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Mogul Minute - 5/3/2016
May 3 | 2016

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?

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

DLA Piper Report: CRE Execs in the Caution Zone (Commercial Property Executive)

  • The latest DLA Piper State of the Market Survey report is out and optimism remains but the word “caution” has been tossed out more frequently. 62% of respondents were bullish on US commercial real estate for the next twelve months, a fairly notable decline from the 89% noted in the 2014 survey.
  • Among those issues that raised concerns, 48% of those that were bearish on the outlook cited market volatility in domestic and international stock markets, while 14% cited uncertainty in potential ramifications from the results of the US presidential election.
  • Foreign investment is anticipated to be strong as there is economic uncertainty in several foreign nations, most notably in China and in many European countries. Many foreign investors see the US as a safe haven landing spot for their money. Just this morning, Modern Land, a Chinese commercial real estate company, has announced a newly formed entity (AMG Capital LLC) that will invest heavily in US multifamily.
  • 78% of respondents agreed or somewhat agreed that second-tier cities like Austin, Seattle, and Nashville would provide increasingly attractive investment targets.

Easy Rent Growth? Not Yet (Globestreet)

  • While moderation was the expectation for multifamily fundamentals in early 2016, the sector continues to defy expectations. The most recent Yardi Matrix report showed that April rents rose 1.1% month over month – the fourth consecutive all-time high for rents. As of the end of April, year-over-year rent growth moved up to 6.3%. “The strong performance comes as something of a surprise, since rent growth is expected to moderate this year after two years of above-trend increases.”
  • As for reasons why the moderation has yet to happen, the report cites continuous demand due to the growing number of Millennial renters, the increasing propensity of empty nesters choice to rent, and the strong labor market. The 300,000 units that are on the way will likely have an impact on vacancy but sentiment still remains bullish that demand will continue to surpass the oncoming supply.
  • Among those with the strongest April rent growth, Sacramento, Seattle, Portland, Las Vegas, and Boston topped the list.

11 Emerging Tech Office Markets (National Real Estate Investor)

  1. Portland – recently nicknamed Silicon Forest, rents have increased 7.5% year-over-year as of February 2016.
  2. Los Angeles – appealing to companies that want to stay near Silicon Valley but at lower costs, Marcus & Millichap is forecasting a rent increase of 3.5% during 2016.
  3. Oakland – Opening in 2017, Uber has recently moved their global headquarters to Oakland. Marcus & Millichap is projecting a 7.2% increase in rents for 2016 as a slowdown in construction will fail to meet the strong demand.
  4. Salt Lake City – Drawing from a strong education base from BYU and the University of Utah, both homegrown and established firms view it as a lower cost alternative to many of the established tech markets. Over 3 million square feet of new office space is currently under construction.
  5. Austin – “The combination of a talented tech workforce and the addition of a growing medical field will boost the healthcare IT industry, increasing the need for office and medical office space in the metro. Strong demand for space and limited new inventory coming on-line in 2016 will facilitate another year of steep vacancy declines” – Marcus & Millichap.
  6. Phoenix & 7. Scottsdale – Both Phoenix and Scottsdale are able to draw from a large concentration of educated young workers with Arizona State University and the University of Arizona nearby. The lower real estate costs and cost of living relative to its neighbor, California, make it an attractive location for some tech firms.
  7. Denver – The revitalization of downtown Denver with the new rail line and the development of the RiNO and LoDO districts has “moved Denver from being an energy-dependent market to a tech-heavy one,” says Jerry Hoffman, president of Hoffman Strategy Group, an urban retail and integral use consulting firm. “It has a whole mix of technology companies, including telecommunications, software development and cable”
  8. Omaha, 10. Lincoln, and 11. Kansas City – While the inclusion of these cities may be surprising, many of them are undergoing adaptive reuse projects transforming older industrial space into attractive tech space and increasing the emerging industries concentration

World’s Largest Coliving Building Opening Next Week in London (Curbed)

  • A brand new 550-unit coliving tower will open next week in London, the first building developed exclusively for coliving use. The 11-story mixed-use development will be fully furnished with shared kitchens, a gym, roof terrace, spa, movie room, library and game room. The building will also have a restaurant and 400-desk co-working space. Rents will run between $329-$400 USD and internet, cleaning , and utilities are included.
  • The project caters to the rise of the sharing economy trend and targets Millennials and their “appreciation for flexible, turnkey lifestyle solutions”
  • In the US, WeWork launched their first coliving building earlier this year in New York
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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