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Real Estate, No Longer a Dirty Word

Fri, 07 Jun 2013 00:50:18 +0000

The opening panel at the ULI Real Estate Finance and Investment conference at Dean Schwanke, SVP of Urban Land Institute.

Part 1 of 2

SAN FRANCISCO-Real estate is no longer a dirty word; it is a well-performing asset class. So said David Lynn, EVP and chief investment strategist of Cole Real Estate Investments, during a discussion about the CMBS market here yesterday at the ULI Real Estate Finance and Investment conference. Real estate is much safer than it has been for some time and for the borrower and lender, it is an attractive environment.

The CMBS market, Lynn said, was scarce two years ago, but is now much more broadly available. There is a real need for it and investors want the yield … CMBS makes sense.

It makes sense, Lynn continued, particularly in the secondary and tertiary markets where there has been a financing gap, but it doesnt necessarily make sense in the primary.

The conference brought together both providers and users of capital to explore key trends that are driving successful real estate investing today. Lynn was a panelist on the opening panel, moderated by Dean Schwanke, SVP of Urban Land Institute.

The panel began with a reviewed ULIs recent consensus forecast, a three-year forecast for 27 economic and real estate indicators. The survey was undertaken from March 4 to march 25, 2013.

Industry experts gather at UCSFs Mission Bay Conference Center for a networking break.

Among other things, the consensus predicted that: Real GDP Growth will continue getting better; showed inflation will increase up to 3% by 2015; cap rates are expected to fall this year and then rise up to 6.2% next year; transaction volume is expected to rise; strength continues on the industrial and warehouse side, with rental rates expected to grow; rental rates for office is expected to grow for the next three years; hotel occupancy rates will continue to rise over the next few years; and home price increase are expected to be stronger, well above inflation.

Richard Sinkuler, partner and global real estate markets leader of Ernst Young,commented on the consensus GDP growth prediction, noting that there are still a lot of headwinds if you look at things globally. There is still some uncertainty and that uncertainty is our enemy because it is still making people who make decisions say, oh well, we will wait and see. And it is four years now of a slowdown.

But Andrew Nelson, director of research and strategy at Deutsche Asset Wealth Management, thought there is a better picture to paint. Sure, the public sector is very much standing in the way right now, he said, but the private sector is recovering nicely. It is a normal kind of reaction to such a severe downturn. It is kind of a bamboo thing where it takes several years underground before it is going to shoot up. We are seeing some positive things like exports increasing and job growth, for example.

Lynn added that there are more positives than negatives. The private sector is in relatively good health. Exports are increasing for the US. We are becoming a major energy power and that isnt insignificantit is helping our economy is a variety of ways, he said. Consumers have been deleveraging over the past several years and are in better shape. They are beginning to re-lever again.

But the big worry is still the jobs picture, which Lynn said has been anemic. It is a new normal, said Lynn, but it is a pretty good environment for real estate. You are seeing fundamentals improve in all sectors. The debt part of this has been very attractive. The economy is gradually improving and the cost of capital is very attractive.

Check back with GlobeSt.com for part two of this panel discussion, where the panel touches on the 10-year treasury, and on a majority of returns stemming from income.

Article source: http://www.globest.com/news/12_619/sanfrancisco/finance/Real-Estate-No-Longer-a-Dirty-Word-334129.html

San Francisco is No. 1 real estate market nationwide, but for how long?

Wed, 05 Dec 2012 16:22:02 +0000

Meg Spriggs of AvalonBay Communities said her firm sees continued demand for apartment development in San Francisco for at least a few years to come.

Blanca Torres
Reporter- San Francisco Business Times

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San Francisco is expected to reign as the nation’s top real estate market for investment, development and homebuilding in 2013, according a recently released annual report from the Urban Land Institute.

The report, “Emerging Trends in Real Estate,” placed San Francisco above other markets such as New York (second), San Jose (third) and Austin, Texas, (fourth) for having the best real estate prospects in the year to come.

It may not be surprising that San Francisco and San Jose would make the top five, while Los Angeles ranked No. 16. Nonetheless, Bay Area experts and real estate leaders are wondering, how long will the good times last?

