Tag - commercial real estate

6 million jobs created by commercial real estate development last year

6 million jobs created by commercial real estate development last year

April 19, 2017 (STLRealEstate.News) We often think about what commercial real estate construction can do for business activity and the economy, but do we ever stop to consider what kind of job creation it can contribute to in our country?  According to an annual study, Economic Impacts of Commercial Real Estate, by the NAIOP Research Foundation, the development, construction, and ongoing operations within commercial real estate supported 6.25 million American jobs and contributed to $861 billion in the U.S. GDP during 2016 alone.

When broken down further, the report showed that this activity spurred the creation of 410 million square feet of office, retail, warehouse, and industrial properties with the combined capacity to host more than 1 million new workers whose salary, when put together, created $57.6 billion in revenue.  Among these states contributing to this turnover, New York led the pack with the highest level of commercial real estate development spending in 2016, at $24.8 billion, followed by Texas at $18.5 billion and California at $14.3 billion.

The report then looked at the different sectors of commercial real estate.  It found that office construction expenditures totaled $36.6 billion in 2016, increasing by 28.7 percent from 2015 and warehouse construction totaled $13.6 billion in 2016, registering a sixth consecutive year of increased expenditures. It gained 12.7 percent from the 2015 figure.

Not surprisingly, retail expenditures were down seven percent from 2015, while industrial construction spending also decreased a second year to $15.5 billion – a massive 29.9 percent decrease from 2015.

Thomas Bisacquino of NAIOP went on to state after the report release, “The importance of commercial real estate development to the U.S. economy is well established, and the industry’s growth is critical to creating new jobs, improving infrastructure, and creating places to work, shop, and play.  We look forward to the results for the end of 2017’s growth.”

Better Homes and Gardens Real Estate adds St. Louis franchise

Better Homes and Gardens Real Estate adds St. Louis franchise

ST. LOUIS, MO/March 28, 2017 (STLRealEstate.News) Better Homes and Gardens Real Estate, a full-service national real estate brokerage determined to expand its operation and clientele hold in 2017, this week announced they have added their latest St. Louis, Missouri-based brokerage, Properties West, to their franchise network.  Now called the Better Homes and Gardens Real Estate Preferred Properties, led by brokers Charles and Laura Davis, they are poised to take on any kind of real estate demand in the St. Louis metropolitan area.

The owners went on to state, “It is rare to find a partnership with a completely aligned set of values, but that is how we immediately felt with Better Homes and Gardens Real Estate,” said Laura Davis.  “We are going to continue to support our affiliated agents as we always have as a small company, but with great resources from a recognized brand.”

Better Homes went on to state they have such passion and energy when it comes to providing an authentic and personal experience to every single real estate customer they support.  Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC stated, “This mindset is fully embraced by the entire company and makes them a perfect fit for our network.  We are thrilled to be working together to serve the St. Louis region, and can’t wait to get to work.”

The newly formed entity will move into a new location this April.  They have not, at this time, disclosed their intentions for where they plan to move, what sized office they are looking at, and if they have any expansion plans in the near future.

This isn’t the first St. Louis real estate partnership formed in 2017.  The area has proved to be a hotbed for buying and selling of property today, so companies from around the country are eyeing the region for a regional office.

Upcoming office vacancies in St. Louis

Upcoming office vacancies in St. Louis

ST. LOUIS, MO/March 28, 2017 (STLRealEstate.News) Though, as a whole, St. Louis has been performing incredibly well with regards to tenants in commercial space today, there are still those “clouds” on the horizon, particularly the announced ones in 2017 for upcoming office vacancies.  As part of the commercial real estate nature, vacancies are imminent, and we are going to discuss the known ones expected to rock the St. Louis region in 2017.

Since Centene has big plans this year, like opening new office space in downtown Clayton as part of its massive campus expansion, they are going to leave a big vacancy in the heart of the city of St. Louis by doing so.  They also announced they are planning to consolidate about 1,000 positions to its new campus when it is complete.  These consolidating plans point to a lot of previous vacancies for an exodus to Clayton.

