“As lenders find it more difficult to serve a narrow slice of the market in 2011, they’ll be forced to broaden the range of deals that they’ll finance in order to put their money to work, suggesting that there may be some hope for those who still struggle to find debt.”
— The Real Estate Roundtable Sentiment Survey, 1Q11
Retail Bull’s-Eye on Canada
Can you believe there’s not a Target in Canada? But not for long as
the ubiquitous U.S. chain just bought 220 leases of Canadian retailer Zellers
and plans to open about 100 of them by 2013. This deal may remake the Canadian
retail scene, says the Financial Post, paving the way for a number of specialty
retailers, such Pier One and Kohl’s, to expand north. And the prospect of these
new faces is prompting Canadian shopping center owners to spruce up their
formats in hopes of attracting U.S. retailers already very well known to the
Canadian market. Canada’s consumer confidence rose 7.1 percent in January — the
highest since late 2009 — signaling that Canadians are ready to shop. Other
U.S. retailers gearing up expansion plans to meet that need by 2012 include
Wal-Mart with 40 stores, Tanger Outlet Centers with 15 stores, and J. Crew and
Marshalls, according to the Winnipeg Free Press. While Canada’s homegrown
retailers will have to step up their game to compete, the other big losers may
be U.S. retail locations close to the border.
Hospitality – Midscale hotels with food and beverage is the only
lodging sector to decline in number of rooms from December 2006 to November
2010, according to Smith Travel Research and HVS data, which reports a 6.9
percent drop. Luxury and upscale sectors posted the largest increase in room
counts at 34.0 percent and 35.9 percent respectively, followed by midscale
without food and beverage reporting a 21.1 percent increase.
Industrial – Last year delivered the lowest amount of new industrial
space as a percentage of total inventory since 1960, according to CoStar. About
17 million sf started construction in 2010, almost 90 percent below the 10-year
annual average of 136 million sf.
Multifamily – Secondary and tertiary markets should see increased
investment activity this year as capitalization rate compression and limited
supply of class A properties send investors searching for stronger yields in
smaller markets, according to Marcus & Millichap. The returns on mid-tier
properties in tertiary markets are particularly attractive for longer-hold
Office – Strong acquisitions of medical office and single-tenant
net-leased properties pushed nationwide suburban office properties to an 88
percent increase in sales volume in 2010, according to Real Capital Analytics.
MOB sales totaled $3.1 billion, an 80 percent rise over 2009, and NNN office
properties racked up $6.5 billion in sales, 125 percent over 2009 and almost
one-third of all suburban office sales in 2010.
Retail – Challenges facing the single-tenant net-leased retail market
this year include a tightening supply of product due to lack of development and
strong sales in 2010, according to the Boulder Group. The number of retail
properties added to the market declined 5.2 percent from 3Q10 to 4Q10, while cap
rates fell from 8.1 percent to 8.0 percent over the same period.
More than 4.7 million charging stations will be available to electric
car owners in the U.S. by 2015, according to a recent study by Pike Research.
That means commercial real estate owners and managers who deal with parking
structures must take charge of installing stations for the 40 million electric
cars that are expected to be on the road by 2030. National retailers such as
Whole Foods, Best Buy, and Meijer have installed stations at stores in certain
markets in the West and Southwest, according to USA Today. Some retailers
provide free electric charges; however, at the Mall of America in Bloomington,
Minn., customers pay $3 per hour for use. Car Charging Group, which installed
and maintains the mall’s units, splits the revenues with the mall. Charging
stations cost from $2,000 to $6,000 plus installation, according to CCG’s CEO
Michael Farkas. Currently, federal tax credits offset about 50 percent of the
“Wells Fargo, which makes one out of three U.S. commercial loans, plans to hire about 240 commercial bankers this year, a 10 percent increase
over current staff levels.”
— Financial Times, Feb. 1, 2011