculations in today’s market can be found on the Shenehon Center’s website: http://www.stthomas.edu/business/centers/shenehon/research/default.html.  The chart’s bottom line shows that a median-income family would have $1,433 available for housing, while the total payment, including insurance and taxes, would be $1,283.

 Each month the center tracks nine housing-market data elements, including the median price for three types of sales: nondistressed or traditional-type sales, foreclosures, and short sales (when a home is sold for less than the outstanding mortgage balance). Overall, the median sale price for a Twin Cities home increased 5.4 percent from May to June, marking the fifth-consecutive monthly increase. The median price of a nondistressed home in June 2013 was $232,000; that’s up 8.7 percent over June of 2012 and is only 3.3 percent less than the all-time high of $239,900 that was recorded in June 2006, prior the burst of the housing bubble. The proportion of distressed sales (foreclosures and short sales) continues to decline. In June, only 22 percent of closed sales were distressed; that’s the lowest percentage since January 2008.

 The number of new listings and pending sales declined slightly in June, following normal seasonal patterns. While historically low, the inventory of homes for sale is improving. “It appears that the inventory of homes for sale bottomed out in January 2013, at 12,919,” Tousley said. “It has increased every month since then, ending in June at 15,523 homes for sale.” In June there were 2.8 homes on the market for every home sold. That low ratio (in a balanced market it usually ranges from 6 to 8) indicates the demand is strong and the inventory is somewhat constrained. “This is good news for sellers since it indicates that there will continue to be upward pressure on median sale prices for several months to come,” Tousley said. That low inventory also creates opportunities for homebuilders. According to the Keystone Report, construction permits for new single-family homes in the metro area are up 29.7 percent for the first half of 2013 compared to the first half of 2012. June saw 478 new permits for homes in the Twin Cities. While permits are running far behind levels seen in 2005 and 2006, homebuilders are in the midst of a second year of steady growth.

 St. Thomas’ real estate index, the one that uses nine data elements to measure the health of the market, showed month-to-month and year-to-year increases in June for the three categories of sales. For traditional sales, the June index is up 9.28 percent over last year; for short sales, the index is up 8.95 percent; and for foreclosure sales, the index is up 14.91 percent. Research for the monthly reports is conducted by Tousley and Dr. Thomas Hamilton, associate professor of real estate at the university. The index is available free via email from Tousley at hwtousley1@stthomas.edu.

 To read the entire report follow this link: http://www.stthomas.edu/business/centers/shenehon/pdf/MplsStpResREIndex07252013.pdf

 

Development, International Real Estate

A Look Inside Shanghai Tower, Now the World’s 2nd Tallest Building

Shanghai Tower

Shanghai Tower, now the second tallest building in the world, will officially be topped-out later this week. The 127-story structure is being built in Shanghai’s Pudong district, where several other skyscrapers have gone up in recent years, such as the Shanghai World Financial Center and Jin Mao Tower.

When completed in 2014, Shanghai Tower will boast over 4 million s.f. of above grade space and an additional 1.5 million s.f. below grade. The tower was designed by U.S. architecture firm Gensler, which beat out eight other firms in an international design competition. The developer is the Shanghai Tower Construction & Development Co., a consortium made up of a government-based developer, a public landowner, and a construction group. CBRE has been selected to provide property management services for the tower.

106 elevators made by Mitsubishi will help funnel visitors to the many office, hotel, retail, and entertainment venues that will be housed within the tower. The elevators in the building will include some of the world’s fastest, traveling at a speed of 59 ft. per second. There will be four sets of double-deck elevators traveling between the ground floor and the hotel lobby on the 101st floor (these will also travel at a world record speed for their type). Rounding out the tower’s impressive elevator system will be an emergency elevator which will become the world’s longest-traveling elevator, operating between the 121st floor all the way down to the 3rd basement level (a distance of almost 1,900 feet).

The tower features a unique “dual-skin” exterior, with the circular building wrapped in a second, exterior skin, which spirals around it. The varying angles of the second skin create 21 landscaped public atriums, each 12 to 14 stories high, which will feature retail and meeting spaces with sweeping views of the city (see image below). The dual-skin feature of the structure is important not only aesthetically but also environmentally and financially. According to Gensler regional managing principal Dan Winey, the outer skin acts like a coat, tempering the space; warm air will be drawn from the occupied spaces into the atrium, where a chimney effect allows the heat to escape. Additionally, the aerodynamics of the spiral shape significantly reduce the wind load on the building, allowing designers to use about one-third less structural steel than in a conventional building.

Other environmental features at Shanghai Tower include wind turbines at the upper levels of the building that will generate 54,000 kWh of energy per year, enough to power Continue Reading