News & Press
Below are press releases announcing; acquisitions, divestitures and industry news.
Retailers Experiment with Mini Distribution Centers in Their Stores
The trend can help landlords charge higher percentage rents and avoid vacancies.
An increasing number of retailers are experimenting with mini distribution centers in their bricks-and-mortar locations to leverage existing physical footprints and dodge record high prices in the industrial sector.
“If [retailers] are already paying rent for a space, and they don’t need 100 percent of it, could they take 25 to 30 percent, and put stock in there? Versus trying to go and buy [or rent a warehouse at an additional cost], then they’re paying a trucker to truck that product to that warehouse and then have the trucker send it to either the store or the consumer,” says Anjee Solanki, national director of retail services at Colliers International, a commercial real estate firm. “Why not store it in the space that they’re already renting?”
Along with retailers getting the opportunity to save on operating costs, retail landlords can also benefit from a mini distribution center on their properties. First, the concept helps landlords struggling with high vacancy for large box formats, as there are fewer potential retail replacements for the space than there were a few years ago. Second, having a mini distribution center in the same location as the physical store means online sales would go through that location. Due to this, landlords can then request the retailer to include those online sales in their reporting, upping the amount of percentage rent their tenants pay, according to Solanki.
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Millennials want to buy homes, but their wallets are saying no
First-time homebuyers made up 42% of spring’s home-shoppers
As summertime heats up, it’s safe to say that spring has officially come to an end. But while its cooler days may be behind us, data says its uptick in home buying interest is here to stay.
According to a survey from Realtor.com, this spring was filled with home-buying interest, especially from the nation’s first-time buyers.
This group of homebuyers, who often tend to be Millennials, made up 42% of spring’s home-shoppers.
“Based on our user responses, just under half of all home shoppers this spring were searching for their first home, and many of them were aging Millennials likely driven by life events such as moving in with a partner, getting married or starting a family,” Realtor.com writes. “It may come as a surprise to some people that Millennials are looking to small towns or suburbs, but when it comes to buying a home, Millennials aren’t that different than other generations.”
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Homeownership Rate in the U.S. Falls to the Lowest Since 2017
The share of Americans who own their homes fell to 64.1 percent in the second quarter of 2019.
(Bloomberg)—The U.S. homeownership rate fell to the lowest level in more than a year as rising prices and a tight supply of starter homes put buying out of reach for many renters.
The share of Americans who own their homes was 64.1% in the second quarter, the lowest since the third quarter of 2017, according to a Census Bureau report Thursday. It was the second straight decrease, down from 64.2% in the previous three months and 64.3% a year earlier.
This year’s drop in mortgage rates and the strong job market have only added to competition for entry-level homes, driving up prices for a limited supply of properties and slowing sales. The median price of a previously owned U.S. home rose 4.3% from a year earlier to a record of $285,700, while sales dropped 2.2%, the National Association of Realtors said this week.
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Federal Reserve poised to reduce its benchmark rate
President Trump tweets: “A small rate cut is not enough”
The world’s most powerful central bank is poised to cut its benchmark rate for the first time since 2008. The reasons couldn’t be more different.
Back then, the economy was in freefall after a spike in foreclosures deflated the value of bonds backed by home loans. This time, more than a decade later, Federal Reserve policymakers aren’t dealing with a financial crisis. They’re trying to keep the nation’s longest expansion from petering out.
The Fed’s policy-setting Federal Open Market Committee, or FOMC, has a two-day meeting that starts on Tuesday. On Wednesday at 2 p.m. it will issue a statement with its decision on whether to maintain or change its overnight lending rate, an important benchmark for financial markets.
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Garden-Style Apartment Projects Allow Developers to Expand in the Suburbs
With many prime suburbs restricting high-rise construction, garden-style apartment complexes remain popular.
Developers in the U.S. continue to build more low-rise apartment buildings than any other type of construction. That includes a high volume of new garden-style apartment buildings—often three-story “breezeway” apartments.
“The ‘same old breezeway’ apartments are still getting built in the same old way,” says Walter Hughes, chief innovation officer with Humphreys & Partners Architects, based in Dallas, Texas.
In recent years, multifamily developers have come to vastly prefer mid-rise and high-rise buildings that squeeze more apartment units onto an average acre. But in many parts of the country, and especially in suburban submarkets, local officials refuse to allow developers to build mid-rise or high-rise structures.