ULI presented the reports findings at an event Tuesday morning in San Francisco featuring a panel of local experts including Luis Belmonte of Seven Hills Properties, Mike Covarrubias of TMG Partners, Oz Erickson of the Emerald Fund, John McNellis of McNellis Partners and Meg Spriggs of AvalonBay Communities.

The panelists spent an hour debating whether we can call the current market a bear or a bull and sharing insights.

Some of the panelists pointed out the market’s strengths. Erickson said double-digit rent growth has made apartment development lucrative and even with thousands of units under construction, there will still be demand.

Spriggs presented data that showed the number of jobs in San Francisco has outpaced housing development in recent years, further emphasizing Erickson’s view. She also said renting is cheaper than buying in the Bay Area, which isn’t the case in other markets, like New York City.

McNellis said that economic conditions in China and Europe are important to keep an eye on, but are unlikely to derail the Bay Area’s growth.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

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Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2012/12/san-francisco-number-one-real-estate.html

Promise holds out for home sales

Sun, 21 Oct 2012 13:20:34 +0000

As we ease into the fourth quarter of our year we continue to see signs of a slow, but steady recovery in the housing market. Builders reported another increase in new home construction last month. This marks the biggest increase in more than four years. Driven by the historically low interest rates that have persisted this year, buyers are active although not in droves, but they are buying.

We have reported here consistently over the last several months of increases in the number of sales of residential properties in all areas of our Multiple Listing Service and we have seen prices follow in most of those areas. In other parts of the country, activity is brisk as well, indicating a true recovery, not exclusive to the North Idaho market.

In a recent report by the Urban land Institute, Seattle ranked No. 7 of its “Best bets for Real Estate.” Leading the pack was San Francisco. The Seattle PI, in reporting on this study, had this to say: San Francisco was rated first for investment, development and home building in the 2013 “Emerging Trends in Real Estate” report by the Urban Land Institute and PwC.

The report says: “In 2013, San Francisco steals the triple crown from Washington, D.C., receiving top billing in the Emerging Trends investment, development and housing categories. ‘San Francisco is driven by growth and a strong jobs outlook, led by technology and a structural change away from suburban and toward downtown.’ Continued infill interest is supported by one of the best transit systems in the country and a city center with walkability that is No. 2 only to New York City. ‘This around-the-clock city has someone pushing paper, shopping, shipping or sightseeing all the time.’ According to 2013 forecasts from Moody’s, San Francisco’s GMP growth will reach 1.7 percent, and the city will add almost 50,000 jobs from the 2007 peak. This pair of growth indicators should open investors’ eyes even wider to this global city. Even though industrial diversity seems weak here, investors still savor its skilled personnel and the facts that high tech accounts for 10 percent of the city’s jobs and the young demographic represents over 15 percent of the population. Even with a questionable business climate at times, San Francisco has a mix that draws many corporations now and will draw them in the future.”

We have “walkability” and “bikeability” and we certainly have great sightseeing, but why should you be interested in the Seattle and San Francisco markets? Because what happens there happens here, eventually. In the housing boom of 2003-2007 we saw the escalation of activity and then prices, begin in the Bay area. The growth then headed north to Seattle and spread throughout the Northwest, where people looking to invest in real estate began reaching further and further to find bargain priced real estate. At the time, it was known as “the roll.”

According to the PI: “Real estate continues to meander along a slower-than-normal recovery track, behind a recuperating U.S. economy, dogged by ongoing world economic distress,” starts the 2013 “Emerging Trends in Real Estate” report by the Urban Land Institute and PwC (formerly known as PricewaterhouseCoopers). “But for the third-consecutive year, Emerging Trends surveys indicate that U.S. property sectors and markets will register noticeably improved prospects compared with the previous year, and the advances now gather some measure of momentum across virtually the entire country and in all property types.”

Investors are gravitating to real estate because, despite its slow recovery, they can make money there, while other investments tighten, said Mitch Roschelle, a partner and U.S. real estate advisory practice leader for PwC. “The big driver is this chase for yield.”

Watch closely, as will we, for some are predicting another real estate boom in 2015. We will be ready, will you?

Trust an expert…call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d’Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d’Alene Association of Realtors, 409 W. Neider, Coeur d’Alene, ID 83815 or by calling (208) 667-0664.

