Commercial Investment Real Estate May/June 2016 | Page 10

Marke T
Trend s
Briefy
Noted
What’s Hot and Not
at the Mall
Sales productivity for selected retail tenant
categories, YOY percent change
Food court +3.3%
Jewelry +1.0%
Women’s apparel +0.4%
Electronics -8.0%
Home furniture -10.6%
Hospitality — Has the hotel sector shifted to a buyer’s
market? “There’s a reduction of leverage and the headwinds
of a smaller number of buyers in the buying pool right
now,” says Drew Noecker, VP at CBRE Hotels’ Houston
offce at the Hospitality Law Conference. Previous leverage
levels at 70 percent are now around 60 to 65 percent,
although it varies by market, he says. For additional value
stick with branded properties: “If it’s a quality brand,
retain that to maximize your proceeds.”
Source: ICSC
Medical Offce Stats, 2015
Average psf
Average cap rate
Vacancy
Average rent
Net absorption
New supply
2016 estimated delivery
$240
7.3%
9.4%
$22.50 psf
6 msf
7.5 msf
12.2 msf
Source: Marcus & Millichap
U.S. Industrial Net
Absorption (in msf)
Year Actual Forecast
2014 224.1 210.7
2015 239.7 241.8
2016 230.0
2017 230.0
 23%
 20 bps
 20 bps
 0.6%
Industrial — NAIOP has reduced its level of industrial
demand in its 1Q16 forecast, due to global uncertainties.
“The forecast remains positive but trends lower, to
quarterly rates of around 54 msf by the end of 2016,
dropping to roughly 48 msf by mid-2017. This is down
from the high of more than 60 msf absorbed on a quarterly
basis last year.”
Multifamily
— Las Vegas, Orlando, Fla., and Austin,
Texas, show the greatest growth for millennial renters this
year, according to Marcus & Millichap, with each market
posting a 2 to 3 percent YOY growth in 20- to 34-year-
old renters. As vacation destinations, Las Vegas and
Orlando offer a strong supply of hotel and entertainment
employment, while Austin’s tech sector attracts young
professionals to the area.
Office
— Five secondary markets — Las Vegas,
Cleveland, Salt Lake City, Orange County, Calif., and
Baltimore — top Marcus & Millichap’s high-yield markets
list for 2016. These markets’ three-year average cap rates
are above 8 percent and offer “assets that have potential
NOI improvements yet to be baked into pricing, leaving
non-risk-averse investors with unique opportunities.”
Retail — REIT landlords are sacrifcing short-term cash
fow for long-term gain, according to Shopping Centers
Today. Federal Realty Investment Trust is letting 465,000
sf of leasable space in 10 properties go empty this year,
giving up about $6 million in rents to redevelop and
retenant. “We expect to signifcantly exceed the prior
in-place rent of approximately $1,350 psf … to deliver
better retailers at better rents and signifcantly improve
these assets,” says CFO and treasurer Jim Taylor.
Source: NAIOP
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May | June | 2016
Commercial Investment Real Estate