Archive for the ‘Investment Real Estate’ Category

AIA: Architecture Billings Index increases, Strongest Growth since 2007

Wednesday, April 24th, 2013

In another sign of improvement in commercial real estate the Calculated Risk blog in a recent posting notes a continuing increase in the AIA Architecture Billings Index.  When architects get busier that usually indicates an increase in new construction is not far behind.

Arch. BillingsNote: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From AIA: Architecture Billings Index Continues to Improve at a Healthy Pace

With increasing demand for design services, the Architecture Billings Index (ABI) is continuing to strengthen. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI score was 54.9, up slightly from a mark of 54.2 in January. This score reflects a strong increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 64.8, higher than the reading of 63.2 the previous month – and its highest mark since January 2007.

“Conditions have been strengthening in all regions and construction sectors for the last several months,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Still, we also continue to hear a mix of business conditions in the marketplace as this hesitant recovery continues to unfold.”

• Regional averages: Northeast (56.7), Midwest (54.7), West (54.7), South (52.7)

• Sector index breakdown: multi-family residential (60.9), mixed practice (56.9), commercial / industrial (53.3), institutional (50.7)
emphasis added

This graph shows the Architecture Billings Index since 1996. The index was at 54.9 in February, up from 54.2 in January. Anything above 50 indicates expansion in demand for architects’ services.

Every building sector is now expanding and new project inquiries are strongly positive (highest since January 2007). Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an “approximate nine to twelve month lag time between architecture billings and construction spending” on non-residential construction.  This index has been positive for seven consecutive months and suggests some increase in CRE investment in the second half of 2013.

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Posted in Commercial Real Estate, Development, Economics, Investment Real Estate, Multifamily, Office Real Estate, Real Estate Trends, Retail Real Estate | No Comments »

Will Wall Street Buy Into Single-Family Rental Craze?

Monday, March 11th, 2013

So Far, Institutional Ownership of Single-Family Rentals Appears to Have Legs, Analysts Say

Here is an interesting article from the CoStar Group about the changing face of the single family home rental market.  A trend is developing among institutional investors to purchase large numbers of single family homes for rental.  Our of the first to do this is a local company, Pine River Capital Management LP through its Silver Bay Realty Trust

By Randyl Drummer at CoStar Group

Private-equity funds, pension funds and other institutional investors have been playing in the single-family rental investment market since the middle of last year, but the space is likely to get quite a bit more crowded in coming months as public REITs join the party.

Along with dozens of other private firms and pension funds, two of the biggest private equity investors in the world, Blackstone Group LP and Colony Capital LLC, formed private REITs and stepped up their acquisitions of vacant homes to be converted to rentals last year, initially targeting the large pool of distressed housing in Arizona, Georgia, Nevada, Texas and Florida, where prices have fallen furthest and been slower to appreciate.

Among the other major players was pension investor Alaska Permanent Fund Corp., which provided $600 million in investment capital to Malibu, CA-based American Homes 4 Rent to purchase and manage foreclosed homes.

As of last week, American Homes 4 Rent — led by Wayne Hughes, who founded Public Storage (NYSE: PSA), one of the largest self-storage REITs in the U.S. — announced it will go public, using net proceeds from its planned IPO to acquire and renovate single-family homes.

Yet while the planned IPO is the most-anticipated offering in the single-family rental space, it’s not the first. That distinction goes to Minnesota-based Silver Bay Realty Trust (NYSE: SBY), a spinoff of mortgage REIT Two Harbors backed by Pine River Capital Management LP that went public in December, raising $245 million. The firm has acquired 2,500 homes with plans to acquire another 3,000.

(more…)

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Silver Bay Realty Files IPO To Be First Single-Family Rental REIT

Friday, September 21st, 2012
A recent report from CoStar written by Mark Heschmeyer indicates that a local company may be the first publicly REIT that invests in single family homes.
 
September 19, 2012 

Silver Bay Realty Trust Corp. is aiming to be the first firm out of the IPO gate to become a publicly traded REIT focused on the acquisition, renovation, leasing and management of single-family rental properties for rental income and long-term capital appreciation.

The proposed REIT won’t be alone in chasing deals in the distressed housing market as several private investors have also been raising money for such ventures.

The Minnetonka, MN-based Silver Bay filed a proposed initial public offering of its common stock looking to raise up to $287.5 million.

Two Harbors Investment Corp., a New York-based publicly traded mortgage REIT, will contribute its portfolio of some 700 single-family rental properties valued at approximately $75 million to help form the venture.