Article source: http://www.cdapress.com/real_estate/article_49b94fe1-961c-5e3e-96a9-f73bd5dc7d18.html

Tampa Bay lands in middle of metro pack in 2013 real estate outlook

Thu, 18 Oct 2012 13:13:08 +0000

Tampa Bay’s real estate prospects in 2013 are better than downtrodden Detroit, Las Vegas and Sacramento, Calif.

But we aren’t San Francisco, New York or San Jose, Calif., either, the top-ranking (if high-priced) beauty queens of real estate next year.

The Tampa-St. Petersburg area lands pretty much in the middle at No. 29 in a survey of 51 major markets appearing in the 2013 Emerging Trends in Real Estate. The report was unveiled Wednesday by the Urban Land Institute and PricewaterhouseCoopers, now known as PwC.

“The Tampa-St. Pete market is one where real estate investors will proceed with caution,” says Mitch Roschelle, Emerging Trends, co-chair and head of PwC’s national real estate advisory practice in New York. But the same market may benefit, he adds, if investors sense the Miami market is overheating again and look for nearby Florida real estate opportunities.

“The enduring low-gear real estate recovery” will continue in 2013, says Emerging Trends. Safe but super-low interest rates increasingly will drive yield-hungry investors away from plain-vanilla financial instruments. And the “ever-seesawing” stock market will push those same investors toward real estate markets coming off recent bottoms.

Within battered Florida, Miami broke through in the survey at a solid No. 12 of national real estate markets. The ranking is based on three measures: investment, development and home-building potential. Orlando ranked 28th, just ahead of Tampa Bay. And Jacksonville, the only other Florida city measured, came in at No. 39.

On a map, the four Florida cities decline from south to north. Miami was ranked as “modestly good” while Tampa Bay and Orlando were deemed “fair” and Jacksonville was called “modestly poor.”

Here are the five most interesting nuggets from the 104-page online report:

5 “The amount of foreign capital in New York City and Washington, D.C., is ‘breathtaking.’ San Francisco, Miami, Los Angeles and Boston also draw attention, but not much heads elsewhere.”

4 “Most areas can sustain little if any new commercial construction, given relatively lackluster tenant demand and the generally weak employment outlook.”

3 “Office users squeeze more people into less square footage, preferring green buildings with operating efficiencies, while retailers reduce store size in favor of various integrated e-commerce strategies.”

2 “The large generation-Y demographic cohort orients away from the suburbs to more urban lifestyles, and these young adults willingly rent shoebox-sized apartments as long as neighborhoods have enticing amenities with access to mass transit.”

1 “More intergenerational sharing of housing occurs to pool resources among children (seeking employment), their parents (reduced wages and benefits), and grandparents (limited pensions and savings).”

Bottom line? In real estate, smaller, leaner and more urban trends will all become big drivers in 2013.

Robert Trigaux can be reached at trigaux@tampabay.com.

Article source: http://www.tampabay.com/news/business/realestate/tampa-bay-lands-in-middle-of-metro-pack-in-2013-real-estate-outlook/1257010

Real estate recovery likely to be slow

Wed, 14 Dec 2011 02:22:30 +0000

Fair warning to U.S. real estate players: Resign yourselves to “a slowing grind-it-out recovery” in 2012, as “enduring economic doldrums” continue to weigh heavily on the market.

Your best bets: a small handful of “property-wealth islands,” including San Francisco and San Jose/Silicon Valley, both seen as “primary 24-hour gateways located along global pathways,” according to a report being released today at the Urban Land Institute conference in San Francisco.

San Francisco ranks third out of 51 cities as a place to invest in and develop commercial and multifamily apartment properties and fourth in for-sale home building, with San Jose two or three rungs lower in each category, according to the survey compiled by the institute and PricewaterhouseCoopers.

Washington, Austin and New York are the other top-rated cities.

“We come out very well as top investment places, although even here it’s still a bit of a chug,” said Kate White, executive director of ULI San Francisco.

Put the “chug” down to the enduring doldrums in the housing market, which continues to weigh on San Francisco and San Jose, if not as badly as in other parts of the Bay Area and nation. Even though both rank high in the home-building category, according to the report, their prospects for investment and development are described only as “fair.”

“There’s still an understandable reluctance by potential homeowners to get into the market,” said White.

Not so, however, when it comes to renting or leasing commercial space in high-tech areas like San Francisco’s Mid-Market and South of Market, a trend driven largely by the influx of a younger, more mobile and urban-oriented workforce.