Downtown St. Louis is going to get rocked with another big vacancy rate when the AT&T Center is scheduled to finish emptying out this fall.  It will put one of the largest office buildings in the region on the market.  The problem with the design of this building is that it’s going to need significant renovations to accommodate more than a single tenant.  “It is a challenge and that is one of the tings we’re having discussions about,” said Otis Williams, head of the St. Louis Development Corp., the city’s economic development arm.

Additionally, Scottrade’s sale to TD Ameritrade, expected to close by the end of the year, likely points to the downsizing of about 1,000 local staff while also putting several large buildings on its Town and Country campus up on the market.  There is also a chance Monsanto could offload some its Creve Coeur buildings as corporate functions are consolidated with Bayer.

It will be interesting to see how these vacancies are balanced with the 2017 St. Louis commercial real estate market.

Real estate crowdfunding platforms raising American real estate prices

Real estate crowdfunding platforms raising American real estate prices

March 28, 2017 (STLRealEstate.News) It was only a matter of time before crowdfunding platforms made their way into the real estate sector today.  Often something that deters a lot of individuals from making investments in real estate, high prices drive away most middle-income individuals from playing around in American real estate.  But, with the rise of third-party crowdfunding platforms, most notably of Chinese origin, middle class people can get in on a piece of the real estate pie – no matter where they live.

Take Brooklyn for example.  Two decades ago, if you asked a New Yorker where the most authentic Chinese food could be found, they would point you to Chinatown in lower Manhattan.  But, today, if you ask that same question again, you could be rerouted to Brooklyn, a borough where millions of Chinese are getting in on crowdfunding brownstones using their Yuan currency.  By using these platforms, Chinese investors are able to skirt around government regulations for transferring their currency into the American dollar.  The result is a piece of the Brooklyn pie, plus free currency exchange to help them get their hands on the greenback.

Since the Great Recession, snapping up prime real estate in coastal American cities has become an increasingly popular activity among China’s wealthy.  In 2014, for the first time, more Chinese bought Manhattan apartments than did Russians, reported Reuters.  Today, Brooklyn is where it’s at, with the price of Brooklyn town homes and apartments growing 16 percent between 2015 and 2016, while Manhattan properties decreased by 1 percent.  Chinese citizens are fully aware of the Brooklyn opportunity, and they aren’t going to let it pass them by.

What do you think about crowdfunding as a means to secure real estate?  It should be interesting to see what effects the approach has with regards to home-ownership and resale processes down the line.

St. Louis office market looking strong

St. Louis office market looking strong

ST. LOUIS, MO/March 26, 2017 (STLRealEstate.News) Though the St. Louis office market is looking strong today, there are “clouds” on the horizon, pundits warn, about upcoming changes and trends.  After a solid 2016 that brought office vacancies to some of the lowest levels in more than 15 years, new construction, corporate downsizing, and a big downtown vacancy could slow the momentum.  But, at this very moment, the fundamentals seem strong, and no one needs to panic about the fate of the St. Louis commercial industry.

Over the past few years, rents have consistently inched higher while the vacancy rate has declined for years.  Local commercial real estate firms project a continuation of St. Louis’ typical slow but steady job gains.  With stats to back up these claims, commercial real estate firm Cushman and Wakefield said the region ended 2016 with an overall vacancy rate for high-end properties at 8.6 percent, the lowest since 2000.  Another commercial firm, CBRE, put the overall vacancy at 14.7 percent at the end of 2016, down from a high 17.6 percent just 6 years prior.

Even more staggering, in the more affluent St. Louis County neighborhoods, like Chesterfield and Clayton, the market for big chunks of top-of-the-line space is very tight, with vacancy rates just about 5 percent.  These “Class A” rents have hit $30 per square foot in the highly desirable submarket and suburban community of Clayton today.

David Randolph of CBRE stated, “That’s a first for us in St. Louis, for us to have a $30-type number on a Class A building.”

But, it’s worth noting there are some big vacancies coming, with Centene opening a new office space in downtown Clayton as part of its massive campus expansion.  The company plans to consolidate presences in their other buildings.  The downtown AT&T Center is going to relocate, too, making a massive office building vacant.

