Month: September 2018

New Tax Incentives for Workforce Housing

Key Takeaways:

  • The Tax Cuts and Jobs Act offers federal tax benefits for investments in certain low-income communities designated as Qualified Opportunity Zones.
  • Tax incentives will promote job and wage growth in these zones, increasing residential housing demand.
  • By building workforce housing in Qualified Opportunity Zones, developers can benefit from new tax advantages and meet increased housing demand.

The Tax Cuts and Jobs Act of 2017 offers a significant tax incentive for long-term investments in Qualified Opportunity Zones. The zones are low-income communities located in all 50 states, Washington, D.C., and five major U.S. territories.

Prior capital gains proceeds reinvested through Qualified Opportunity Funds in Qualified Opportunity Zones are eligible for tax deferral and potentially also for permanent tax exclusion, depending on the length of the investment. In addition, a permanent exclusion of future appreciation is possible if the opportunity fund is owned for more than 10 years.

A qualified fund’s investments can be in qualified stock, partnership interests, or business property within the zone. For developers, this offers an attractive advantage. Using Qualified Opportunity Zones for workforce housing will allow real estate developers to obtain preferential tax treatment, as well as spur development and provide housing in economically distressed areas.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Rising Construction Materials Prices, Labor Shortages Tax Multifamily Developers

Many multifamily developers and contractors are fighting off price increases for construction materials.

“Lately we have seen a few knee-jerk reactions from manufacturers claiming upcoming price increases or possible increases due to tariffs,” says Marc Padgett, president of Summit Contracting, a multifamily general contractor based in Jacksonville, Fla. “Often, they can’t substantiate the claim because there isn’t an actual tariff, just the mention that there could be one.”

The administration of President Donald Trump has threatened to impose tariffs on a long list of construction materials imported from foreign countries, including lumber from Canada and steel from China. Many manufacturers have already responded by hiking up prices.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Popular Mortgage-Bond Trade Losing Appeal as Rates Keep Rising

(Bloomberg)—One of the most popular mortgage-bond trades since the financial crisis is going out of fashion as rising rates punish down-on-their-luck borrowers.

So-called “scratch and dent” mortgages — which are tied to borrowers that fell behind or began repaying their debts after a default — accounted for the largest piece of the U.S. residential mortgage-backed securities market without government backing over the last decade.

But rising rates make it harder for homeowners to refinance their mortgages, potentially lengthening how long it will take them to pay off that loan. This means bond buyers could get stuck with these non-performing loan and re-performing loan mortgage securities for more time than they anticipated. And investors are taking a step back, pushing yields higher.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Manhattan Landlords Sacrifice Higher Rents to Fill Apartments

(Bloomberg)—Manhattan apartment vacancies dropped in August to the lowest level in more than four years as landlords, facing the end of peak leasing season, focused on filling empty units before the slower winter months arrive.

The vacancy rate fell to 1.58 percent, down from 2.27 percent a year earlier and the lowest since May 2014, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Taken together with a decline in rents and an increase in concessions, it’s a sign that landlords cared more about finding tenants than pushing the line on prices.

“These landlords know what comes after the summer so, yeah, they definitely want to fill these vacancies as best they can,” said Hal Gavzie, executive manager of leasing at Douglas Elliman.

Manhattan landlords typically pin their hopes for higher rents on the months of May through August, when new college graduates and families seeking to move before the start of the school year boost demand for apartments. But a persistent oversupply of units has prompted a shift in tactics this year.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

What Institutional Investors Want in this Stage of the CRE Cycle

Whether it’s in a more favored sector like multifamily, a less attractive sector like retail or a somewhat in-between sector like office, the best paths for institutional investors to drive value these days are the ones less traveled.

That’s the assessment of Jacques Gordon, global head of research and strategy at real estate investment management firm LaSalle Investment Management. And other experts in the sector echo those sentiments.

Gordon says purchasing and then improving an undermanaged apartment complex or value-add office building stands to deliver a better payoff, in many cases, than snapping up a stabilized property. He also notes that pursuing retail assets that feature experiential components or that could be remerchandised also provide opportunities to seek value in a sector that’s been largely out of favor among institutional investors in recent years.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Blackstone Seeks $18 Billion for Biggest Real Estate Fund

(Bloomberg)—Blackstone Group LP expects to raise $18 billion for its biggest real estate fund ever.

The firm, already the private equity industry’s largest real estate investor, will have a strategy similar to its last fund, investing in distressed properties globally, according to people with knowledge of the plans. Blackstone’s prior fund gathered $15.8 billion in 2015.

Blackstone is seeking capital at an opportune time. Institutions such as public pension plans and insurance companies are betting big on property assets to protect against inflation and broaden their holdings beyond stocks and bonds. The number of investors allocating $1 billion to the space keeps increasing, according to data provider Preqin.

A representative for Blackstone declined to comment.

