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Equity Office Daily Brief: March 8, 2017

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Daily Brief

March 08, 2017

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Coming Soon to Your Local Mall: Celery and Dog Food

The Wall Street Journal

 

Mall landlords are now eagerly courting a type of retailer they once ignored: grocery stores. As the internet reshapes the way Americans shop, landlords of mid- and low-quality mall properties are adapting to stay relevant, trying everything from restaurants to indoor skydiving. Now a...

 


Lincoln Property Expands, Launches LPC West

Commercial Property Executive

 

Lincoln Property Group, which has been at the forefront of many high-profile Southern California deals in recent years, is launching LPC West, a new unit led by veteran executive David Binswanger, to continue boosting the company’s West Coast presence. The group will...

 


Santa Monica seeks to pass the nation's most extensive earthquake retrofit plan

Los Angeles Times

 

Santa Monica is poised to require safety improvements to as many as 2,000 earthquake-vulnerable buildings in what would be the nation’s most extensive seismic retrofitting effort. Santa Monica’s safety rules would go beyond what Los Angeles has done by requiring not only...

 


Report Finds Big Downtown Growth in 2016

Los Angeles Downtown News

 

It’s no secret that Downtown Los Angeles is growing. A new report seeks to quantify that growth, and delivers some impressive numbers. How impressive? According to the Downtown Center Business Improvement District’s fourth quarter “Downtown L.A. Market Report,” the community in 2016...

 



BLOG & ONLINE NEWS

 

LA Closes on Nearly 42 Acres Near LA River

Bisnow

 

The City of LA just closed escrow on a parcel of land by the LA River known as G2. It is the final remnant of the 250-acre Taylor Yard that was owned by Union Pacific Railroad. The nearly 42-acre parcel is...

 


This Week's LA Deal Sheet

Bisnow

 

Hoping to capitalize on the increasing popularity of DTLA, a Georgia Street lot has just hit the market.  Currently a three-story, 32-unit apartment building sits on the lot at 916 Georgia St., which is next to the JW Marriott expansion, between LA...

 


Survey: Net Buyers Will Rule In Americas This Year

GlobeSt.com

 

With Europeans leading the way, 67% of investors in Americas commercial real estate intend to be net buyers this year. That’s among the key findings of the CBRE Americas Investor Intentions Survey 2017, issued Tuesday. Although they may comprise a comparatively small...

 


Office Growth Slows, But Continues Nationally

GlobeSt.com

 

For all the steady improvement that the US office sector has seen in the past few years, it finished the fourth quarter of 2016 with a vacancy rate of 12.3%. That’s just 10 basis points above the low of 12.2% seen...

 

FULL TEXT


Coming Soon to Your Local Mall: Celery and Dog Food

The Wall Street Journal

 

Mall landlords are now eagerly courting a type of retailer they once ignored: grocery stores.

As the internet reshapes the way Americans shop, landlords of mid- and low-quality mall properties are adapting to stay relevant, trying everything from restaurants to indoor skydiving.

Now a few are bringing in supermarkets.

Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans Food Markets Inc., which is planning to open a store in 2018.

College Mall in Bloomington, Ind., plans to bring in 365 by Whole Foods Market in the fall.

Grocery giant Kroger Co., meanwhile, has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place.

The goal for landlords of covered malls is to provide one-stop destinations where consumers can pick up a broad array of items and, ideally, visit multiple times a week. These massive rectangular structures surrounded by vast parking lots are usually built to serve shoppers up to 25 miles away.

“Consumers, particularly millennials, are placing a high priority on experiences while also valuing convenience,” said Tom McGee, chief executive of the International Council of Shopping Centers, a trade group. “As a result, among other things, we are seeing more restaurants, movie theaters, health clubs and grocery stores serve as anchors.”

While some malls have brought in grocery stores as tenants in the past, the pace has accelerated sharply in the past few years as higher-end grocery stores look to expand, analysts said.

In recent years, institutional investors such as private-equity firms have become more interested in acquiring grocery-anchored shopping centers as they take on defensive investment strategies, eyeing assets that are more immune to competition from e-commerce.

