Commercial Investment Real Estate March/April 2013 - Page 10

MARKE T TREND S Briefl y Noted Hospitality — Do hotel loyalty programs work? Not according to Deloitte’s October 2012 survey of 4,000 travelers. Nearly 50 percent of loyalty members’ annual hotel dollars were spent some- where other than their preferred hotel. In fact, only 7.8 percent of participants always stay at the same hotel brand. The majority of respondents selected value, free parking, comfort, and location as a hotel brand’s most important attributes. “CMBS loan growth will continue its sluggish recovery as U.S. banks take a wait-and-see approach to new federal regulations. The Fed has announced no timeline for the release of bank capital hold requirements. When the rules are made clear, CMBS issuance in the U.S. will rise.” — Colliers International’s 21 Predictions for 2013 Hotel Investment Down 16% 2012 2011 $18.3 billion $21.7 billion Source: CoStar Industrial — Multifamily — In the next 12 to 15 months, 30 U.S. cities will pass mandates requiring multifamily property owners with more than 10,000 sf to enter energy use data in the Environmental Protection Agency’s Portfolio Manager, a data resource that will be used to develop Energy Star ratings for apartment buildings, said EPA offi cials at the National Multi Housing Council’s fall tech conference. Offi ce — Despite — or because of — the fi scal cliff scenario, 4Q12 demand for offi ce space nearly tripled over the previous quarter, with markets absorbing 20.1 msf, up from 7.1 msf in 3Q12, says Kevin Thorpe, chief economist for Cassidy Turley. It was the strongest demand for offi ce space since 2007, with 65 of the 80 metros tracked showing occupancy gains. Retail — Class B is back. “Class B [community, neighborhood, and strip shopping centers are] now generally back to reasonable vacancy levels and rental rate growth in at least the top 70 percent of major U.S. markets,” says Chainlinks Retail Advisors 2013 retail forecast. Just two years ago class B shopping centers were perform- ing in only the top third of U.S. metros. 8 March | April | 2013 Net Lease Activity Up for 2013 More than half of the investors surveyed predict a 5 percent to 14 percent increase in net lease transactions this year, despite a continuing lack of product on the market, says the Boulder Group’s 4Q12 Net Lease Report. Overall supply declined 14.4 percent from 3Q12 due in part to tenants back fi ll- ing vacant retail space instead of building new. With more investors than product, many properties are sold in off-market transactions, the report says, and in other cases, owners have refi nanced at today’s lower interest rates and continue to hold assets. Since long-term credit-tenant leases are hard to come by, investors will most likely settle for properties with shorter leases but still located in top-tier markets. Commercial Investment Real Estate A stronger housing market will boost industrial absorption this year, cutting the current vacancy rate by 70 bps by year-end, reports Cassidy Turley. In the last two years, industrial absorption has topped 205 msf, surpassing the 145 msf lost dur- ing the recession. While landlords have been reducing rental rates to lease space, rents are poised to grow 2 percent to 3 percent this year.