Ways in which U.S. retail is changing in 2017

retail changing

March 13, 2017 (STLRealEstate.News) The U.S. retail market seems to be making headlines lately, as realtors are fascinated with the online shopping trend that is resulting in the closing of millions of retail locations.  The market is changing rapidly, and there appears to be a greater demand than supply today.  According to the Washington, D.C.-based National Retail Federation, retail sales during November and December 2016 increased by 4 percent over 2015 to $658.3 billion, which greatly exceeded the forecasts. What does that mean for future retail forecasts?  Here are a few trends to watch in upcoming months.

1. Lagging Construction
New-construction on retail spaces has been historically low ever since the housing bubble in 2008.  The new inventory is far below historical (30-year) annual averages of growth in many U.S. metro areas.

2. Demand
Consumers are actually outpacing a lot of established retail stores today.  The problem is that the concentration is a little lopsided, forcing stores like Macy’s and Kohl’s to close thousands of locations nationwide while stores like Forever 21 can’t seem to keep up with demand.

3. Health Conscious
For whatever reason, people are health conscious today, and industry related to health, fitness, and organic-based products is doing incredibly well.  These expanding sectors are the ones scooping up any vacancies available today.

4. Declining Department Stores
Department stores and big-box retails, like Sport Chalet and Sports Authority, all filed bankruptcy in 2016.  Macy’s is closing 68 of its 750 department stores in 2017.  Kmart and Sears plan to close 150 stores in the near term as select storefronts undergo the real estate liquidation process.  It’s not looking good for the traditional shopping centers.

5. Online Shopping
Why spend the money going out to the mall when you can buy everything on Amazon.com today?  The online shopping trend is making it incredibly hard for construction workers and realtors to understand what kind of buying trend is coming in the future.

Stay tuned for more updates on commercial real estate and the U.S. retail sector.

Three things to impact commercial properties financing in 2017

commercial properties

March 10, 2017 (STLRealEstate.News) According to a report by the Mortgage Bankers Association, over $500 billion in commercial real estate loans were originated this past year, indicating a strong financial landscape for lending in the year ahead.  The financing market has demonstrated sustainable, dependable growth we can expect to shape commercial properties financing starting today.  Low interested rates, steady rental growth, and rising property values are increasing investor activity in commercial real estate, which is presently driving up loans to finance these investments.

Of course, with the beginning of every New Year, many are wondering what the future holds for commercial real estate financing.  Some wonder if the market will continue this upward trajectory of increased lending activity, or will new legislation by our new president have an even bigger impact?  Here are 3 major things to consider when pondering these questions:

1. Interest rates: These rates will remain low, at least in 2017, incentivizing borrowers to refinance their maturing loans in order to lock in lower rates.  Though the Fed is going to raise rates this year, the effects won’t be felt for a few years.

2. Availability of capital: There will be a wide availability of diverse sources of capital that will increase lender competition in the year ahead.  Strong market fundamentals, like low unemployment rates and increased property values, are fueling a boom in loan originations for commercial real estate assets.  Based on these strong fundamentals, it can be assumed capital will remain strong in 2017.

3. CMBS Regulations: A new bill is requiring CMBS lenders to hold onto five percent of the loans they issue as opposed to being able to pass them off as bonds.  In anticipation of this new law, many CMBS lenders are adopting more conservative underwriting standards as we speak.

Reading for financing in 2017?  Take notice of these three upcoming factors.

Retail stores expected to close in 2017

Retail stores

March 7, 2017 (STLRealEstate.News) American retail stores are in for the fights of their lives lately, experts say, and in the years ahead we should expect it to only get worse.  Pundits are predicting dozens of retail chains to permanently close their doors in 2017 as many retailers see online sale grow at a much larger rate than at physical store locations.  In the mean time they are shouldering overhead costs like electricity, taxes, and other utilities when it just isn’t necessary anymore.

Howard Davidowtiz, chairman of Davidowitz & Associates Inc. in New York City, stated, “Of the 10 largest online retailers, eight of them are companies with a brick-and-mortar heritage, substantial investments and huge overheads.  They have a thriving online business in which they continue to invest, but are not doing so well overall because of the brick and mortar shortfall.  They are coming to the conclusion that it just isn’t worth it anymore.”