Overall, investment in retail-property assets declined almost 19% in 2016, but investment in grocery-anchored shopping centers and single-asset grocery shops rose 0.4% over the same period, according to commercial real-estate services firm JLL.

In some cases, replacing a department store with a grocery store can contribute to a higher value for the building, said Margaret Caldwell, managing director of investment sales at JLL. Grocery stores will generally pay higher rents than department-store tenants, which have historically paid low rents. And the demographics of grocery shoppers, who currently skew older, are likely to change over time, Ms. Caldwell said.

“Millennials will begin to go to the grocery stores more as they age,” she said.

But supermarkets might not do much to lift other retailers in struggling malls, analysts said. Grocery shoppers, especially seniors, often are sensitive to the distance between their car and the store, and might not want to navigate busy malls with grocery bags in tow, or supermarkets with mall purchases in hand.

“You’re not going to buy a Louis Vuitton bag or a dress when you’re carrying your groceries,” said Jeff Edison, chief executive of Phillips Edison & Co., an owner and operator of grocery-anchored shopping centers across 34 states. His company’s neighborhood shopping centers are smaller and closer to customers, who typically live within 3 miles of a center.

“It’s a fine line how this strategy is implemented,” said Thomas Dobrowski, executive managing director of capital markets at real-estate services firm Newmark Grubb Knight Frank. “The addition of a grocery anchor is not necessarily complementary to the other stores, particularly fashion retailers.”

Grocers present an advantage for landlords because they are more resistant than traditional retailers to internet competition.

A number of grocers are expanding locations and coming up with new features such as wine bars and sushi restaurants inside stores to lure shoppers. With construction costs high, existing mall department-store locations are seen as viable options.

“Retailers care less about the format of the center than they do about the quality of the location,” said Lisa Kaufman, managing director of LaSalle Investment Management Securities.

Malls in areas that are densely populated, with high household incomes and fewer competing shopping centers are considered attractive potential locations for a new grocery store, Ms. Kaufman said.

Aldi Inc., a grocer based in Germany, is investing $1.6 billion to remodel and upgrade more than 1,300 stores by 2020 and plans to open 650 new stores across the U.S. By the end of next year, Aldi expects to operate nearly 2,000 stores.

“We’re always open to considering different types of store location sites beyond the typical Aldi location you’re used to seeing,” said Dan Gavin, vice president of Aldi’s real-estate group. Prospective landlords and developers are seeking Aldi as an anchor in mixed-use developments, covered malls, town centers and open-air shopping centers, Mr. Gavin added.

-Esther Fung

Lincoln Property Expands, Launches LPC West

Commercial Property Executive

 

Lincoln Property Group, which has been at the forefront of many high-profile Southern California deals in recent years, is launching LPC West, a new unit led by veteran executive David Binswanger, to continue boosting the company’s West Coast presence.

The group will handle acquisitions and development as well as property management and repositioning of existing commercial, retail and mixed-use properties. Binswanger, who has spearheaded much of Lincoln’s growth over the last decade in Southern California, is now senior executive vice preDavid sident of LPC West.

“We are bringing our national resources and local expertise to a cohesive West Coast brand that will better serve our clients, acquisitions and development,” Binswanger said in a prepared statement. “As part of the new LPC West group, we are promoting several Senior VPs to serve as Executive VPs in every key city on the West Coast from San Diego to Seattle. We’ve assembled an A-team that will create an unparalleled one-stop-shop approach for our clients and partners.”

Lincoln was founded in 1965 by Chairman Mack Pogue and is a privately-owned real estate firm involved in real estate investment, development, property management and leasing worldwide. It has offices in all major U.S. markets and throughout Europe.

“LPC West creates an unmatched synergy for Lincoln on the West Coast,” said Parke Miller, the executive vice president who will continue to run the Orange County office.

“By merging our market leaders and operations into one united group, we are creating efficiencies that, combined with our on-the-ground knowledge, allows us to provide high-quality, thoughtful service to our clients in Orange County and beyond,” added Miller, who was in charge of the FLIGHT at Tustin Legacy development, a 1,600-acre commercial and residential community in Tustin, Calif.

