Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/923123
COMMERCIAL INVESTMENT REAL ESTATE 8 January | February 2018 $1.0 Mobile Home Self-Storage Q1 2014 Q2 Q3 Q4 0.8 0.6 0.4 0.2 0.0 Q1 2015 Q2 Q3 Q4 Q1 2016 Q2 Q3 Q4 Q1 2017 Q2 Q3 $ in Billions MARKET Briefly Noted Hospitality — The landscape for hotels is changing fast due to geopolitical and economic factors. Also, technological disruption, millennials' cultural expectations, and new market players are causing structural shifts. JLL has identified five groups of cities that provide different opportunities for hotel investors and developers. The five groups consist of Global Giants, with cities such as New York City and London; Rising Giants, including Dubai, United Arab Emirates, and Shanghai; Gateways, with cities such as San Francisco, Singapore, and Sydney; New World Cities, with mid-sized cities like Vancouver, B.C., and Dublin; and Emerging Hotspots, such as Bangalore, India, and Ho Chi Minh City, Vietnam. Industrial — Demand continues to outpace new supply for industrial properties nationwide, according to JLL. Year-to- date, the U.S. delivered 161 million square feet of new industrial property and absorbed about 165.6 msf. During Q3 2017, nearly 25 percent of the total U.S. leasing demand for industrial came from e-commerce companies. Vacancy rates remain steady at 5.2 percent, and average cost of industrial space was $5.40 psf, an all-time high. Multifamily — The hurricanes in Florida and Texas have a cost for the multifamily sector; many workers will migrate to those states for rebuilding apartments, resulting in a slower delivery schedule for the rest of the nation. Despite the current long cycle, multifamily continues to show strength, driven by the steady tide of millennials and downsizing baby boomers and the healthy economy, according to Yardi Matrix. Office — Employers are seeking office locations near public transportation, which offer co-working and flexible office space options, according to Avison Young. Class B buildings often are being renovated to Class A-, while redevelopment continues to turn obsolete buildings into apartments, schools, and self-storage facilities. The U.S. office market is immense — about 5 billion square feet – of which about 3.3 bsf is located in suburban markets. Retail — As shopping malls reinvent their mix of tenants and use of space, vacancies rose to 8.3 percent in 3Q 2017 compared to 2Q 2017, according to Reis. With more retailers declaring bankruptcy or closures, this trend will continue. Ten retail companies filed for bankruptcy during the first three quarters in 2017, which is headed toward eclipsing the 20 retail bankruptcies during the 2008 Great Recession, according to AlixPartners. Despite these headwinds, asking rents moved up 0.4 percent, while effective rent rose 0.5 percent, Reis reports. Mobile Home and Self-Storage Deliver Sterling Performance Source: Trepp ProjectB (mobile homes), Snapphoto (storage) T R E N D S 1Q 2014 through 3Q 2017 Mobile Home and Self-Storage Deliver Sterling Performance