Commercial Investment Real Estate September/October 2013 - Page 10

TREND S Briefl y Noted Hospitality — Atlanta, New Orleans, and Houston were among the most active hotel acquisition markets for the fi rst half of 2013, according to Jones Lang LaSalle. “These large secondary markets will remain targets for investors, as their revenue per available room growth should outpace national averages,” said Art Adler, Americas CEO of Jones Lang LaSalle’s Hotels & Hos- pitality Group. As of midyear, U.S. hotel transaction volume was up 50 percent over 2012 to $8.0 billion, and Adler predicts a $17.5 billion total by year-end. Industrial — For the fi rst half of 2013, sales of industrial properties are up 25 percent YOY, accord- ing to Cassidy Turley, totaling $13.8 billion in the fi rst fi ve months of 2013. Most of the sales were warehouse product, up 42 percent YOY. Favorite Grocery Stores A survey of 6,600 consumers reveals where they spend their food dollars. What do they like most about their favorite grocery store? T e convenient location. Northeast: Stop N Shop South: Kroger Midwest: Kroger West: Safeway Canada: Loblaws Source: Chain Store Age Job Growth Isn’t the Problem 2Q13 of ce absorption ticked up 14.9 msf from 1Q13 and vacancy fell 20 basis points — clearly upward movement but at a subpar pace, says Kevin T orpe, Cassidy Turley’s chief economist. However, the economy has created an average of 189,000 jobs per month since January 2012, above the 2004–07 prerecession pace of 160,000 jobs per month, so what’s inhibiting of ce space use? Due to telecommuting, open space plans, and cost-cutting strategies, companies are leasing less space, upending the traditional ratio of job growth to worker psf. Retail Cycle, 2013–16 Multifamily — No surprise, cap rate compression is strongest in the Pacifi c regional market, where the overall apartment cap rate — now at 4.92 percent — has lost 237 basis points in the past three years, according to the 2Q13 PwC Real Estate Investor Survey. Southeast cap rates now average 5.80 per- cent, down 213 bps since 2010, and Mid-Atlantic asset cap rates have lost 173 bps in three years, currently at 5.67 percent. Offi ce — Occupancy gains are small, but wide- spread: 62 of the 80 markets tracked by Cassidy Turley increased offi ce occupancy in 2Q13. And rent growth is coming — by year-end 2014, 80 percent of major metros should experience rising offi ce rents. Retail — The nation’s second largest retailer, Kroger, plans to buy the 212-unit Southern-based upscale grocery chain Harris Teeter for $2.5 billion, hoping to gain entrée to a class of affl uent shop- pers as well as counter Walmart’s expansion into the grocery arena. Kroger will maintain the Harris Teeter brand as it does with its fi ve other regional chains. 60 60% Percentage of retail market in each phase It’s going to be a long haul for the retail market as it works through serious oversupply issues in the next three years. 55% 50% 50 48% 42% 40 41% 33% 29% 30 20 10 0 8% 7% 0% 2013 15% 11% 0% 1% 0% 2014 2015 2016 Year-end Recession Recovery Expansion Contraction Source: PwC Real Estate Investor Survey, 2Q13 8 September | October | 2013 Commercial Investment Real Estate MARKE T