Rob Kane, the executive vice president leading the Los Angeles office, has been active in acquisition, entitlement and development efforts for Lincoln, focusing on mixed-use projects like 100 West Walnut, a transit-oriented development in Pasadena, Calif., that will feature 610,000 square feet of office space, 17,500 square feet of commercial space and up to 475 residential units.

“The L.A. market is evolving in dynamic ways as technology and media continue to converge here,” Kane said. “Our experience and local knowledge uniquely positions us to capitalize on this market growth, and we look forward to continuing to provide premier value-added services to our clients.”

The San Diego office will be led by Executive Vice President Brig Black, who helped open the office there in 2012. He recently led a repositioning of 600 B St., a Class A office tower that is now home to prominent law firms, technology and media companies.

John Herr, who has been with Lincoln on the West Coast for 25 years, will be in charge of the San Francisco office. Some of his prominent deals have been the development of 350 Bush St., a 19-story, 372,000-square-foot Class A office tower, and 500 Pine St., a five-story, 56,000-square-foot office and retail project.

Executive Patrick Gilligan has moved from San Francisco, where he had served since 2006, to head up the Seattle-Portland area. In December, Lincoln acquired the Pacwest Center in Portland, a 30-story office tower that the firm is repositioning.

“The Pacwest deal was an exciting transaction for us because it’s right in our wheelhouse,” Gilligan said. “It had been a troubled asset and we felt that with the right investment, we could elevate the building to its former glory and meet the demand for modern office space with great amenities. We’re bullish on this marketplace, and I’m excited to lead Lincoln’s expansion in this area.”

-Gail Kalinoski

Santa Monica seeks to pass the nation's most extensive earthquake retrofit plan

Los Angeles Times

 

Santa Monica is poised to require safety improvements to as many as 2,000 earthquake-vulnerable buildings in what would be the nation’s most extensive seismic retrofitting effort.

Santa Monica’s safety rules would go beyond what Los Angeles has done by requiring not only wood apartments and concrete buildings to be retrofitted, but also steel-frame structures.

Steel buildings were once considered by seismic experts to be among the safest. But after the 1994 Northridge earthquake, engineers were stunned to find that so-called “steel moment frame” buildings fractured.

About 25 were significantly damaged, said structural engineer Ronald Hamburger, senior principal with Simpson Gumpertz & Heger in San Francisco.

No steel building suffered a catastrophic failure that took lives in that earthquake, but some were so badly damaged they had to be demolished. One — the Automobile Club of Southern California building in Santa Clarita, open for just 21 months — came very close to collapse, Hamburger said.  

A year later, one story of a Japanese steel building collapsed during the 1995 Kobe earthquake.

Now, Santa Monica has decided to tackle what has been the third rail of seismic safety. It has been controversial because retrofit costs are significant, especially for tall skyscrapers, and because steel buildings are less likely to collapse than other types of vulnerable buildings.But the failure of even one high-rise could cause a large number of deaths.

The collapse of five high-rise steel buildings in Southern California was seen as possible during a future 7.8 earthquake on the San Andreas fault, according to the U.S. Geological Survey’s simulation of such a disaster. If the earthquake hit during working hours, about 5,000 people could be inside those five buildings. 

Other building types fare worse — 50 brittle concrete buildings could collapse in the same temblor. 

“Like all of life, it’s a question of what risk we are willing to tolerate,” Hamburger said.

The mayor said he does not want Santa Monica to take that chance, as a major earthquake is inevitable for the city’s future.“We are very committed here in Santa Monica to make sure that we are resilient in the face of possible catastrophe,” Mayor Ted Winterer said. “We want to make sure that we are doing everything we can to protect our community.”

The mayor acknowledged that the price tag of retrofits would be a burden in the short term. City officials estimate a cost of $5,000 to $10,000 per unit to retrofit a typical wood apartment building and $50 to $100 per square foot for concrete and steel buildings.

That is a fraction of the price tag if an entire building were to collapse.

