Maybe the Worst Is Over?
While the number of stores closed
in 2012 increased by 9.6 percent over 2011, the amount of retail square footage
lost to the market decreased by 28.8 percent, according to the International
Council of Shopping Centers/PNC Research’s January report. In 2012, 46.5 msf of
retail space closed, compared with 65.3 msf in 2011. The amount of 2012 space
closed was more in line with the 46.7 msf of space closed in 2010, perhaps
indicating that retail is right-sizing itself due to smaller stores and better
Industrial Digs Up Best Five-Year Return
The Pension Real Estate
Association forecasters see the industrial sector providing five-year returns
of 8.5 percent annually, the highest of all property sectors, according to its
1Q13 Consensus Forecast survey of the NCREIF Property Index. In addition, while
multifamily returns are forecast to reach 9 percent this year, they decline
going forward to provide a five-year average of 8.1 percent annually. Office
and retail follow with five-year average returns of 8.0 percent and 7.9 percent
respectively. PREA firms surveyed include 28 large investment and adviser
commercial real estate companies.
"The growth trajectory should accelerate in 2014 with GDP growth ranging between 3 percent and 4 percent. Finally, after four years of sluggish growth, a very healthy U.S. economy is poised to emerge." — Kevin Thorpe, chief economist, Cassidy Turley
— Sequestration’s automatic spending cuts are slashing
federal travel budgets, one of hospitality’s most lucrative segments, says
HotelNewsNow.com. In 2011, local, state, and federal employees spent $30
billion in travel, according to the U.S. Travel Association.
Industrial — Net industrial absorption is expected
to jump from 18.4 msf in 1Q13 to 34.7 msf by year-end, according to Cassidy
Macro Forecast. Asking
rents are projected to increase from $5.03 to $5.12.
Multifamily — The robust apartment market has two
more years of improving fundamentals, according to Wells Fargo Securities 4Q12 Commercial Real Estate
little to fear from the current uptick in the rental home market. “The talk of
a permanent shift toward renting homes instead of buying them is considerably
overblown,” the report states, predicting a return to homeownership as the
Office — While 1.7 million office-using jobs
were lost in the recession, 1.8 million have been gained, primarily in professional
and business services, according to Jones Lang LaSalle and the Bureau of Labor
Statistics. Of the jobs added in February, 42 percent were office jobs, with
PBS comprising about 75 percent, followed by temporary help services and
— In 4Q12, shopping centers posted a net operating income psf gain of 4.3
percent over 4Q11, according to the National Council of Real Estate Investment
Fiduciaries and the International Council of Shopping Centers. Power centers
posted a 7.7 percent YOY NOI gain, followed by super-regional malls at 4.6
percent, and neighborhood and community centers at 3.8 percent. Regional malls
had the lowest gain at 0.4 percent.
tenants willing to locate in the suburbs of some of today’s hot markets face
more space options and much lower rents than CBD locations. In addition,
suburban rents are not rising as quickly as downtown rents, according to CBRE.