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.
• “Malls,
Self-Storage Led REITs in First Quarter” by A.D. Pruitt of The Wall Street
Journal.
The performance of real estate investment trusts (REITs) exceeded
analysts’ expectations in many cases during the first quarter, and REITs
focusing on luxury shopping malls and self-storage facilities saw the largest
gains, Pruitt reports.
Upscale malls and outlet centers that appeal to a wide range
of shoppers haven’t been significantly impacted by online competition,
according to Alexander Goldfarb, an analyst with Sandler O’Neill + Partners.
Additionally, self-storage REITs have performed strongly because
of rising rents and strong tenant demand, Pruitt notes.
Office and apartment landlords continued to see earnings
growth, but at a slower pace than in past quarters because of lackluster
employment growth and increased competition, Pruitt reports.
• “Property
Values Hovering Around Market Peaks” by Carisa Chappell of REIT.com.
“Five years after the onset of the
global financial crisis, bellwether pricing indices indicate that commercial
property values appear to have reached — if not surpassed — the market peaks of
2007,” Chappell writes.
According to the Green Street Advisors’ Commercial Property
Price Index, commercial property values increased 1 percent in April, putting
them above 2007 levels.
Another index showed that the unlevered property values of
REIT-owned properties nationwide were almost even at the end of April with
their January 2007 levels, Chappell reports.
• “Colliers:
Shopping Centers’ National Vacancy Rate Down in Q1” by Marianne Wilson of
Chain Store Age.
Shopping centers absorbed nearly 4.5 million square feet in
the first quarter, causing the national vacancy rate to drop ever so slightly, from
10.09 percent to 10.06 percent, according to Colliers International’s “2013 Q1
North American Retail Highlights” report.
As the housing and job markets improve, consumers’
confidence is rising, and they’re spending more, the report notes. The six North
American markets with the most shopping center leasing activity are also cities
that are experiencing significant long-term employment growth and strengthening
housing markets, according to the report.
• “Expect
Fed Decisions to Impact Lodging” by John Salustri of GlobeSt.com.
The Lodging Industry Investment Council’s annual member
survey shows concern over the impact that sequestration and Obamacare will have
on the market.
Sequestration is “anticipated to negatively impact hotel
owners,” the report says. “Fifty-five percent believe that the current
government sequestration will cause ADR to decrease 1 percent to 5 percent in
markets that rely heavily on government spending.”
Increased labor costs stemming from the new federal
healthcare law and the sluggish economy are also expected to affect the
industry, Salustri reports.
• “Running
to Stand Still: The Office Sector Sees Marginal Improvements” by Brad
Doremus and Victor Calanog of National Real Estate Investor.
With sluggish job growth leading to equally sluggish growth
in demand for office space, the national office vacancy rate declined just 10
basis points during the first quarter to 17 percent — the exact amount it
declined in the prior quarter, Doremus and Calanog report. More expansive job
growth would have a dramatic impact on the rate “since supply
additions are virtually nil,” they add.
Asking and effective rents grew by 0.7 percent during the
first quarter. “Despite 10 consecutive quarters of rent increases, rent levels
are still anchored at benchmarks last observed in late 2007,” Doremus and
Calanog report.
Still, tech- and energy-heavy markets are outperforming the
national average in terms of asking and effective rent growth, Doremus and
Calanog note.