“But taking the long view — that process is much preferable to the loss of life and the destruction of buildings,” Winterer said.

The city’s move comes more than three years after The Times reported how Santa Monica quietly stopped enforcing its earthquake safety regulations. Santa Monica had actually passed laws in the 1990s requiring retrofits of these buildings. But the mandatory retrofit effort quietly faded in the early 2000s, amid the departure of key staff. By 2013, the city could not find its old list of possibly vulnerable buildings.Former city officials were stunned when told of the missing list, and the city’s elected leaders vowed to take up the issue.

“‘There is no greater responsibility of government than public safety,’” Councilman Kevin McKeown said at a recent council meeting, quoting from a staff report. “But here, we have a case to preemptively prevent a lot of injury and damage.”

Santa Monica is at a particular risk of earthquakes. The Santa Monica fault runs through the northern half of the city. Santa Monica was also hard-hit by the Northridge quake, which badly damaged several landmark buildings, including the St. Monica Catholic Church, and caused the loss of 1,500 apartments, or about 5% of the city’s total stock. 

Santa Monica has released its list of possibly vulnerable buildings, the result of a three-year-long process to identify them. The City Council is scheduled to vote on a law Tuesday that would require owners to conduct a seismic evaluation and, if needed, order the buildings to be retrofitted. Of the roughly 2,000 buildings, about 1,700 of them are suspected to be wooden apartment buildings with carports on the ground story and held up by flimsy columns that might snap in an earthquake. Known as soft-story buildings, one such complex collapsed in the 1994 Northridge earthquake, killing 16 people on the ground floor in the predawn darkness.

About 150 are suspected vulnerable brick buildings, also known as unreinforced masonry, in which bricks can come spilling out of walls, striking occupants and passersby and triggering the collapse of the roof. This type of building construction has generally been outlawed in California since the 1933 Long Beach earthquake. Some possibly vulnerable brick buildings are located along the popular Third Street Promenade of shops.

The tallest buildings on the list are steel and concrete buildings. About 80 were identified as steel buildings, with the tallest a 13-story condominium and two 12-story office buildings.About 60 suspected brittle concrete buildings were listed, holding residences, hotel rooms and office space. The tallest is a 21-story building on the western edge of Wilshire Boulevard, which overlooks the Pacific Ocean.

So-called non-ductile concrete buildings lack enough steel reinforcing bars in the columns, and shaking can cause them to disintegrate. Fifty-two people died in the collapse of several concrete buildings in the 1971 Sylmar earthquake.

Officials also found about 30 possibly vulnerable concrete tilt-up buildings.

The law would not require retrofits of single-family homes.

With the release of its list, Santa Monica has become the first city in California to publicly post a list of addresses of possibly vulnerable concrete and steel buildings that should be evaluated for seismic risk.

Some experts praised Santa Monica for taking the step of identifying possibly vulnerable steel buildings and making it public. “People in steel buildings deserve to know if their buildings have problems,” said Thomas Heaton, Caltech’s director of the Earthquake Engineering Research Laboratory. 

Among the reasons for the flaws in steel buildings were problems in welding technique and inspections, the filler metal used in the welds, and the basic configuration of the connection between vertical columns to horizontal beams, Hamburger said.

“The flaw exists almost universally of buildings of this type constructed from the early 1970s through 1994,” Hamburger said. Most taller steel buildings are moment frame buildings, Hamburger said.

There are a couple of ways to retrofit steel buildings. One is to remove the filler metal used to weld together the steel frame, and replace it with a more modern, tougher metal, said structural engineer Thomas Sabol, a principal at Englekirk. Adding more steel to reinforce the frame can also help.Another approach has been to reduce the stress on the existing steel frame by adding the equivalent of shock absorbers, which are full of a viscous fluid, Sabol said. 

“If a building collapses, you’re stuck for years. The cost to society is extremely high,” said structural engineer Ashwani Dhalwala, who has chaired the steel committee for the Structural Engineers Assn. of Southern California.