The contribution is intended to be part of a larger transaction in which Silver Bay expects to acquire two other large portfolios containing about 800 homes from Provident Real Estate Advisors LLC while concurrently offering its common stock.

Silver Bay will be externally managed by PRCM Real Estate Advisers LLC, a joint venture between a Pine River Capital Management affiliate and Provident Real Estate, a private capital management firm. An affiliate of Pine River also serves as the external manager of Two Harbors Investment.

In its IPO filing, Silver Bay called the large-scale, single-family residential rental industry a relatively new market in the U.S.

“Until recently, this industry has been fragmented in both its ownership and operations, consisting primarily of private and individual investors in local markets and managed by local property managers,” Silver Bay stated. As a result, the firm believes a compelling opportunity exists to accumulate a large portfolio of properties and lease them to tenants for attractive yields.

Read the rest of the article:  http://www.costar.com/News/Article/Silver-Bay-Realty-Files-IPO-To-Be-First-Single-Family-Rental-REIT/141622?ref=100&iid=298&cid=FC4C5ECBFF14BCA42CFC3FCF0353A739

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Posted in Industry News, Investment Real Estate, Property Management, Real Estate Trends, Residential Real Estate, Uncategorized | No Comments »

Are Clicks Cannibalizing Bricks?

Friday, August 17th, 2012

While Reducing Square Footage Saves in Short Run, Sales in Both Online and Catalog Channels Benefit from Retail Store Presence

The article below appeared in today’s CoStar Advisor Newsletter. It examines the relationship between retail stores and online sales for various types of retailers.  It mentions the issues that Best Buy is facing as it reconsiders its marketing strategy for retail store sizes and locations. What long term effects will this have on the overall demand for retail space?

By Mark Heschmeyer

August 15, 2012
 

With retailers just recently beginning to recover from the effects of the enduring global recession, pressure is mounting for managers to eliminate inefficiencies in their channel portfolios, and, in an increasingly digital world, many are taking the axe to their retail store operations to fund their digital footprints.

For example, Gap is closing 200 U.S. stores, while Lowe’s is closing 20 stores and scaling back its plans for store expansion. But the strategy shift prompted the American Marketing Association to ask the question: Does opening retail stores help or hurt a retailer’s online sales? The answer they found was surprising.

“In the long run, sales in both the online and catalog channels benefit from the presence of retail stores. The physical presence of a store attracts new customers to the direct channels and encourages existing customers to buy more,” concluded Dr. Jill Avery, assistant professor marketing at the Simmons School of Management and lead author of the analysis.

Ryan McCullough, a real estate economist for CoStar Group also recently analyzed the effect of e-commerce across a variety of retail segments. McCullough compared 2010 retail sales growth by segment against the change in occupied square footage of a sampling of retailers in fiscal year 2011.

In a period of record-high profitability, such as is the case today, one might expect retailers to expand their footprints at the same rate or faster than their sales growth if their physical stores are indeed productive.

McCullough concluded that auto parts, warehouse club, and sporting goods retailers are still wringing solid productivity out of their storefronts.

Read the rest of the article:  http://www.costar.com/News/Article/Are-Clicks-Cannibalizing-Bricks-/140714?ref=100&iid=293&cid=FC4C5ECBFF14BCA42CFC3FCF0353A739

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Posted in Commercial Real Estate, Economics, Industry News, Investment Real Estate, Real Estate Trends, Retail Real Estate | No Comments »

Miami, Minneapolis, Phoenix Emerge as New Target Markets for Foreign Investors

Monday, August 6th, 2012

U.S. Benefiting from ‘Being a Safe Haven’

Minneapolis has been attracting international attention from foreign investors who are looking for attractive commercial real estate assets.  CoStar’s Mark Heschmeyer writes in a recent article(see below) that while New York, Washington, and San Francisco have traditionally been that first choice for foreign investors, cities like Minneapolis are now  being viewed as attractive alternatives.

By  August 1, 2012

Global investor commercial real estate purchasing activity picked up in the second quarter with total market volumes increasing 24% from the first quarter to $108 billion, according to data collected from more than 60 countries by Jones Lang LaSalle Capital Markets Research in London.

This level of investment reverses the slight dip in activity recorded in the first quarter when volumes reached $87 billion.

REITs and unlisted funds were the second quarter’s biggest net buyers of property.

London remains the world’s most sought-after location, according to the report, with the United States moving back towards the $40 billion transactions mark in the second quarter, with 35% of deals involving cross-border parties.

