Retail Projects

CRE Sales Pricing Recovery Coming to Your Market?

Uptick to CRE Sales?

According to Randyl Drummer, in a CoStar Group article, “sales of U.S. commercial real estate reached nearly $64 billion in 2012, jumping 22% from the previous year to the highest annual total since 2004”.  These signs of recovery in CRE pricing also extended past the apartment market, spreading into office, industrial and retail property, however; what really stands out is the pricing gains in apartments.  Drummer wrote, “The multifamily property index advanced by 11.2% in 2012, with the 10 markets in the prime multifamily index again hitting pre-recession peak pricing well ahead of the other major property types”.  This shows that many consumers are still apprehensive about purchasing a home, so they are choosing to rent for now.  This is excellent news for the CRE construction industry, because demand for apartments is outpacing supply, so there is money to be made in building apartment complexes at the present time.  There is even further proof of this, because, according to Drummer, “developers delivered double the number of new multifamily units in 2012 than in the previous year, and construction in 2013 is on pace to bring an [even] bigger increase”.  Even though retail investors remain cautious, commercial, retail and hospitality are showing positive growth, which point to an increase in consumer confidence in the market overall.

 

Most Family Friendly Ranking: Great for Business

 

Raleigh and Charlotte Rankings Good for CRE and Construction IndustryRaleigh and Charlotte Top Rankings Good for CRE and Construction

The Human Life Project is a nonprofit organization that encourages cities to invest in families and to identify and reverse negative trends before they become even bigger issues. Every year, this organization takes the 50 largest cities in the U.S. and ranks them according to how family friendly they are; one being the most family friendly, fifty being the least. The rankings are based on a variety of factors including marital status, age demographics, available housing and home prices, unemployment, crime rates, median income, and availability of parks, museums and places of worship. Well, the results are in, and this year, Charlotte was ranked #4 and Raleigh was ranked #1!

This could be great for North Carolina’s state and local economies; since people generally like to feel safe in their environment and secure in their jobs, they might feel more comfortable moving to Raleigh and Charlotte, rather than cities with lower rankings. So, more people means a larger economy, more jobs, more shopping, more housing, more services, more everything! Having these rankings is not only good for families, but it’s good for commercial real estate, retail, construction, and business in general. If you’re a company looking to expand, this might be your opportunity to find some highly qualified employees to grow with you!

Green Building Top 10 Megatrends for 2013

A&K Painting is the North Carolina Leader in Green Expertise.

In a recent press release, Jerry Yudelson revealed his “annual list of Top 10 Megatrends for the green building industry”.  Jerry is known as one of the nation’s leading green building consultants and sustainability experts. He is the founder of Yudelson Associates and has written 13 books on building green.  He believes that despite the global economic slowdown, green building will continue to expand globally in 2013.  According to Jerry, “more people are building green each year, with 50,000 LEED projects underway by the latest counts”.  Jerry lists ten megatrends, but his second prediction stands out specifically, because it affects so many sectors of the building industry, including commercial real estate professionals, facility managers, general contractors, BOMA, education authorities, and more.

In his second prediction, Jerry explains, “The focus of the green building industry will continue its switch from new building design and construction to green existing buildings.  The fastest growing LEED rating system the past three years has been LEED for Existing Buildings Operations and Maintenance (LEED O+M), with cumulative floor area in these certified projects now greater than in new construction”.  The LEED for Existing Buildings O&M Rating System, according to the U.S. Green Building Council, is a “set of voluntary performance standards for the sustainable ongoing operations of buildings not undergoing major renovations”.

For the professionals mentioned above to stay competitive and profitable all new projects will need to be LEED certified, whether Jerry’s prediction is correct or not.  Perhaps more importantly, existing operations will need to follow the LEED for Existing Buildings O&M Rating System; otherwise they will get left behind in this progressive, environmental friendly market.  These professionals need to take into consideration that although transforming an existing building into a green building cost a substantial amount of money initially, in the long run, LEED certified buildings lower operating costs, increase asset value, reduce waste, conserve energy and are safer for occupants.

Bring our ‘Green’ expertise to your project. A&K Painting is the leader in the “Green Painting” world.

Construction Outlook for 2013 Improves

Construction Ahead Sign

According to the construction outlook survey results released from the ACG of America, “Significantly more construction firms are planning to add new staff than plan to cut staff, while demand for many types of private sector construction projects should increase this year”.  While the outlook for construction firms in the nation overall is optimistic for 2013, North Carolina’s survey results were a little different.   The vast majority at 85 percent do not believe the construction market will grow again until 2014 or later, with 35 percent expecting 2016 to be the earliest it will grow.  The majority believe that the available dollar volume of projects in 2013 will be lower or about the same for all sectors, except for higher education.

As far as new jobs in the construction industry in 2013, 72 percent will either add employees or they don’t know yet; only 8 percent plan to lay off employees.  The survey results also showed that construction firms do not plan on investing in any more capital in 2013 than they did in 2012, and if anything, they plan to invest less.  Possibly the reason construction firms plan to invest less, is because they expect their costs to rise in 2013.  An overwhelming 72 percent expect the cost of providing health care insurance to their employees to increase in 2013, and 86 percent estimated the price of construction material prices would increase as well.  With these increasing costs, 68 percent plan to keep their bid prices where profits are the same.

Overall, the North Carolina survey results for construction firms seem to be neither optimistic nor pessimistic.  Firms are being a little more cautious this year due to expectations of higher costs with the volume of projects in 2013 being about the same.  On a positive note, N.C. construction firms do plan to hire more employees this year, despite the rising costs, so maybe they are a little more optimistic than the survey reveals.

Highway Projects in Charlotte and their effect on Commercial Real Estate

roadconstruction

I think it’s safe to say most people despise traffic.  It takes your time away from your families and dips into your much needed sleep.  We’d all be a little happier for a shorter commute, but this isn’t the only thing traffic affects.  On an economic level, it stunts the growth of the commercial real estate market, because investors may not be willing to build in a city that lacks the infrastructure for success.  This is a problem Charlotte faces since the city hasn’t received the proper amount of funding in the past for transportation projects and now it’s possibly getting too much all at the same time.

According to Steve Harrison in an article in the Charlotte Observer, “for years, Charlotte political and business leaders complained the city didn’t receive its fair share of state highway funds.  But in a reversal of that long-running theme, the Charlotte area is in a highway building boom, with more than $3 billion in projects under way or planned.”  Some of the projects taking place include completing the       I-485 outer loop in north Charlotte, widening the I-485 outer belt in south Charlotte, while adding a flyover at the Johnston Road interchange.  More projects include, widening I-85 from Bruton Smith Boulevard to NC 73, and converting the carpool lane on I-77 into a toll lane.  These projects have positives and negatives, and they are much needed for an ever expanding metropolis, but how are they going to affect commercial real estate?

In the short term, the increase in traffic during these projects may cause a decrease in CRE business along the congested highways, since people will tend to avoid these areas.  But these improvements to Charlotte’s highways could also increase the city’s population since people will feel more comfortable investing in a growing market.  In the long term, these improvements may cause the CRE market to experience an exponential growth in business, since there will be more opportunities to expand into untapped locations in the Charlotte area. Areas such as Ballantyne, Fort Mill, Concord, Monroe, and Rock Hill will all have the potential for CRE growth with the much more developed infrastructure.  And let’s not forget the everyday commuter-maybe, just maybe- we’ll all be a little disgruntled for the next year or two, but in the end, there might actually be a smile on our face when we experience our newly shortened commute.