Santa Monica’s proposed law gives owners of steel buildings the most time to retrofit once an order is given to evaluate the structure — 20 years. Brittle concrete buildings will have a deadline of 10 years; wooden apartment buildings, six years; tilt-ups, three years; and brick buildings, two years.

There have been few signs of organized opposition to the proposed law. The Building Owners and Managers Assn. signaled support at a council meeting in December. The city Rent Control Board has yet to consider how retrofit costs will be distributed between owners and tenants.

Sources: City of Santa Monica, Image of downtown Santa Monica Pictometry Imagery. 

-ron.lin@latimes.com | @ronlin

Report Finds Big Downtown Growth in 2016

Los Angeles Downtown News

 

It’s no secret that Downtown Los Angeles is growing. A new report seeks to quantify that growth, and delivers some impressive numbers.

How impressive? According to the Downtown Center Business Improvement District’s fourth quarter “Downtown L.A. Market Report,” the community in 2016 saw the completion of 2,671 residential units, and the breaking ground of projects representing 3,968 housing units. Additionally, 40 projects were proposed last year.The report recorded growth in a variety of sectors, including office space, hotels and retail. Commercial development is particularly heavy in the Arts District and South Park, while residential projects are rising throughout Downtown, according to DCBID President and CEO Carol Schatz.

“Having been doing this for as long as I have, I have not seen a year where there has been such dramatic growth,” said Schatz, who has worked in Downtown for more than 25 years.

The report found that the Downtown office vacancy rate fell to 16.8%, a 4.5% decrease over the previous year. That was in part due to major leases such as City National Bank filling 241,000 square feet in Two California Plaza on Bunker Hill.

There could be challenges ahead, however, with more space in the works. The Wilshire Grand replacement, set to open in June, will have 400,000 square feet of office space. The Broadway Trade Center is being transformed and also will eventually have roughly 400,000 square feet of office space. Steve Marcussen, executive director for the brokerage firm Cushman and Wakefield, said that additional creative office space is coming as a number of decades-old, mostly vacant buildings are renovated.

Still, Schatz expects the market to remain strong. She pointed to the announcement in October that Warner Music Group will fill the old Ford Factory Building in the Arts District, bringing hundreds of employees to the 257,000-square-foot complex when it is ready in 2018. She expects a ripple effect.“A range of smaller creative companies are seeking to come into Warner Music Group’s orbit, and that will generate more interest from larger tech and creative companies,” Schatz said.

The report also found that rents are rising in Class A office space (generally the most modern towers). The BID reported an average price per square foot of $3.34, a 7.1% increase over the fourth quarter of 2015. Schatz said this indicates that more traditional office tenants are venturing to Downtown, not only companies seeking creative space in industrial conversions.

Downtown still remains one of the least expensive sub-markets of the region, according to Marcussen. He noted that rents in Century City and Santa Monica can be twice that of Downtown.

The residential boom is apparent in the cranes across the community, from the Financial District to the Arts District to South Park. The report said 11 housing projects opened in 2016.

 

The study found that more than 7,600 housing units, including over 1,200 condominiums, were proposed in the fourth quarter alone. Real estate experts previously attributed the burst of activity to developers trying to get approvals for projects before voters consider ballot initiatives such as Measure S, which could place a two-year moratorium on developments that seek zoning or land-use changes.

Despite the growth, Schatz said some areas in Downtown, including parts of the Industrial District, remain under-developed. Additionally, while the hotel scene is blossoming, the number of rooms near the Convention Center is still a fraction of what cities such as San Diego and Anaheim offer. Marcussen expects to see continued hotel development.

Schatz said Downtown could use more cultural institutions. She noted that The Broad drew more than 900,000 visitors in its first year, far exceeding expectations. The report mentioned the arrival of the half-acre Arts District Park at Fifth and Hewitt streets as another civic gain.

One shortfall, Marcussen and others have said, continues to be limited services for parents with young children. That includes a small number of Downtown schools.

Schatz said that Downtown still has a number of undeveloped spaces, and that she doesn’t think 2016’s gains will register as a one-off spike.