The bottom line is that retailers cannot afford to rest idly.  Their coping strategies have so far included closing their physical locations and focusing on smaller-format stores and picking up more online orders for making sustainable returns.  As a result, retail giants like J.Crew, Guess, Claire’s, American Eagle, Wet Seal, Ambercrombie & Fitch, Aeropostale, J.C. Penney, Macy’s The Limited, Chico’s and more are expected to close their brick and mortar locations around the country to start finally saving money and investing time and resources into the growth of their online shopping experiences.

Though these are just some of the biggest retail names in the business expecting closures, there are hundreds more medium-sized retailers following suit probably in 2017 as well.  What does this mean for the total shopping experience moving forward?  Techies have stated there may be virtu

Top American markets for building mega-warehouses

mega-warehouses

Big demand for mega-warehouses

March 7, 2017 (STLRestaurant.News) Mega-Warehouses – The United States has witnessed a significant industrial and commerce-based consumer expansion in the last ten years with the rise of Internet-shopping and eCommerce purchases.  In order to accommodate the expanding bulk of online orders, companies have had millions upon millions of square feet of warehouses erected in just about every corner of the United States.  Since 2010, approximately 141.2 million sq. ft. in mega-warehouses have been built, according to a recent report from commercial real estate services CBRE.  The CBRE study decided to look at the top American cities in 2017 for companies to settle down and have a mega-warehouse constructed.

1. Philadelphia

Philadelphia is the third-hottest market for new construction of mega-warehouses in 2017, as five building spanning 5.4 million sq. ft. will be built there.  Though it used to be number one for a few years, the city is still hanging onto its warehouse reputation.

2. Atlanta

Atlanta is predicted to be the fourth-busiest market for mega-warehouse construction in 2017.  This year, close to 3.1 million sq. ft. of warehouse will be erected in the southern city.

3. Chicago

Coming in as the second most active warehouse city in 2017, five buildings totaling 5.6 million sq. ft. will be built in the windy city this year.  From 2010 to 2016, Chicago has witnessed nine mega-warehouse facilities’ completion, which added 11.7 million sq. ft. of industrial space to the market.

4. Inland Empire

The Inland Empire in California will take the crown for 2017 construction, with six buildings totaling 6.4 million sq. ft. slated for completion this year.  From 2010 to 2016, the city took second place for top markets overall, having 13 warehouses totaling 15.4 million sq. ft.

5. Baltimore

After the major four described above comes Baltimore with an historic jump this year to 2.5 million sq. ft. of construction.  Mega-warehouses were not typically built in Baltimore between 2010 and 2016.

North Side St. Louis up for discussion in upcoming mayoral race

North Side St. Louis

ST. LOUIS, MO/March 5, 2017 (STLRealEstate.News) Today, entire blocks sit empty, abandoned, and vacant in the northern part of St. Louis as no businesses even dream of making the attempt to set up shop in the dangerous, downtrodden area.  The city’s homicides remain concentrated in a handful of North Side neighborhoods, and as such, regular businesses like grocery stores and convenient stores avoid the area to the best of their ability.  Thousands have left the area, and even more are expected to vacate in 2017.

Though most St. Louis neighborhoods are witnessing modest improvements to their home sectors, North Side is still being left behind.  “There are two different cities,” said the former director of the Greater Ville Preservation Commission, Harold Crumpton, who worked in the once proud, predominantly black neighborhood for years.  “Economically, we’re pretty much at the same place we were over 70 years ago. It’s not a good sign.”

Mayor Francis Slay of St. Louis has stated he is not seeking reelection this year after serving the city for 16-years in office.  The candidates competing currently for the March 7 primary all agree that north St. Louis deserves a renewed focus from City Hall.  Most of the candidates also agree that reducing violent crime there is the first step towards the revitalization of the area.  But, with a tight budget, figuring out a way to reverse the steady decline is not going to be an easy task.

Overcoming the demographic forces and migration patterns in that section of the city can probably not be tackled by the mayoral office alone.  The mayor is going to need to reach out to foundations, universities, and other entities outside of the government to find additional funding for social services, neighborhood building, and other community-related events.

The city will need to stay committed for more than one mayoral term.