In June, New York-based Blackstone raised $7.1 billion for an opportunistic real estate fund focused on Asia, and Carlyle Group LP this month also raised its largest U.S. real estate fund.

Beyond real estate, investors are piling into alternative assets, helping firms raise much larger funds than before. The private equity industry brought in a record $453 billion last year. Blackstone, like its rivals, is taking advantage of that demand. It expects to raise more than $20 billion for its eighth buyout fund, Bloomberg reported in July. Its prior buyout fund was a third invested at the end of June, according to a regulatory filing.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

The Top Countries Investing in U.S. Commercial Real Estate

Canadian investors have been the most active buyers of U.S. real estate in the last 12 months, securing $19.63 billion in assets, according to a recent report from Real Capital Analytics (RCA). It’s a familiar spot for the Great White North, which was also the top source of capital into the U.S. in 2017 and number two in 2016. China, which topped the list in 2016, sits fourth in volume for the past 12 months, at $5.48 billion. Singapore ($9.05 billion) and France ($8.66 billion) edged out China for second and third on RCA’s list. Germany, with $4.33 billion in capital invested in the U.S., rounded out the top five.

Cross-border investment has continued at a strong clip despite an increase in protectionist measures, such as tariffs and tensions in trade agreement negotiations. According to RCA’s report “These fears are genuine but sometimes also taken to extremes. This too shall pass…. Cross-border investors are, with some exceptions, focused on longer-term objectives and temporary roadblocks can be overlooked. Clearly these investors overlooked trade concerns in the first half of 2018.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Older U.S. Apartments Are Losing Their Affordability Advantage

(Bloomberg)—For U.S. apartments, older is also better—at least when it comes to rent growth.

Units at properties built in 1959 or earlier had steeper median rent increases from 2000 to 2016 than those half their age, according to a study by rental website Apartment List. The older buildings are still cheaper, however, with a median rent that’s 23 percent lower than the median for properties built in the 1990s.

Older buildings, usually a reliable source of affordable housing, aren’t meeting that need as many of the properties are taken offline for extensive renovations that result in higher rents when the units return to the market, the study shows. Units from the ’70s and ’80s — the country’s biggest surge in multifamily construction — are now prime targets for redevelopment, meaning costs for older units that aren’t updated are likely to climb as renters seek them out for their relative affordability.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Attracting Institutional Capital to Affordable Housing Debt Markets

Impact investing as a category is attracting institutional investors with diverse goals to seriously consider adding impact to their portfolios. In the ESG landscape, there is an opportunity today to expand beyond the plentiful array of “environmental” funds to explore “social” impact—specifically, affordable housing as an investable asset class.

The question is, how can affordable housing lenders attract institutions to multifamily, affordable rental housing in a way that reflects fundamental requirements of institutional investors (from risk profile to financial performance)? Below are several criteria to consider.

CONSISTENCY AND TRANSPARENCY

Investors want to know what they are buying. To dedicate resources to an investment opportunity, institutions need scale and that means, more than big dollar amounts, replicability. It means that they look for assets with similar economic returns and risks. This allows the assets to be considered “similar” and allows investors to apply a consistent investment analysis to them.

Additionally, potential investments should have defined parameters that drive risk and return. This reduces uncertainty and provides a framework for evaluating the investment opportunity. For example, low-income housing tax credit (LIHTC) properties perform in similar ways to each other because, despite the geographic and property type diversity, the tax credit program provisions are a key driver of performance. This helped facilitate institutional investment as investors could apply consistent framework across investments and get comparable results.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Tech Job Growth Continues to Create Demand for Office Space

Growth in technology-related jobs—particularly computer and mathematics occupations—is expected to keep office leasing strong in certain markets over the next decade.

Overall, between 20 and 25 percent of current office leasing activity is related to technology jobs, particularly computer and mathematics occupations—a subset of STEM (science, technology, engineering and mathematics), reports Rebecca Rockey, Cushman & Wakefield’s economist, head of forecasting for the Americas, and lead author of a new Occupier Insights report on the impact of certain technology occupations on the office sector. This is a stark contrast to the previous office cycle, when leasing was primarily driven by new financial services and business analyst occupations, noted the report.

In total, 1 million new computer and mathematics occupations have been created over the last seven years, bringing the total to 4.1 million computing and 167,000 mathematics jobs in the United States today. STEM jobs are being created at a faster pace than other jobs with seven of the top 10 STEM occupations being computer-related and including jobs such as programmers, network developers and designers. Of these new jobs, 85.4 percent are in office-using industries, making it the largest occupational category driving growth in the office cycle’s current expansion, according to the C&W report.

Click Here For The Full Article

SUBSCRIBE TO OUR NEWSLETTER

Start receiving; press releases, commercial real estate news, information and trends on particular markets and regions.

Richard is our resident social media expert. He researches and writes about; the economy, marketing trends and all aspects of real estate investing.

Scroll to top