-Nicholas Slayton

LA Closes on Nearly 42 Acres Near LA River

Bisnow

 

The City of LA just closed escrow on a parcel of land by the LA River known as G2. It is the final remnant of the 250-acre Taylor Yard that was owned by Union Pacific Railroad. The nearly 42-acre parcel is considered the key to Alternative 20, a plan to restore habitat between DTLA and Griffith Park, Curbed Los Angeles reports. It will connect Rio de Los Angeles State Park with the state-owned Bowtie parcel in the future. LA Mayor Eric Garcetti referred to the land as the "crown jewel" in revitalizing the LA River. Before the public can use the land, it will require a major cleanup since the land used to be part of Union Pacific Railroad's freight-switching facility.The LA City Council voted in January to spend $59.3M to buy the land. -Karen Jordan

This Week's LA Deal Sheet

Bisnow

 

Hoping to capitalize on the increasing popularity of DTLA, a Georgia Street lot has just hit the market. 

Currently a three-story, 32-unit apartment building sits on the lot at 916 Georgia St., which is next to the JW Marriott expansion, between LA Live and the Metropolis, according to Concord Real Estate senior vice president of investments Guillermo Ma. The deal is being pitched off-market. The owner believes it is a good time to sell to a developer due to the development boom, especially in South Park, Ma said.  TRG Investments owner Reuben Robin is asking for more than $8M for the property, which could be redeveloped or rehabbed. It last sold about four years ago, according to Ma.

SALES V.C.I. Corp. sold a 157,225 SF building in El Segundo for $52M in an off-market deal. The vacant, seven-story, Class-A building is at 2300 East Imperial Ave. It sits on 4.57 acres and was built 53 years ago and renovated in 2000 with new common areas and a parking structure added. Cushman & Wakefield senior directors Chris Sinfield and Tom Sheets repped the seller. ***Plaza de Escobar, a retail center in Sherman Oaks, just sold to a private investor for $7M. The buyer was in a 1031 exchange. The 12,938 SF center is at 13307 Moorpark St. and is anchored by a 7-Eleven store that has been a tenant there for 20 years. Lee & Associates-LA North/Ventura principal Cory Stehr and associate Cole Martens repped the buyer, DRMG LLC. The seller, Health-Dan Properties LLC, repped itself. *** A newly formed JV of New Standard Equities and an affiliate of Brixton Capital bought Arbor Terrace, a 276-unit multifamily community in Port Orchard, Wash., from Sea 1800 Sydney Avenue LP for $38.15M.    Arbor Terrace is the second acquisition in the area in less than two months and third in Kitsap County in the past year for LA's NSE, a real estate investment and management company. Sklar Kirsh LLP co-founder Andrew Kirsh and head of the real estate practice at the LA-based law firm repped the buyer and brought the JV together. CBRE’s Capital Markets Group led by vice chairman Brian Eisendrath arranged a $30.15M loan from Freddie Mac.Glendale Plaza, a 24-story trophy office tower in Glendale, just sold to DivcoWest. The sale price was $179M, according to market sources. The 547,300 SF Class-A office tower is at 655 North Central Ave. The building is approximately 95% leased to 19 tenants that are primarily entertainment and financial services firms. The LEED Platinum-certified property was built 18 years ago and has an eight-story adjacent parking structure. The CBRE Capital Markets team of executive vice president Sean Sullivan, executive vice president Todd Tydlaska and vice president Michael Longo repped the seller. CBRE executive vice president Brad Zampa procured financing for the buyer. CBRE executive vice president Doug Marlow and first vice president Scott Crawshaw acted as the leasing market experts.California Landmark Group and Cayton Capital just completed R3, a $30M loft-style project with 67 apartments and more than 5K SF of creative office space. It is at 4091 Redwood Ave. in the Marina del Rey Arts District. R3 offers a mix of one- and two-bedroom apartments, ranging from 685 SF to 1,655 SF. There are also a rooftop pool and lounge, a state-of-the-art fitness center, and a Zen yoga garden with complimentary yoga sessions by a certified instructor. Roughly 35% of the units were leased within 30 days of opening.EXECUTIVE NEWS A new boutique commercial real estate brokerage firm, SharpLine Commercial Partners, officially launched Monday. Its headquarters is in DTLA, and it caters to owners, investors and occupiers in retail and industrial properties. Barbara Armendariz, a former vice president at CBRE, is SharpLine's president and founder. *** Jeremy Michaelson has joined iBorrow as vice president of originations. Michaelson's years of experience in the real estate industry include underwriting and closing multimillion-dollar transactions and project development and property management. Michaelson will work with the firm’s borrowers to develop and structure loans based on the needs and objectives of the borrowers. Previously, he was director of loan origination at Post Investment Group | Park West Financial.-Karen Jordan

