Market Data

Market Trends

2013 CCIM Deal Makers

CCIM designees reported participating in 242 deals totaling almost $2.4 billion last year, handily surpassing 2013’s total of $1.7 billion. The figure is based on the number of deals published in Commercial Investment Real Estate’s Deal Makers and Deal Makers Online columns for the year. While representing only a fraction of designee activity, the numbers do reflect an improving market. On average, CCIM members close more than $250 billion annually in transactions. CCIM designees: report your deals to dealmakers@ccim.com.

Briefly Noted

Hospitality — Branded midscale and upscale projects dominate the hotel construction pipeline, according to Lodging Econometrics 3Q13 report. Of non-casino projects in the works, nearly 80 percent are branded, with 30 percent of those being upscale and 61 percent midscale projects. Hilton, Marriott, and IHG account for 74 percent of the branded projects.

Industrial — Currently nearly 30 percent of big-box warehouse demand is due to e-commerce, says a recent Jones Lang LaSalle report, with retailers now focused on opening mid-size warehouses in smaller markets to meet same-day delivery demand. The explosive growth of etailing may eventually lead to six distinct types of e-commerce facilities.

Multifamily — Infill development builders are experimenting with smaller units to serve the needs of young professionals encumbered by student debt but attracted to urban living. In a presentation at the Counselors of Real Estate annual convention, Patrick Kennedy said his company Panoramic Interests determined that a range of 275 sf to 295 sf was comfortable for “Generation Rent,” particularly when access to a large outdoor deck and a “dramatic” lobby space was included.

Office — “Office space will expand in some surprising markets,” reports PWC and Urban Land Institute’s Emerging Trends in Real Estate 2014. With low vacancies and rents in the $27 to $28 psf range, downtown construction is feasible in a number of Southeast markets including Greenville and Charleston, S.C., Charlotte and Raleigh, N.C., Birmingham, Ala., Nashville and Chattanooga, Tenn.

Retail — Are power centers back? Possibly, as the vacancy rate has fallen to below 5.5 percent from a high of 8 percent in 2009, according to CoStar’s 3Q 2013 Retail Review and Outlook. Dollar stores and discount clothing stores have taken up some space, as well as grocery anchors from neighborhood centers. A CoStar Index puts the sales psf in power centers up 15 percent from 2007.

Top Investment Prospects

1. Value-added

2. Development

3. Opportunistic

4. Core-plus

5. Core

Source: Emerging Trends in Real Estate 2014 survey

“2014 is the year that institutional investors reduce their emphasis on core properties. … their future equity investments should reflect a search for higher returns in value-added and opportunistic investments in secondary locations, with development focused in only the strongest markets.”

— Emerging Trends in Real Estate 2014

“The people that invest in deals are going to do really well. The people that invest in markets have more risk — you really need to play the deal, not the market or sector.”

— participant comment from the Q4-2013 Real Estate Roundtable Sentiment Survey, which measured a three-point drop in overall real estate conditions from 3Q13 to 4Q13, due to political gridlock and the slow recovery pace.