Market Data

Market Trends(17)

More Women Join Industry

More women are joining the commercial real estate profession, but men still earn more at comparable age and experience levels, according to a 2005 Commercial Real Estate Women Network survey. Women comprise 36 percent of commercial real estate professionals, up from 32 percent five years ago. The financial/professional services sector added the most women, a 7 percent increase over the past five years. Yet female industry professionals still are clustered in lower-paying positions in all four specializations.

More Offshore Gains

While cheaper labor is the main reason companies take business overseas, offshoring also is boosting corporate bottom lines through capital savings, according to a Boston Consulting Groups study. In a rapidly developing economy, a company can add about 6 percent to the return on capital expenditures such as manufacturing facilities, researchers found. By using locally made equipment, companies save 20 percent to 80 percent on fixed assets, and since labor is cheaper, they use more labor and less or older machinery. Better productivity is an added bonus as most offshore locations have six-day work weeks and lower pay for overtime and holidays.

Briefly Noted

• HOSPITALITY - The 3Q05 lodging construction pipeline increased by only 197 projects over 2Q05, the lowest 2005 quarterly increase, signaling developer caution, according to Lodging Econometrics.

• INDUSTRIAL - Manufacturing's strong fundamentals, lack of institutional and foreign buyer interest, and limited supply have increased the sector's investment appeal, especially in technology-heavy markets, says Marcus & Millichap.

• MULTIFAMILY - The National Association of Home Builders' Multifamily Stock Index rose 2 percent in September 2005, marking a 26 percent year-over-year increase in the total returns of 27 publicly traded apartment companies.

• OFFICE - The office market continues to tighten, with the national vacancy rate falling to 15.1 percent at the end of 3Q05, putting it at the halfway point to full recovery, says Grubb & Ellis.

• RETAIL - Shopping center real estate investment trusts with assets outside of key Wal-Mart markets outperformed the overall REIT shopping center sector by 34 percent, and REITs with assets within Wal-Mart markets underperformed the sector by 15 percent, according to ICSC Research Review.

Hiring for Success

New employees have almost a 50-50 chance of failing, most because of poor interpersonal skills, but hiring managers must share the blame, according to a Leadership IQ report. The three-year study of 20,000 hiring situations predicts that 46 percent of newly hired employees will fail within 18 months because: 26 percent can't accept feedback; 23 percent can't understand and manage emotions; 17 percent lack the necessary motivation; 15 percent have the wrong temperament for their jobs; and 11 percent lack the necessary technical skills. More than 82 percent of the hiring managers interviewed reported that in hindsight they perceived subtle clues to such problems. But because of their fixation on finding technically competent employees, they overlooked the signs of potential failure. The most successful hiring managers emphasized interpersonal and motivational issues in interviews.

Seniors Housing Offers Investment Potential

A shakeout among operators and a slowdown in new facility construction has given the seniors housing market a second lease on life, according to Marcus & Millichap. Operating averages are up across all sectors and a clearer model for investment success has emerged: Larger unit sizes, quality locations, and state-of-the-art amenities characterize the most sought-after investment properties.

Who's Getting the Money?

Light manufacturing, industrial distribution, and service companies are most likely to receive funding from lending institutions over the next six months, according to Phoenix Management Services' 3Q05 "Lending Climate in America" survey. Health care, retail, and real estate are the next three most attractive industries. Least attractive are start-ups/new ventures, technology, and agriculture/forestry/fishing.

Most Closed Hotels Convert to Other Uses

Only one-third of 170 currently shuttered U.S. hotels will reopen as hospitality properties, according to a Lodging Econometrics analysis. Of those remaining hotels, 38 are undergoing renovations, with 17 re-opening under the same brand, 16 switching brands, and five converting to condominium hotels. The remaining 22 will be demolished to make way for new hotels on the same site. The 110 hotels remaining closed will convert to residential use or be replaced by another commercial use. Cities with the most closed hotels are New York, Las Vegas, Miami, Phoenix, and Tampa, Fla.

Multifamily CEOs Top Chart

Chief executive officers of multifamily real estate companies substantially outearn their compatriots heading real estate finance, retail, office and industrial, and corporate real estate companies, according to Construction & Real Estate Leaders 2005 executive compensation report. Multifamily CEOs earn a median base salary of $550,000, almost 50 percent more than office and industrial company execs, who post a median salary of $280,000. They are followed closely by retail CEOs who earn a median of $268,000. Real estate finance CEOs come in next with $190,000, with corporate execs trailing at $157,000. Bonuses don't change the rankings, but they boost multifamily execs ahead another 10 percent.

Independent Grocers Go High Tech

Despite the looming shadow of Wal-Mart, national grocery chains and other national retailers such as Target are homing in on food-buying consumers. But independent grocery retailers are holding their own, even looking toward expansion, and using technology to hone their advantage over the supermarket big boys, according to Progressive Grocer's survey on technology and the independent grocer. Real estate plays a big role in their fight to remain competitive, as most independents cite location and convenience as their biggest customer draws. In addition, 61 percent expect to expand in the next three years. While independents have embraced technology, they choose different tech tools than the large grocery chains. The industry's leading tech innovation - self-checkout - ranks last among independents, mostly because they lack the space for it. Instead they are interested in wireless communications - so checkers don't have to stop checking to answer phones for price checks and stores can keep better track of home deliveries.