Survey: Net Buyers Will Rule In Americas This Year

GlobeSt.com

 

With Europeans leading the way, 67% of investors in Americas commercial real estate intend to be net buyers this year. That’s among the key findings of the CBRE Americas Investor Intentions Survey 2017, issued Tuesday.

Although they may comprise a comparatively small percentage of investors overall, institutions make up for it in sheer scale. Fifty-four percent of institutions—including insurance companies, sovereign wealth funds and pension funds—intend to deploy more than $1 billion of capital in ’17, CBRE says. That includes 21% that plan to spend between $2 billion and $5 billion in the Americas; 19% that plan to deploy between $1 billion and $2 billion; and 14% that intend to invest more than $5 billion.

SWFs in particular are under-allocated to commercial real estate, which comprises just 3% of assets under management among the top 20 sovereign funds. That under-representation, says CBRE, “accounts for expected higher levels of capital deployment.”

Within the Americas region—and globally, in fact—the US remains the prime destination for investment. During a media briefing Tuesday at CBRE offices in Midtown Manhattan, Revathi Greenwood, the firm’s Americas head of investment research, cited “the three Rs”: return, risk and resilience. Although Japanese real estate actually fared slightly better in terms of returns during 2016, US CRE’s risk profile and the resilience seen both in the national economy and on a market-by-market basis carried the day.

Not surprisingly, the survey revealed a marked preference for US gateway cities, although Toronto moved up into eighth place, tied with Boston, while Sao Paulo was ranked #12. Los Angeles maintained its position as the most preferred metro area for investment in ’17. Dallas/ Ft. Worth overtook New York City for the second rank this year’s survey, pushing the largest US city into third place. Washington, DC moved up the ranks from eighth to the fourth most preferred metro for investment in ‘17. Atlanta, Seattle and Houston are also viewed as attractive markets for investment.

Industrial is top asset class in this year’s survey, bumping multifamily out of the top spot by a margin of 38% to 28%. Among investment strategies, value-add came out best with 39% of respondents rating it highest. Core product was relegated to third place with good non-core assets taking second; CBRE says the diminished appeal of core investments was due to a combination of low cap rates, weakening property fundamentals and the search for higher yielding assets.

Although 83% of survey respondents intend to maintain or increase their investment levels compared to 2016, “they also intend to retreat on the risk curve, becoming more conservative in strategy and risk appetite,” says Brian McAuliffe, president, institutional properties, capital markets at CBRE. “This is counterbalanced by the search for yield.”

The survey found that the majority of investors surveyed are focused on real estate in the Americas and don’t intend to make asset purchases in other regions of the world. Some 74% rate North America highest, with only Europe registering a double-digit response (14%) as the most attractive global region for real estate investment. Seven percent rate Asia Pacific above all other regions, and 5% prefer to invest in Latin America. CBRE conducted the survey between January and February of this year.

-Paul Bubny

Office Growth Slows, But Continues Nationally

GlobeSt.com

 

For all the steady improvement that the US office sector has seen in the past few years, it finished the fourth quarter of 2016 with a vacancy rate of 12.3%. That’s just 10 basis points above the low of 12.2% seen in 2007, according to Colliers International’s new Office Market Outlook report.

“While class A rents in most markets are holding firm or growing at a reduced pace, tenant incentive packages are increasing in some locations where vacant new supply is being added or occupiers are moving out,” writes Stephen Newbold, national director of office research | USA and author of the report. He tells GlobeSt.com that “on a national basis, I think vacancy has pretty much plateaued,” and he sees little change, at least in the current year.

