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Introducing the Mogul Minute
April 22 | 2016

Mogul Minute

Here at RealtyMogul.com, we keep our finger on the pulse of all things real estate, from finance to technology and everything in between. We make a point of sharing interesting articles and think pieces among RealtyMogul.com staff to help our team stay abreast of the market, and ahead of the curve.

So we thought, why not share some of these insights with you, our partners?

We are proud to introduce “The Mogul Minute” – a new blog, specially curated with interesting content and our favorite news stories to help keep you up-to-speed on all the latest industry news and trends.

Here we go!

Got A Minute? Here’s some recommended reading with key points from the content:

C&W: Q1 Industrial Absorption Up Y-O-Y (GlobeStreet)

  • Although big box retail is suffering due in large part to online retail, the industrial market has been booming
  • US industrial markets absorbed nearly 58 million square feet of space in 1Q16 – this is up 9.3% year-over-year
  • The quarter marked the 24th consecutive quarter of positive net occupancy gains with this phase of expansion marking the longest on record. During the downturn the industrial market lost 182 million of square feet of occupancy and has now absorbed 990 million square feet during this expansion period
  • The vacancy rate fell 20 basis points from the prior quarter to 6.1%. This is 70 basis points lower on a year-over-year basis
  • Industrial rents increased 3.8% year-over-year with increases in 68 of 79 markets tracked by Cushman & Wakefield. In many markets, industrial rents are now either at their historic high or quickly approaching it.
  • Developers are breaking ground on more speculative projects but “it remains well below what we observed at the peak of the last cycle.” – Jason Toliver, C&W head of industrial research.
  • The strongest market in terms of demand for industrial space are: DFW, Central NJ, Chicago, Inland Empire, Atlanta, Detroit, Pennsylvania I-81/I-78 Corridor, Philly, Greater LA, and Phoenix.

U.S. commercial real estate sales volume dropped 20% in the first quarter (Real Capital Analytics Report - The Big Picture – 1Q2016)

  • Though not unexpected, U.S. commercial real estate sales volume dropped 20% in the first quarter from a year earlier on sales of $111 billion.  This pace of activity is still elevated and there were only two other periods in history when Q1 deal activity was higher than $100 billion. Overall volume is down across all property types except for multifamily – which was up 12% year-over-year.
  • For commercial property, all of the six major metros saw strong pullback as investors had concerns over buying at record low cap rates.
  • Even as volume fell, prices held steady in the first quarter from the year earlier period. For most property sectors cap rates were largely unchanged. The combination of flat cap rates and lower volumes suggest that buyers and sellers were further apart on pricing expectations.
  • Individual asset sales, which can be a better gauge of investor demand and less subject to the swings of portfolio and entity-level deals, fell 11%.
  • At a high level, the pull back is due to a number of factors including new pricing expectations based on the changing CMBS financing market. Some think a rebound is in order as spreads have recently thinned.

As Fed goes silent, so too go chances of April rate hike (Market Watch)

  • The Fed is widely expected to hold rates steady during their meeting next week following underwhelming March inflation performance and expectations of the weak first quarter GDP data (expected to come in at 0.8% for the quarter)
  • This follows non movement in March where it held rates steady and scaled back its projection of rate hikes from four two

Second-Tier Malls Have Their Fans (WSJ)

  • On the other end of the spectrum, there are those that are taking the contrarian view and feel the hate has gone too far for lower tier malls
  • The majority of these asset purchases have focused on regional malls where there is no mall more than 50 miles away and little competition

Blackstone Weighs Opening Up Real Estate to Individual Investors (Bloomberg)

  • Nothing definitive here, but Blackstone is considering open up its investments to individual investors. “The prospects for growth in that business are huge. At some point as we move into the retail chain of distribution with this, we should be able to create a really very large-scale business.” – Chairman and CEO Steve Scharwzman
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Tim Ednoff Headshot
Written by , Associate - Commercial Equity at RealtyMogul.com

Tim evaluates investment opportunities as well as performs due diligence and writes content for various equity and debt transactions. Outside of the office, Tim is an avid sneaker collector, a passionate health and fitness advocate, and a dedicated podcast enthusiast.

 
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