“Gen Y is driving up the demand for apartments and driving up rents, which makes investing in apartments a safer bet,” said White.

Depending on how long it lasts, such a trend could be a game-changer for real estate.

“Living smaller, closer to work, and preferably near mass transit holds increasing appeal as more people look to manage expenses wisely,” notes the report. “More companies concentrate in urban districts where sought-after generation-Y talent wants to locate in 24-hour environments.”

A separate Urban Land Institute report, examining land use changes in California, takes the point further.

Projecting out to 2035, the report says demand for traditional single- family homes will decline, by as much as 10 percent, while “changing demographics” and other factors shift the real estate focus to smaller lots and “multiple or intergenerational households” within walking distance of “transit station areas.”

“California’s future is a lot more urban and transit-oriented than it has been historically. There’ll be an increasing demand for the 24-hour, livable city model,” said White. “The next generation is ushering it in, and local agencies need to plan accordingly.”

– These and other provocative notions will be chewed over at the ULI conference, today in San Francisco at the Hotel Nikko, and Wednesday at the Corinthian Event Center in San Jose. Agenda, speakers and registration at sfg.ly/sDt7tE.

The ULI/PwC report, “Emerging Trends in Real Estate 2012,” can be read and downloaded at sfg.ly/rKT6up.

The California land use report, “The New California Dream: How Demographic and Economic Changes May Shape the Housing Market,” is at sfg.ly/stQrNV.

Blogging: www.sfgate.com/columns/bottomline. Facebook page: sfg.ly/doACKM. Tweeting: @andrewsross. E-mail: bottomline@sfchronicle.com.

This article appeared on page D – 1 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/13/BUMU1MBG04.DTL&type=business

Fewer vacant office spaces

Fri, 28 Oct 2011 08:27:17 +0000

By Mark Puente, Times Staff Writer

In Print: Friday, October 28, 2011

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The Tampa Bay commercial real estate market is no longer in the basement but remains far from the penthouse.

A bright spot in a national report released this week shows the commercial sector has improved in the bay area and other parts of Florida amid the languishing economy and lackluster job growth.

The report ranked the bay area as the 33rd best of 51 metro areas for investment in commercial real estate. Overall, the bay area improved to fair this year from poor last year, according to the “Emerging Trends in Real Estate” report by the nonprofit Urban Land Institute and accounting firm PricewaterhouseCoopers.

“It shows we’re moving in the right direction,” said Ray Sandelli, head of the Tampa office of the CB Richard Ellis commercial real estate firm. “It will also challenge us to improve.”

Experts attribute the improvement locally to the commercial market not being overbuilt during the boom, and real estate prices correcting downward to match today’s market.

Statewide, Miami ranked 17th and recorded the biggest gains among major markets for investment opportunities. Foreign cash is flowing into the city because of political instability in Latin America, the report said. Orlando ranked 29th; Jacksonville ranked 40th. Detroit, Cleveland and Las Vegas were at the bottom.

Apartments are the safest place to park cash here and across the country, the report said. Nationally, brokers and investors of industrial properties, shopping centers, hotels and office buildings face a “slowing, grind-it-out recovery” in 2012.

Investment cash is gushing toward the 24-hour global gateways: Washington, D.C., San Francisco, New York City, Boston and Seattle. Money is also following young professionals to pedestrian-friendly cities such as Portland, Ore., Seattle and Austin, Texas.

Not all experts buy into the report.

Larry Richey, senior managing director of Cushman Wakefield in Tampa, said the bay area is doing better and will never be near the top when compared to big metro areas on the East Coast and West Coast. But it would rank high among similarly sized metro areas.

Vacancy rates have dropped in office and industrial buildings as companies move to bigger offices or relocate from outside the region, he said. He pointed to Time Warner’s recent pledge to create 500 jobs in Hillsborough County and to spend $5 million on new facilities over the next five years.

The report, Richey said, doesn’t reflect all the gains made in 2011.

“It’s the most improvement we’ve seen in the last five years,” he said.

[Last modified: Oct 27, 2011 09:54 PM]

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Article source: http://www.tampabay.com/news/business/realestate/tampa-bays-commercial-real-estate-sector-rebounds-report-says/1198914