Each Wednesday, The Wrap presents a compilation of recent noteworthy
commercial real estate stories from a variety of publications.
Below are five stories that caught our eyes in recent days.
• “U.S.
Retail Sales Increase for Third Straight Month” by Tim Trainor of CoStar.
Recent economic reports are showing more signs of a gradual
economic expansion in the United States, according to Trainor. A new Census
Bureau report says the country’s retail sales totaled $412.9 billion in
September, the third straight month of increasing sales.
Retail sales from July through September were higher than
economists had expected, Trainor adds.
Other encouraging news includes the drop in the unemployment
rate to 7.8 percent after the addition of 114,000 jobs, although many of the
jobs added were part-time positions, Trainor reports.
Good signs in the real estate sector include positive
numbers in home starts, building permits and construction activity (not
including the Northeast), and home sales.
• “More
Robust Commercial Real Estate Recovery Projected for 2013” by Carisa
Chappell of REIT.com.
Those in the commercial real estate industry are optimistic
about its recovery next year as the job market seems to be improving and new
construction has been limited, according to the new “Emerging Trends in Real
Estate 2013” survey from PricewaterhouseCoopers (PwC) and the Urban Land
Institute.
Survey respondents said there should be gains in leasing,
rental rates and pricing for all real estate sectors, and also noted that newly
added jobs should increase absorption and push down vacancy rates in the
industrial, office and retail sectors.
Optimism about commercial real estate could increase
investment in the industry as other types of investments struggle, Mitch
Roschelle of PwC told Chappell. Investors are also expected to take on more
risk in their real estate portfolios, including in secondary and tertiary
markets, according to the survey.
• “Are
Rising Rents Too Much of a Good Thing?” by Bendix Anderson for National
Real Estate Investor.
Apartment rents are rising faster than inflation, meaning
more profits for real estate investors, but the trend also comes with risk,
Anderson reports.
“Landlords need to be careful,” Brad Doremus of Reis told
Anderson. “They can’t raise rents forever if they come up against that budget
constraint.”
Competition exists from new rental housing, cheaper rental
housing and for-sale housing, making sky-high rents unattractive, Anderson
notes.
According to a new report from the Center for Housing Policy
and the Center for Neighborhood Technology, the cost of housing rose 52 percent
between 2001 and 2010, while household incomes only rose 25 percent in that
time.
Transportation costs also rose dramatically in that time,
but that could make an apartment community in a place with less expensive
transportation more attractive, Scott Bernstein of CNT told Anderson.
• “Traditional
MOB Is Becoming Obsolete” by Carrie Rossenfeld of Globe St.
Healthcare reform is coming, and that means a dramatic change
for the medical-office sector, according to Gary McKitterick of law firm Allen
Matkins.
Specifically, McKitterick believes the traditional
medical-office building will soon become outdated. “Providers are reducing cost
by pushing services out of the hospital — the highest cost point for delivery —
into an outpatient setting,” he told Rossenfeld. “From a real estate
perspective, you need to understand what your local hospital is doing to push
services out.”
Sanford Smith of Hoag Memorial Hospital Presbyterian says
the industry needs to deconstruct the hospital and take out services that would
be better located in the heart of a community.
Other innovative ideas in the medical industry that could
greatly affect real estate include the idea of time-sharing spaces between
multiple physicians and “medical pods,” locations to which doctors travel to
see outpatients instead of patients coming to them.
• “Why
Pier 1 Is Choosing Bricks over Clicks — and Winning” by Lydia Dishman of
Forbes.
The CEO of retailer Pier 1 Imports, Alex Smith, isn’t completely
sold on the idea that e-commerce is better, telling Dishman his company offers the
experience of seeing a product in person with great service.
Smith is using funds to improve Pier 1’s physical stores
through remodels, relocations and merchandising fixtures set up to better
display products and keep customers lingering in the store, according to
Dishman.
Pier 1 is not totally turning its back on e-commerce, also
choosing to focus funds on its website, which was re-launched in July after
being shut down five years ago.
“We are trying as much as we are able online to replicate
the in-store experience,” he told Dishman.