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/700533
Commercial Investment Real Estate T RE N D S M A RK E T Transaction volume $2.5 billion YOY % change 69% Hotels traded 147 Price per room $114,300 Source: Colliers International Canadian Hotel Investment, 2015 Briefl y Noted Hospitality — "The brands are all chasing the millennials now," said Tye Turman, a senior vice president for development for Marriott International, at a recent conference discussion on hotel development trends. To attract young customers, brands are looking past the cookie cutter model and fl exing design and development rules to add unique elements. Trends include historic and offi ce building reuse and cobranding between select service and full service brands, particularly in urban areas. Industrial — New supply will slow industrial rent growth next year, as new supply comes online, according to CBRE. "We also expect that demand might ease a little, because it's been so strong for so long," says Jeff Havsy, CBRE's Americas chief economist. "You'll probably see a slight pickup in vacancy this year, but nothing dramatic." Availability of U.S. industrial space declined 20 bps to 9.2 percent in 1Q16, the lowest level since 2001. Multifamily — Apartment developers are hitting the breaks as the average annual rate of multifamily construction starts for March fell to 312,000, essentially the same rate as last year, according to JLL. This makes six months of starts below the 12-month average of 384,000. In addition, multifamily construction permits also declined for the third month in a row, down 12.4 percent. Offi ce — Nervous fi nancial markets led to lower job growth in the office-using sectors of business and professional services during 1Q16, which posted its lowest hiring fi gures since 4Q13, according to CBRE. A 10 bps hike in offi ce vacancy also occurred in 1Q16, but the overall trend is downward with 47 of 58 markets tracked showing a YOY vacancy decrease. Another positive sign: a 6 percent YOY increase in the average gross asking rent. Retail — Slowing sales growth will limit brick and mortar retail expansion, according to CoStar. Same-store sales growth dropped to 1 percent in early 2016, from a high in 2012 of 3.5 percent. "These numbers in aggregate indicate that public retailers will be pulling back on their expansion plans," says Ryan McCullough, CoStar's senior real estate economist. "The retail recovery has matured. We're beyond talking about pent-up demand for retail and are now looking at underlying fundamentals driving retail sales growth." 1031 Exchanges Lead Net-Lease Buyer Pool As more property owners near retirement, many are deciding to transition their investment portfolios from apartment assets that are trading at a premium into net-leased retail properties across the U.S. Among the benefi ts, higher initial yields than other low- maintenance options and reduced volatility relative to the other property types. Sector YOY change Hotel 3% Industrial 56% Multifamily 2% Offi ce 18% Source: Mortgage Bankers Association Loan Originations, 1Q16 Commercial Investment Real Estate professional services during 1Q16, which posted its lowest hiring fi gures since 4Q13, according to CBRE. A 10 bps hike in offi ce vacancy also occurred in 1Q16, but the overall trend is downward with 47 of 58 markets tracked showing a YOY vacancy decrease. Another positive sign: a 6 percent YOY increase in the average gross asking rent. Retail — Slowing sales growth will limit brick and mortar retail expansion, according to CoStar. Same-store sales growth dropped to 1 percent in early 2016, from a high in 2012 of 3.5 percent. "These numbers in aggregate indicate that public retailers will be pulling back on their expansion plans," says Ryan McCullough, CoStar's senior real estate economist. "The retail recovery has matured. We're beyond talking about pent-up demand for retail and are now looking at underlying fundamentals driving retail sales growth." are trading at a premium into net-leased retail properties across the U.S. Among the benefi ts, higher initial yields than other low- maintenance options and reduced volatility relative to the other property types. July | August | 2016