Commercial Investment Real Estate Winter 2020 | Page 10

MARKET TRENDS
Some prognosticators have
chattered about an impending
market correction for a while
now. But the multifamily sec-
tor is holding steady, accord-
ing to CBRE Research’s analy-
sis of U.S. Census Bureau data.
Through September 2019,
340,600 units were approved,
a 7.6 percent bump from a year
before. In all, 121,900 units
were approved in 3Q2019, a
year-over-year increase of 19.7
percent. Through 3Q2019,
622,000 multifamily units
were under construction,
according to the U.S. Census
Bureau. That total topped
600,000 in 3Q2016 and re-
mained steady since, point-
ing to high demand without
continued acceleration.
Another
metric
of
growth, construction starts,
totaled
278,000
through
3Q2019. This figure represents
a high level for this economic
cycle, but it pales in compari-
son to the booming growth of
the 1970s, which often topped
600,000 starts a year.
8
The trend of employers opting
for urban office locations over
suburban alternatives isn’t new,
but recent research measures
the effect accessibility to public
transportation has on office val-
ues. The report, from the Amer-
ican Public Transportation
Association and the National
Association of REALTORS®,
examined five regions between
2012 and 2016. Four saw me-
dian sales “increase between
5 and 42 percentage points
more in transit-proximate ar-
eas when compared with areas
farther from public transit.”
Boston (38 percent growth in
transit sheds to 4 percent loss
in non-transit areas) and Los
Angeles (85 percent to 48 per-
cent) saw the biggest gains. Se-
attle was the only market where
non-transit areas (59 percent
growth) outpaced transit sheds
(14 percent contraction).
Of all the households in-
volved in the study, one in four
did not own a personal vehicle,
which translated to house-
holds saving between $2,500
and $4,400 per year.
COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE
“Emerging Trends in Real Es-
tate,” a recent report by PwC
and Urban Land Institute,
pointed to structural transfor-
mations in the industrial sec-
tor, with demand, supply, and
capital markets driving value
in warehousing.
“[T]he value propo-
sition of logistics real estate
surged, just as availabili-
ty reached its lowest point
in recorded history,” the
report states.
According to ULI/PwC,
current opinion of industrial
pricing leans toward overpriced
than under. While 1.2 percent
saw warehouse as being under-
priced, another 45.6 percent
said it was overpriced. In ful-
fillment, 5.9 percent said the
market was underpriced, while
46.4 said it was overpriced.
Much of the industrial
growth has been concentrated
in six markets, with Dallas,
California’s Inland Empire,
Pennsylvania, Atlanta, Chica-
go, and Houston accounting
for 45 percent of new comple-
tions and half of all space un-
der construction after 2Q2019.
COMMUNITY AREAS GAINING
SPACE IN HOTELS
EXPERTS THINK INDUSTRIAL
IS (BARELY) OVERPRICED
industryview
OFFICES NEAR
TRANSPORTATION HUBS
DRAW INTEREST
MULTIFAMILY HOLDS STEADY
AMID FEARS OF SLOWDOWN
Generational change is com-
ing to hospitality, specifically
in how hotels approach the
designs of their shared space.
“Hotels have always had lob-
bies, pools, bars, and restau-
rants,” says Lauro Ferroni,
JLL’s Global Head of Hotels
& Hospitality Research, to
The Hotel Conversation. “But
now the design and features
of these communal spaces
are being driven by hotels
wanting to appeal to younger
travelers.” Along those lines,
Moxy, Marriott’s boutique
brand, and Tru, Hilton’s line
of affordable midscale hotels,
aim to recapture customers
who have opted for firms like
Vrbo and Airbnb.
Facing
competition
from home rental companies,
hotels are ways to appeal
to larger groups, including
friends and families traveling
together, according to David
Black, managing director with
JLL Hotel Project and Devel-
opment Services.
WINTER 2020