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/847000
COMMERCIAL INVESTMENT REAL ESTATE 32 July | August 2017 parks, promenades, apartments, and retail space to create a complete community. "The apartments we are building offer many ame- nities, including resort-style pools, exercise facili- ties, an internet café, and social areas for connecting with neighbors," says Shopoff, president and CEO of Shopoff Realty Investments in Irvine, Calif. In another case, his fi rm bought a 100,000-sf for- mer Target store out of bankruptcy. Shopoff plans to lease the frontage space, about 30 to 40 percent of the property, and either turn the back space into self-storage units or tear it down and build multi- family units. "The best solution is to repurpose the space because it would be tough to lease more than 30 to 40 percent of the property," he says. When his fi rm considers buying properties, it looks at many factors, such as the surrounding envi- rons, the change of use, adjustment of what's chang- ing for zoning and development in the area, and how much it will take to fi x environmental issues. "We recognize good opportunities, where other buyers see obstacles," Shopoff says. In Las Vegas, Sean Deson, CCIM, has evolved his fi rm's niche from a national agency business to a national direct private lender. Through the years, his company has adjusted its investment strategy to profi t from changing market dynamics. "We invest in value-added offi ce when offi ce can further leverage nearby existing amenities, such as hospitality or retail," says Deson, president of Deson & Co. "These amenities are largely a byproduct of the adjacent facilities." Transforming Communities Successful commercial real estate professionals are harnessing the inherent connection, elastic- ity, and resilience in urban centers to develop new mixed-use communities or to repurpose existing structures. Some fi rms, such as Browning, have restructured their teams into industry special- ization groups, facilitating greater target market knowledge and collaboration. "This structure allows us to have an early seat at the table with institutions, municipalities, and quasi-public institutions, which drive mixed-use developments," Wethington says. "In this way, we can act as a partner as the opportunity evolves, rather than reacting to an individual request or a specifi c request for proposal." For example, Wethington's group is collaborat- ing with another Browning team specializing in higher education to develop the Purdue Innova- tion District for the Purdue Research Founda- tion. Expected to span 30 years, the development encompasses multifamily and graduate housing; hospitality; retail; light industrial; off ice; and research and development. Wethington's team consults with the higher edu- cation team to ensure the multifamily and graduate housing components include collaboration space, green space, and bike storage. Also, the team has shared past experiences about optimum design and 4.56 4.10 3.95 3.53 3.44 3.38 3.33 3.24 3.13 3.05 2.94 Job growth Income and wage growth Interest rates Global economic growth Tax policies Inflation Strength of U.S. dollar New federal financial regulations Energy prices State and local budget problems Federal fiscal deficits/imbalances Economic/financial issues 4.13 4.03 3.83 3.78 3.57 3.51 3.30 3.26 3.22 3.20 3.19 3.14 2.99 2.84 2.82 2.61 1 2 3 4 5 Construction costs Land costs Infrastructure funding/development Vacancy rates Transportation funding Refinancing Affordable/workforce housing Future home prices NIMBYism State and local water regulations Increasing water conservation CMBS capital availability Deleveraging Sustainable buildings Wellness/health features in buildings Risks from extreme weather Real estate/development issues 1 No importance 2 Little importance 3 Moderate importance 4 Considerable importance 5 Great importance Importance of Issues for Real Estate 2016 Source: Emerging Trends in Real Estate 2016 survey by PwC and ULI