MARKE T
TREND S
Briefly
Noted
Hospitality — Sequestration's automatic spending cuts are slashing federal travel budgets, one of
hospitality's most lucrative segments, says HotelNewsNow.com. In 2011, local, state, and federal
employees spent $30 billion in travel, according to
the U.S. Travel Association.
Industrial — Net industrial absorption is expected
to jump from 18.4 msf in 1Q13 to 34.7 msf by
year-end, according to Cassidy Turley's U.S. Macro
Forecast. Asking rents are projected to increase from
$5.03 to $5.12.
Suburban Bargains
Ofce tenants willing to locate in the suburbs of some of today's hot
markets face more space options and much lower rents than CBD
locations. In addition, suburban rents are not rising as quickly as
downtown rents, according to CBRE.
Downtown vs. Suburban Office
Gross average asking rents, $psf, 4Q12
METRO
DOWNTOWN
SUBURBAN
DIFFERENCE
$42.97
$19.58
$23.39
Houston
33.96
21.23
12.73
Denver
25.45
18.72
6.73
Seattle
32.29
26.65
5.64
Boston
Source: CBRE
Multifamily — The robust apartment market has
two more years of improving fundamentals, according to Wells Fargo Securities 4Q12 Commercial Real
Estate Chartbook, and little to fear from the current
uptick in the rental home market. "The talk of a
permanent shift toward renting homes instead of
buying them is considerably overblown," the report
states, predicting a return to homeownership as the
economy improves.
Office — While 1.7 million office-using jobs were
lost in the recession, 1.8 million have been gained,
primarily in professional and business services,
according to Jones Lang LaSalle and the Bureau of
Labor Statistics. Of the jobs added in February, 42
percent were office jobs, with PBS comprising about
75 percent, followed by temporary help services and
financial services.
Retail — In 4Q12, shopping centers posted a net
operating income psf gain of 4.3 percent over 4Q11,
according to the National Council of Real Estate
Investment Fiduciaries and the International Council of Shopping Centers. Power centers posted a 7.7
percent YOY NOI gain, followed by super-regional
malls at 4.6 percent, and neighborhood and community centers at 3.8 percent. Regional malls had
the lowest gain at 0.4 percent.
Apartment Upkeep
In 2011, apartment owners spent $67.9
billion on operations, maintenance, and
capital improvements.
Utilities
15.5%
Repairs &
maintenance
14.3%
Building
services
42.8%
Management
27.4%
Source: National Apartment Association
"RERC is forecasting a total return of
approximately 8.0 percent for institutionalgrade commercial real estate."
— RERC Real Estate Report, 1Q13
10
May | June | 2013
Commercial Investment Real Estate