Tag: commercial mortgage financing

Death of the American mall

by Randybaconin Commercial Mortgage LendingLeave a Comment on Death of the American mall

Last week, big box retailers such as Macy’s M, -1.40%  and Nordstrom JWN, +0.72%  reported weak results and both stocks came crashing down, inflicting damage on the retail sector and equity markets in general. I contend that what is happening to these companies is not a result of a weakening economy. Rather, it is due to a secular change — a paradigm shift — in consumer behavior and retail commerce. Investors fail to recognize this at their own peril.

What is most remarkable, in this shift, is the decline of traditional shopping, over the past few years, at malls across the country. I refer to this phenomenon, with no sense of hyperbole, as “The Death of the American Mall.” Recently I discussed this theory and its consequences for investors on WSJ Podcasts and Bloomberg Radio, but wanted to put my thoughts in writing for our MarketWatch readers.

Do you remember the classic movie “Fast Times at Ridgemont High”? It was a story which revolved around teenagers working and hanging out in a mall. I grew up in the 1960s, went to high school in the 1970s and graduated from college in 1982. During those years, malls in the United States were a destination for teens, tweens and young adults. You would go there to get the latest record release (those were vinyl disks which played music on a turntable), shop, grab a meal, see a flick or just hang out with friends. It was also a great place to get a job.

Read entire article here on Marketwatch.com

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Scarce Labor Drives Construction Costs for Multifamily Developers

by Randybaconin Real EstateLeave a Comment on Scarce Labor Drives Construction Costs for Multifamily Developers

The good news for the multifamily industry is that the cost of construction materials is very low. The bad news is that skilled construction workers are increasingly expensive and hard to find.

“I’m pretty optimistic that materials costs are going to stay low and maybe get lower,” says Ken Simonson, an economist with Associated General Contractors of America, an industry trade group. “My number one concern is the availability of labor.”

The U.S. economy is relatively strong—at least compared to the rest of the world. From Asia to Europe, economies around the world have struggled this year, driving down demand for products bought and sold on the global market, from oil and steel to concrete. But here in the U.S., unemployment is low. The price of labor needed to build large projects is high and rising, often wiping out the cost benefit of cheaper materials.

Overall costs rise

The prices contractors charge for construction projects, including the cost of labor, rose slowly but significantly this year, according to the U.S. Bureau of Labor Statistics. The overall producer price index for the construction of new non-residential buildings climbed 1.8 percent over the year that ended September 2015. (Costs for “non-residential” construction do not include single-family homes, and include many of the same materials and labor as large apartment developments, especially high-rise apartment buildings.)

The 12-month increases ranged from 0.2 percent for healthcare construction to 1.8 percent for schools to 1.9 percent for warehouses and industrial buildings and 2.4 percent for office buildings.

Worldwide demand for many commodities has fallen over the last year and that makes those goods less expensive in the United States.

Read entire article in National Real Estate Investor here.

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What Do Investors Need to Know About Crowdfunding?

by Randybaconin Commercial Mortgage LendingLeave a Comment on What Do Investors Need to Know About Crowdfunding?
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Crowdfunding platforms have exploded recently, with experts expecting $2.57B raised this year. And while we have discussed what investors should look for in a platform, we’ve yet to tackle why you should be looking at crowdfunding in the first place. To get a grip on crowdfunding’s advantages, potential concerns and future, Bisnow sat down with partner RealtyMogul.com’s CTO and co-founder, Justin Hughes (pictured). The Appeal Justin says the advantages of crowdfunding extend beyond accessibility and reach (although he admits they are significant benefits for investors). A solid crowdfunding platform provides investors additional investment opportunities they wouldn’t normally get because investors can “leverage the connections of the platform, as well as benefit from the enhanced purchasing power when investors pool their capital.”

Read more at: https://www.bisnow.com/national/news/technology/is-crowdfunding-an-investors-best-friend-52400?utm_source=CopyShare&utm_medium=Browser

After Leading CMBS Out of Recession, Retail Loans Slower To Refinance

by Randybaconin Real EstateLeave a Comment on After Leading CMBS Out of Recession, Retail Loans Slower To Refinance

For all of their success in leading a resurgence of CMBS financing following the Great Recession, retail properties face a tougher rode ahead in the short term.

Approximately $50 billion of retail-backed CMBS loans are scheduled to mature through 2016. Collateral backed by retail properties accounts for the largest portion of that, its also accounts for the largest proportion of loans defaulting at their 2015 maturities, according to Fitch Ratings.

For loans with original maturities in 2015, retail comprises the majority of the currently delinquent loans ($555.2 million) followed by office ($469 million). Other property types have far lower levels of deliquent loans, including hotel ($162.9 million), mixed use ($161.9 million), multifamily ($44.6 million), industrial ($12.4 million), and self-storage ($6.5 million).

Read the entire article at www.Costar.com.

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Private Equity Funds Are Sitting on $244B for Commercial Real Estate

by Randybaconin Real EstateLeave a Comment on Private Equity Funds Are Sitting on $244B for Commercial Real Estate
Private Equity Funds Are Sitting on $244B for Commercial Real Estate
Private equity firms are loving them some commercial real estate as funds ended Q3 with $244B of dry powder ready for investments in the industry, Preqin data says. Additionally, private institutional investors are still raising money to bankroll investments in core product in core market—i.e. pricier assets—with 52% of funds focused on North America. “The easy money has clearly been made and pricing is very aggressive,” Vornado CEO Steven Roth says. Vornado holds $555M in property investments and is now focusing on building up its cash reserves from $1B to $2B by the end of the year. Among other funds to keep an eye on, Blackstone Real Estate Partners VIII closed last quarter after raising $15.8B, making it the largest commercial real estate PE fund ever. [CoStar]

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/private-equity-funds-end-q3-with-244b-for-cre-52017?utm_source=CopyShare&utm_medium=Browser

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Sustainability: The New Norm in Real Estate Development and Investing

by Randybaconin Commercial Mortgage Lending, Green financingLeave a Comment on Sustainability: The New Norm in Real Estate Development and Investing

Time was when the idea of sustainability in real estate development and investing was a pretty soft notion. Sure, everyone liked the “idea” of reducing carbon emissions, protecting the environment and exploring alternative energy sources, but few were willing to spend money on it. Today, things are vastly different, and it’s the bottom line that’s talking.

A number of factors have driven real estate sustainability into the mainstream, but the greatest influence, whether in the initial design phase or via retrofit, are tenant expectations.

According to McGraw-Hill Construction’s report, “World Green Building Trends—Business Benefits Driving New and Retrofit Market Opportunities in Over 60 Countries,” client demand (35 percent) and market demand (33 percent) were the top two reasons the global green building market grew to $260 billion in 2013, including an estimated 20 percent of all new U.S. commercial real estate projects.

For a commercial building to be able to proclaim sustainability and eco-friendliness is one of its best marketing tools. LEED certification has become a de facto standard for many U.S. cities and class-A buildings. The U.S. Green Building Council-issued LEED certification is awarded to new and renovated office buildings, interiors and operations based on how they’ve adopted best practices in energy, lighting, air quality, water usage and more.

Similarly, the sustainability metrics detailed by GRESB—Global Real Estate Sustainability Benchmark—are increasingly proclaimed by properties.

Government offices for the most part must have LEED certification or other demonstrations of green compliance, according to the U.S. General Services Administration. In other commercial spaces, many tenants simply won’t lease class-A space that’s not LEED-certified.

View entire article here in National Real Estate Investor.

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