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Retailers Focus on Large Distribution Centers, Small Urban Warehouses for Fast Delivery

by Randybaconin Real EstateLeave a Comment on Retailers Focus on Large Distribution Centers, Small Urban Warehouses for Fast Delivery

As third quarter fundamentals continue to show improvement in the industrial sector, retailers are honing their distribution center strategy to meet current e-commerce demands.

Fundamentals for warehouse space have improved steadily over the past five years. The availability rate for industrial properties declined to 9.6 percent nationally in the third quarter, according to a report from commercial real estate services firm CBRE. Net demand for industrial space is on pace to exceed 200 million sq. ft. this year, and the vacancy rate dropped to 7.3 percent, almost a full percentage point down from the third quarter of 2014, according to report from Cushman & Wakefield. Demand for class-A logistics product will continue to fuel the rapid increase in construction through the rest of the year and into 2016, the Cushman report predicts.

Dwight Hotchkiss, president of brokerage services and the national director of industrial with real estate services firm Colliers, says warehouse demand from retailers has been one of the top reasons for the improved industrial picture. Increased online purchasing, driven by rising smartphone and tablet use, has corresponded with retailer demand for more distribution center space.

However, in the years immediately following the recession, retailers trying desperately to follow Amazon’s example engaged in a jumble of distribution center activity. Same-day delivery of products became the goal, but many companies weren’t sure how to achieve it, or whether they had the capital to invest in the infrastructure necessary to get products out that quickly. Omni-channeling entered the retail and industrial lexicon, as retail chains tried various storage use combinations to get products to customers.

Today, two strategies have emerged, Hotchkiss says: A focus on expanding the “first mile” of distribution, such as building massive distribution centers with advanced robotics and RFID technology, to the “last mile,” where e-commerce retailers are leasing up older or smaller warehouses near urban centers to shorten delivery routes.

“We have an expectation in this digital age of more instantaneous delivery,” he says. “A lot more people today are shopping this way. It takes away from the brick-and-mortar storefront and makes more demands on the warehouse space.”

Read entire article here in National Real Estate investor.

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Class-B, Suburban Class-A Apartment Properties Gain Momentum

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on Class-B, Suburban Class-A Apartment Properties Gain Momentum

Class-A apartments in core neighborhoods may no longer be the best investment in today’s market. Vacancy rates are rising for the most expensive apartment communities in urban neighborhoods, research shows.

“The urban class-A market is seeing some pressure. It’s not a crisis by any means, but it’s now an underperforming segment of the market,” says Jay Parsons, an expert with MPF Research, a division of RealPage, Inc., an apartment market intelligence firm. “We expect that to remain the case through 2016 and likely into 2017.”

The pressure is due to the fact that developers are building so many new luxury apartments in urban areas, especially in downtown districts. Vacancy rates are lower and rent growth is steady for apartment communities that don’t have to compete so hard to attract renters—including class-A apartment communities in suburban areas, where there isn’t so much new construction, and class-B apartment communities everywhere.

“Class-A vacancy rates will continue to rise, while class-B vacancy should decline as few developers build class-B buildings,” says Barbara Byrne Denham, economist with New York City-based research firm Reis Inc.  “Rents should continue to rise, although the rate of growth for class-A rents will be lower than it has been. The rate of growth for class-B rents should stay the same.”

Vacancy rates fall for class-B apartments

Usually, class-A communities have significantly fewer vacant apartments than class-B communities. Over the last dozen years, from 2003 to present, the class-A apartment vacancy rate averaged 5.2 percent. That’s 40 basis points lower than the vacancy rate for class-B apartments. But that difference has vanished as class-B apartments catch up to class-A—both had an average vacancy rate of 4.9 percent over the last two years, according to data firm Axiometrics Inc.

Read entire article in National Real Estate Investor here.

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Everything You Need to Know About Commercial Solar

by Randybaconin Real Estate, TechnologyLeave a Comment on Everything You Need to Know About Commercial Solar
Everything You Need to Know About Commercial Solar
As the price of solar panels continues to drop–they’re already 80% lower then in 2008–more commercial companies are finding several reasons to switch over. Actually, make that several billion reasons. The commercial sector consumes more than 1.3 trillion kWh each year, and since the average electricity rates for commercial users have inched up more than 20% in the past 10 years—from $0.08/kWh to more than $0.10/kWh—that adds up to an increase of tens of billions of dollars in utility bills. So it definitely makes sense for companies to generate their own electricity. So much so, that it could become the top source of electricity by 2050.
The Challenges
But while the benefits are promising, there are still some challenges. For starters, there’s always a possibility that Congress won’t extend a 30% tax credit for solar power beyond 2016. That would deliver a financial blow to commercial and utility scale projects. Meanwhile, smaller commercial companies are already facing the hurdle of high upfront costs. Fortunately, solutions like third-party ownership—where a third-party takes on the initial costs of designing, constructing and owning the solar system, then sells the electricity to the customer at lower rates—help mitigate that problem. Then there’s the issue of land. The National Renewable Energy Laboratory (NREL) estimates that a 100% solar America would require solar installations on up to about 0.6% of the country’s total land area. Or roughly the size of West Virginia.

Read more at: https://www.bisnow.com/national/news/energy/everything-you-need-to-know-about-commercial-solar-51455?rt=title?utm_source=CopyShare&utm_medium=Browser

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The 11 Largest EB-5 Projects in America

by Randybaconin Commercial Mortgage Lending, Real EstateLeave a Comment on The 11 Largest EB-5 Projects in America
The 11 Largest EB-5 Projects in America

The EB-5 Program allows for foreign investors to have stakes in US developments while also reducing costs for US developers and helping to create regional jobs. So far, $3.7B has streamed into major US cities, such as NYC and San Francisco. “EB-5 is an alternative source of funding for good projects and to create more jobs quicker,” US Immigration Fund VP Nicholas Mastroianni tells Bisnow. “It allows them to free up capital to do more projects.” Here are 11 of the largest and most important projects funded by EB-5 in the country.

Read more at: https://www.bisnow.com/national/news/commercial-real-estate/top-eb-5-projects-51067#0?utm_source=CopyShare&utm_medium=Browser

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The Cost of Operating a National Shopping Center

by Randybaconin Real EstateLeave a Comment on The Cost of Operating a National Shopping Center
The Cost of Operating a National Shopping Center (Chart of the Week)
The Institute of Real Estate Management (IREM), an international community of real estate managers, collected the national median income for open shopping centers based on average actual occupancy (AAO). The findings range from $15.28/SF to $25.45/SF. The Northeast and Mid-Atlantic regions reported the highest income/SF for open centers. The individual expense categories represent open shopping centers by proportion of total operating cost based on AAO. Insurance and taxes accounted for 45% of total operating costs; services consumed 14.2%; maintenance and repair and utilities accounted for 8% and 8.7%, respectively.
Click here to download the full report.

Read more at: https://www.bisnow.com/national/news/retail/the-cost-of-operating-a-national-shopping-center-chart-of-the-week-51121?rt=title?utm_source=CopyShare&utm_medium=Browser

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