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U.S. Pending Home Sales Increase by Most in Three Months
The index for pending home sales rose by 2.8 percent month-over-month in June.
Bloomberg)—Contract signings to purchase previously owned U.S. homes rose in June by the most in three months, indicating demand may pick up with the help of lower mortgage rates and steady job growth.
The index of pending home sales increased 2.8% from the previous month, exceeding the most optimistic forecast in a Bloomberg survey of economists, data out Tuesday from the National Association of Realtors in Washington showed. Still, contract signings were down 0.6% from June of last year on an unadjusted basis.
Key Insights
The gain in contract signings is a welcome sign for the housing market as it struggles to accelerate despite a recent dip in mortgage rates. Still, elevated prices and limited supply may constrain growth even as the Federal Reserve is expected to lower borrowing costs for the first time in a decade.
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Looking Ahead: Midyear Multifamily Investment Landscape
Fogelman Properties’ Mike Aiken provides five insights for the future.
According to CBRE, 2019 multifamily investment activity will reach peak volumes with the forecast exceeding $150 billion for the year. While whispers of a slowing economy and higher interest rates concerned many in the first quarter, buyer demand continued to dominate early this year as it did in 2018. The first quarter is historically the most competitive period for multifamily acquisitions. Moving into the third quarter, there’s little indication activity will let up as many are wondering if multifamily investment will remain the “darling of deal making” this year or if appetites will taper as financing becomes more challenging. Here are five considerations in looking ahead at the multifamily investment landscape:
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Investors Are Showing Greater Interest in Nursing Home Acquisitions
More capital is now chasing nursing home deals.
Investors, especially private equity players, see increasing value in a nursing home portfolios, according to the National Investment Center for Seniors Housing & Care (NIC) research.
Nursing homes are increasingly becoming a target for commercial real estate investors, especially if they can achieve economies of scale, according to Zach Bowyer, senior managing director at real estate services firm CBRE. According to a summer 2019 CBRE U.S. Seniors Housing & Care survey, investor interest increased in the nursing care sector.
Investors, especially private equity players, see increasing value in a nursing home portfolios, according to the National Investment Center for Seniors Housing & Care (NIC) research.
Nursing homes are increasingly becoming a target for commercial real estate investors, especially if they can achieve economies of scale, according to Zach Bowyer, senior managing director at real estate services firm CBRE. According to a summer 2019 CBRE U.S. Seniors Housing & Care survey, investor interest increased in the nursing care sector.
“The sector is still extremely fragmented, with the 10 largest nursing care operators comprising only 14 percent of total supply,” says Bowyer. “We see considerable opportunity in this sector, but only under a very advanced lens.”
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Only half of Americans can afford an entry-level home
This spells major opportunity for the rental market
Just over half of Americans can afford an entry-level home as affordability issues continue to plague the nation’s housing market, and the situation is creating a robust opportunity for rentals.
Only 54% of Americans can afford a home priced at 20% of the median home price in their area, according to a study of 130 metros by John Burns Real Estate Consulting, which called that benchmark a reasonable proxy for an entry-level home.
But while this figure seems bleak, the report noted that affordability is improving, increasing 3% thanks to a recent drop in mortgage rates.
“The plunge in mortgage rates has created homeownership possibilities for 2.7 million more households as well as move-up possibilities for current homeowners with enough equity,” the analysts wrote. “This will spur home-buying activity this year, possibly averting the decline in volume we have been forecasting.”
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NYC Apartment Building Sales Plummet as New Rent Law Poses Risk
Multifamily sales came to a standstill in New York after new rent control regulations.
(Bloomberg)—Things looked promising for the sellers of a collection of Harlem apartment buildings, listed in April for $260 million. Almost immediately, 150 would-be buyers requested financial details on the 789 units, nearly all rent stabilized. About a dozen investors made offers.
Then the New York state legislature rewrote the rules on stabilized rents, capping the potential for increases, and slashing the property values overnight. Suddenly the suitors of the 28-building “Harlem Ensemble” disappeared faster than they came.
“They called us every day — and then we couldn’t reach them,” said David Chase, partner at B6 Real Estate Advisors, whose team marketed the portfolio. The listing, still unsold, will expire at the end of the month, he said.
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