That being said, the office story has been one of steady improvement. The Colliers report notes that almost 75% of the metro office markets tracked by the firm saw an increase in asking rents and a decline in vacancies last year. Just over 60% experienced positive net absorption.

A possible spur to further improvement may be the policies of the Trump administration. These include a planned stimulus package of infrastructure spending and tax cuts, along with regulatory rollbacks in the financial and pharmaceutical sectors, which could boost employment and therefore leasing among those office-using employers.

However, Newbold cautions, “There’s going to be a lead-in time” before the effects of these policies are felt. For one thing, none of these potential spurs to office leasing have been enacted as yet. When they are, says Newbold, “There could be a boost, but you’re looking at the fourth quarter of 2017 at the earliest.”

As it stands, suburban markets are leading the way in terms of absorption, driven by large build-to-suit campuses and new urban environments that compete with traditional downtown locations. In the report, Newbold writes that although office tenants are not abandoning downtowns, “the desire to be located near highly-qualified, young professionals who prefer urban living must be balanced against the limited availability of large blocks of space.”

Construction activity in the office sector remains elevated, but Newbold notes that most of the space being added is pre-leased. Much of the current delivery pipeline will empty out over the course of this year.

There is some speculative development occurring in select pockets of downtown/urban fringe markets where there is a perceived shortage of modern, prime assets, and Newbold writes that this may put pressure on rents in some markets, notably San Francisco, Seattle and Washington, DC.

The report cites no fewer than nine spec projects across those three markets, totaling 2.8 million square feet, that are set to deliver this year. Almost 60% of that 2.8-million-square-foot aggregate of new space is uncommitted.

For instance, Salesforce Tower in downtown San Francisco, which will be the city’s tallest at 1,070 feet, is scheduled to be completed in ’17. Although Salesforce pre-leased half of the space, 555,000 square feet, or 40% of the total, has yet to be spoken for. On the whole, though, “I believe supply and demand will remain in balance,” Newbold says.

-Paul Bubny


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Google + Spam 2010- 2017 Spamdex - The Spam Archive for the internet. unsolicited electric messages (spam) archived for posterity. Link to us and help promote Spamdex as a means of forcing Spammers to re-think the amount of spam they send us.

The Spam Archive - Chronicling spam emails into readable web records index for all time

Please contact us with any comments or questions at questions@spamdex.co.uk. Spam Archive is a non-profit library of thousands of spam email messages sent to a single email address. A number of far-sighted people have been saving all their spam and have put it online. This is a valuable resource for anyone writing Bayesian filters. The Spam Archive is building a digital library of Internet spam. Your use of the Archive is subject to the Archive's Terms of Use. All emails viewed are copyright of the respected companies or corporations. Thanks to Benedict Sykes for assisting with tech problems and Google Indexing, ta Ben.

Our inspiration is the "Internet Archive" USA. "Libraries exist to preserve society's cultural artefacts and to provide access to them. If libraries are to continue to foster education and scholarship in this era of digital technology, it's essential for them to extend those functions into the digital world." This is our library of unsolicited emails from around the world. See https://archive.org. Spamdex is in no way associated though. Supporters and members of http://spam.abuse.net Helping rid the internet of spam, one email at a time. Working with Inernet Aware to improve user knowlegde on keeping safe online. Many thanks to all our supporters including Vanilla Circus for providing SEO advice and other content syndication help | Link to us | Terms | Privacy | Cookies | Complaints | Copyright | Spam emails / ICO | Spam images | Sitemap | All hosting and cloud migration by Cloudworks.

Important: Users take note, this is Spamdex - The Spam Archive for the internet. Some of the pages indexed could contain offensive language or contain fraudulent offers. If an offer looks too good to be true it probably is! Please tread, carefully, all of the links should be fine. Clicking I agree means you agree to our terms and conditions. We cannot be held responsible etc etc.

The Spam Archive - Chronicling spam emails into readable web records

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