Tag - commercial real estate

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.

 

St. Louis Radon adds more radon services to repertoire

St. Louis Radon

ST. LOUIS, MO/March 5, 2017 (STLRealEstate.News) St. Louis Radon, a St. Louis-based innovative company making splashes in local and national news lately, recently announced they are expanding their offerings next month with an environmentally friendly odor-neutralizing service for homeowners.  This brand new, optimized ozone generator treatment will eradicate smoke, pet, urine, and other odors from the home, car, and local business locations, CEO Cherie Summa confirmed.  This was a service that was most requested by past customers, and St. Louis Radon has yet to assign an official pricing.  Summa said the time and money investment is minimal, however.

Functioning as part of the lucrative air purification market in the United States, Grand View Research predicted that the market is expected to be worth $22 billion by 2024, and the residential sector, which makes up less than half of the industry, is projected to grow 8.2 percent over that same period.  Summa, intent on being part of the expansion, predicts this new service will increase revenue by almost 3 percent in 2017, though Summa declined to confirm the exact amount she is expecting.

“The customer base is similar,” said Summa.  “Customers we are targeting are customers we are already working with.”

St. Louis Radon is a full-service radon testing entity that tests for the odorless, colorless radioactive gas full of carcinogens.  This past December, Summa was fully licensed by the state of Illinois, which will allow her Chesterfield-based company to perform mitigation services and grow its Metro East customer base.

At this time, the state of Missouri does not require a home’s radon level to be disclosed in a real estate transaction, and mitigation systems are not normally installed.  This shortcoming is what motivated Summa to professionalize the industry in the state and provide individuals with more access and insight into a potentially life-threatening gas that slips under the real estate radars.

 

St. Louis experts weigh in on what’s new with local development

St. Louis experts

ST. LOUIS, MO/March 5, 2017 (STLRealEstate.News) St. Louis has played host to a lot of construction and local development in the last year, with more projects and real estate activity predicted this year than in the last decade.  As such, a table of experts sat down this week with the St. Louis Business Journal to hash out what development trends they are personally noting in the city as of late.

Mark Kornfield: For retail, the biggest development concern at this time is the ever-enduring battle between storefronts and the expansion of eCommerce availability.  When one talks to various retailers here, they are equally focused on the quality of their real estate as they are on their eCommerce platforms.  Therefore, the retailers still afloat in St. Louis are the ones that provide products not necessarily preferred from online.

David Biales: The St. Louis office sector is experiencing a much more user-driven development than it has in the past.  There’s a build-to-suit development, where the construction is customized for the lead user.  There are also corporate owned facilities like RGA, Centene, and MiTek.  These larger companies are undoubtedly becoming more strategic about their real estate needs and how they grow.

Garrick Hamilton: From our perspective, the trends we’re seeing is a flight to quality of life across those sectors where our entity currently operates: residential, office, and retail.  It’s not enough just to develop the retail shopping center, a residential community, or an office building.  Projects need to tie into users’ lives and tailor to the manner in which its occupant are living their lives in an effort to improve the quality of those lives.

David Richardson: From my perspective, developments in St. Louis are no longer viewed as “stand-alone” projects – they are constantly tying into the larger community.  Should be interesting to see what 2017 has in store for the area.

 

Why are St. Louis malls struggling?

St. Louis malls

ST. LOUIS, MO/March 5, 2017 (STLRealEstate.News) Shopping malls across the country have come under fire with the success and expansion of online retail shopping juggernauts like Amazon, Forever 21, Ikea and more.  St. Louis, particularly in the northern part of the city, has witnessed the closing of dozens of shopping mall strips, centers, and outlets in recent years as the decline of the American shopping mall continues to sweep the country.  Local St. Louis residents have described some barely open outlets as “ghost towns” this past holiday season, despite the popular time of year to go shopping.  Others have been forced to say goodbye to malls they once cherished and appreciated for its shopping availability.

A local St. Louis resident, Erica Holliam, stated, “Everyone that lives out this way, it’s not like they don’t like to shop.  They’re making the drive, they’re spending the money, so I’m stumped as to why malls out here keep declining.”  Curious St. Louis set out to answer her question in a feature piece this past week.

The magazine looked at overall American retail trends, which have not been kind to the traditional enclosed mall.  One analyst found that over a third of the country’s 1,200 malls will close in the next few years.  The biggest reason? Online shopping.

A professor at Saint Louis University weighed in on the dilemma, “A lot of commerce is shifting to online retailing, as opposed to brick and mortar.”  He went on to note that retail department stores, which often serve as anchors for malls down the line, are also struggling.  “Retail can be a heartbreak because of the trendy character surrounding it,” said Fischer.  “The concepts get hot, and then they get cold, and it can happen without any notice.”

Curious St. Louis also confirmed the closures are due to poor store locations.  If a place isn’t easy to drive to/park at, people aren’t going to deal with the hassle when they have online shopping.

 

Bunge North America new headquarters underway in Chesterfield

Bunge North America

CHESTERFIELD, MO/March 5, 2017 (STLRealEstate.News) Bunge North America is a food ingredient maker and grain trader located currently in Maryland Heights, MO, but is building a new facility in Chesterfield, MO.

On 14 acres, previously known as the Kraus Farm, the company is building a four story building that is 145,000 square feet that is currently under construction.  The contractor is Opus Development Co.

The company has been part of the community for more than 25 years with more than 550 corporate employees with plans to increase another 200 jobs over the next ten years.

The parent company, Bunge Limited is public traded (NYSE – Ticker: BG) The market capitalization is more than 11 billion with more than 139 million shares outstanding, owned approximately 84% by institutions.

Bunge is an agribusiness, food company with integrated operations that expand from farm fields to consumers foods.  Diversified company that also is an oil-seed processor, producer of vegetable oils, protein meals, grain processor, seller of packaged vegetable oils across the globe among many different operations that are beyond the scope of this article.

Bunge Limited is located at 50 Main Street, FL 6, White Plains, NY 10606-1901.

St. Louis second most affordable city to buy a home right now

affordable city

ST. LOUIS, MO/March 5, 2017 (STLRealEstate.News) If you’re someone who is looking for good schools, affordable living standards, and expanding job opportunities as a result of construction revitalization, then St. Louis is a city you definitely want to check out in the coming months.  St. Louis Realtors have announced that St. Louis is the second-most affordable city among the hottest real estate markets in which to purchase a home, according to their February ranking.

“We have had such a strong real estate market in St. Louis through the first two months of 2017,” said St. Louis Realtors president Sandy Hancock.  “Property values have also been rising but have remained affordable for the first-time, move-up and luxury buyers in our market.”  She went on to confirm that so far in 2017, it shows promise for the healthiest residential housing market the city has experienced in years.

In December, Realtor.com Chief Economist Jonathon Smoke ranked St. Louis second among the hottest real estate markets for the upcoming year.  Looking at those 10 markets in terms of affordability, Providence is still edging out St. Louis with the #1 spot, though mid-year rankings of 2017 could tell a different story.  San Diego, Sacramento, and Atlanta follow St. Louis, with Boston coming in at the #10 spot.

According to MARIS statistical data for St. Louis and St. Louis County, there were 7,279 active listings in July 2016 compared to 7,804 that same period in 2015, down 7 percent.  The number is expected to be even more impressive for July 2017, coming in at around 7,000 active listings.  Days on market for listed homes keeps dropping, though it has become so low that construction companies are reacting as fast as possible with the development of new real estate.  In the mean time, it is definitely still a seller’s market in St. Louis.