While New York, San Francisco and Washington DC have long topped the target list for foreign investors, a number of second-tier U.S. cities have entered the Top 10 list for cross-border purchases into the United States, including Miami, Minneapolis and Phoenix.

Read the entire article: http://www.costar.com/News/Article/Miami-Minneapolis-Phoenix-Emerge-as-New-Target-Markets-for-Foreign-Investors/140390?ref=100&iid=291&cid=FC4C5ECBFF14BCA42CFC3FCF0353A739

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Posted in Commercial Real Estate, Industry News, International Real Estate, Investment Real Estate, Real Estate Trends | No Comments »

Foreclosures – Round II

Friday, March 16th, 2012

You’re probably seeing headlines communicating the thousands of foreclosures initially delayed are now making their way through judicial proceedings. Recently, RealtyTrac CEO Brandon Moore noted that 21 states (including Minnesota) saw foreclosure filings rise from a year earlier stating “February’s numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed, that should result in more states posting annual increases in the coming months.”

However, this second ‘flood’ of foreclosed residential properties entering the real estate marketplace will likely not have the same detrimental effects on the housing market and economy as witnessed in prior years.  Here are some reasons not to freak.

(more…)

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Posted in Industry News, Investment Real Estate, Real Estate Trends, Residential Real Estate | 2 Comments »

Whit Peyton shares CBRE’s Service Strategy and Local Market Insights

Thursday, March 15th, 2012

Whit Peyton, Managing Director CBRE

Earlier this week at UST’s Executive Insight Series, Senior Managing Director of CBRE, Whit Peyton, shared how CBRE has competitively structured services in the new marketplace and communicated local market insights.

With 30,000 employees worldwide, CBRE is a Fortune 500 firm and a global leader in commercial real estate. Through its global presence, the company has an intimate knowledge of virtually every major real estate market in the world.  In his role, Peyton is responsible for managing the CBRE’s Minnesota operations, which are staffed by over 580 real estate professionals.  His management duties include oversight of new business development, client relations, and related services.

In his presentation, Peyton reported impressive 2011 transactional figures. His offices completed just under 1,000 deals in 2011, with 1.56 billion in total consideration.   Peyton explained to competitively compete in today’s marketplace, their organization has worked to differentiate itself through delivering more integrated and vertical services to their clients.  Locally, their offices’ suite of services includes over a dozen areas of expertise, from asset management to project management to niche services (such as golf course services).  Through offering an array of real estate service offerings (pictured below), CBRE works to  position their clients’ investment properties to obtain maximum value while offering solutions “from main street to wall street”.

(more…)

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A day in the life of: Mark Krogh, Managing Broker of Java Properties

Friday, March 2nd, 2012

Mark Krogh is excited and he should be.   As Broker of Java Properties (Java), he is one of the busiest developers in town.   For Krogh, day begins at sun up and ends well after sun down with activities ranging from acquisition to redeveloping once blighted spaces, to leasing to meetings with agents, financiers, architects, contractors, and more.

At only 34, Krogh is already an industry veteran.  Beginning his career in commercial lending, and following in similar footsteps of his father, Krogh then went on to owning (via a multi-ownership structure) the State Bank of Marietta by his late twenties.  His partner, a former college roommate, eventually made Krogh “an offer he couldn’t refuse,” whereby Krowe immediately reinvested his profit payout back into the bank and his business partner.   With strong finance and lending knowledge/connections, Krogh then pursued the development game.  5 years and running, Java is, and there is no other word for it, a ‘cool-kid’ developer in town.  From Eat Street to Frogtown to Central Ave. NE, Java is cornering a lucrative market niche and redefining Minneapolis/St. Paul neighborhoods in the best of ways. (more…)

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Investors to the Housing Recovery Rescue

Friday, February 17th, 2012

Investors to the Real Estate Recovery Rescue

Savvy investors know the old real estate adage, you make money when you buy, realizing the profit at sale.  And in the interim, it’s very possible to make a decent living as a landlord.  With depressed home prices, record low interest rates, strong rental demand, and a slowly recovering economy, investors from an array of backgrounds are taking leaps into the landlord business.

From large institutions to mom and pop shops, the federal government is looking to investors to help remedy and add liquidity into the depressed housing market.  In fact, the Obama administration has recently started a pilot program for investors to buy properties in bulk.  According to a recent whitepaper distributed to key lawmakers, the Fed notes that, “A government-facilitated REO[Real Estate owned]-to-rental program has the potential to help the housing market and improve loss recoveries on reo portfolios.”  (more…)

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