Category: News & Market Reports

Inflation? War? COVID? None of it can Slow Down the Multifamily Market

Posted on by Sarah

Yes, inflation is battering the U.S. economy. The country is still dealing with COVID-19. And Russia’s continued attack on Ukraine brings its own set of worries. But despite all this turmoil? The U.S. multifamily market continues to boom.

In its April Multifamily National Report, Yardi Matrix said that the average asking apartment rent in the United States rose $15 in April to an all-time high of $1,659. This is an increase of 14.3% from the same month a year ago.

In the largest 30 metropolitan areas in the United States, monthly rent growth was up at least 8.8% during the last year in all but one. And this increase in monthly rents was remarkably consistent. Yardi Matrix reported that rent growth was positive in each of these large metropolitan areas during the last one-month, three-month and 12-month periods.

Of course, not all markets are equal. Yardi Matrix said that Miami led the way in April with a 24.6% year-over-year rent increase. Overall, though, asking rents increased by 20% or more on a year-over-year basis in five of the largest 30 metropolitan areas and 10% or more in 26 of the biggest 30 markets.

The rent growth wasn’t as robust in all Midwest markets. Yardi Matrix said that year-over-year rents increased by just 4.7% in Minneapolis-St. Paul and just 8.8% in Kansas City, Missouri. These ranked among the lowest percent increases among the biggest metropolitan areas in the country.

What does the future hold? Yardi Matrix said that the fundamentals are still in place for steady growth in multifamily rents. Most importantly, the country still faces a shortage of new single-family housing. Yardi Matrix reports that an average of 16 million to 17 million new homes were built between the 1980s and 2010. That number fell to less than 11 million in the 2010s.

This has left the United States short of several million single-family homes. Leonard Kiefer, deputy chief economist at Freddie Mac, says that the country went from a surplus of 1.9 million units of housing in 2010 to a shortfall of 3.8 million units in 2020.

You can blame the financial crisis of 2008 and 2009 for the shortage of newly built homes. During and after the crisis, banks slowed the amount of financing they made available for single-family and multifamily housing. That resulted in a slowdown in new residential construction.

Today, a shortage of land and the high cost of construction materials and labor is contributing to the slowdown in residential construction. Developers also face regulatory hurdles and NIMBY protests in many areas.

This all adds up to higher costs for housing, including of the multifamily variety. And these pressures are showing few signs of lessening, meaning that monthly apartment rents aren’t forecast to decline anytime soon.

What does this mean for renters? They can expect to pay more for their units, especially if they plan on living in a major metropolitan area.

Dealin’ in Dallas: Near ‘White Hot’ Market Fueled by Capital, Retail Expansion

Posted on by Sarah

In retail, few things are constant, but one thing Texas CRE professionals can always count on is that more rooftops generate more retail demand. And those rooftops are going up as fast as they can in the Dallas-Fort Worth area. “Retail here is on the heels of white hot with cautious optimism,” says Jennifer Pierson, Managing Partner of STRIVE. “The reason I temper it a little bit is because we had such a robust Q2 and Q3 of last year and a robust
Q1 of this year, but we’ve just had our first interest hike and it hasn’t slowed anything down yet, but we’re wondering if it will.”

When she says robust, she means it. STRIVE sold 107 properties last year and already in 2022, Q1 numbers doubled.

“That’s a lot of product,” Pierson says.

That product is at a premium right now, according to Steve Zimmerman, The Retail Connection’s Managing Director in Brokerage.

“The supply of quality available space is very low due to the extreme lack of new development,” he explains. Click to read more at www.rednews.com.

Global Investors Remain Enthusiastic About the U.S. Commercial Real Estate Market

Posted on by Sarah

The U.S. commercial real estate market – with Dallas ranking fourth in the most favored spot – continues to be seen as attractive by global investors over both the short and long term, according to the Association of Foreign Investors in Real Estate (AFIRE) 2022 International Investor Survey Report, released in mid-April.

About 75 percent plan to increase their volume of activity this coming year, and 25 percent anticipate increasing it considerably. Beyond 2022, about 80 percent of investors expect to increase their U.S. exposure over the next three to five years. These are topline results of the annual survey of some 175 organizations in more than 20 countries. CBRE and Holland Partner Group served as underwriters of the research, conducted in February by AFIRE and PwC.

Atlanta is the city most favored for future real estate investment by the respondents (with 37 percent indicating it was their top destination). Atlanta was especially popular among those outside the United States. Austin and Boston tied for second. Dallas took the fourth position, followed by Seattle, New York, Charlotte, Los Angeles, Denver, Raleigh, District of Columbia, Phoenix, and San Francisco. Click to read more at www.dmagazine.com.

Frisco-Based esrp Merges with Cresa, the World’s Largest Occupier-Focused CRE Firm

Posted on by Sarah

esrp—a leading tenant advisory firm headquartered at The Star in Frisco—has merged with Chicago-based Cresa, which calls itself the world’s largest occupier-focused CRE company.

Founded in 2013, esrp assists clients in over 40 countries, providing multi-market corporate and occupier advisory services. Its clients have included NTT DATA Services, Riddell, Mattress Firm, 7-Eleven, and Neiman Marcus.

esrp’s nearly 50 team members will now be added to the Cresa platform. esrp will lead Cresa’s existing Texas teams through its HQ at The Star, its office in the Dallas Arts District, and Cresa’s Houston Galleria office. A key goal moving forward will be building a stronger presence in Austin, Cresa says.

esrp has Dallas Cowboys connections

esrp was founded as E Smith Realty Partners, with Emmitt Smith as one of its three founding partners. The company spun out from E Smith Legacy Holdings in 2017, parting ways with Smith and changing its name to esrp. But that’s not the company’s only Cowboys tie: Founding partner and CEO Sharon Morrison started her career in the industrial division of The Staubach Co., learning the ropes from the greatest Cowboy of all. Click to read more at www.dallasinnovates.com.

Searching for Stability Ongoing Disruptions to the Global Supply Chain will Impact Commercial Real Estate

Posted on by Sarah

But opportunities are available across various sectors.

Everyone is feeling the pinch of the supply chain disruption, whether they are walking by empty store shelves or waiting weeks for a part in a much-needed auto repair. For commercial real estate professionals, that supply chain disruption is creating both challenges and opportunities.

The big question is just how long supply chain disruptions will last — and views from experts are mixed, with estimates ranging from 12 months to more than three years. Although the cargo ships stacked up outside the ports of Los Angeles and Long Beach have become symbolic of the supply chain crisis, problems with the movement of goods go beyond a single bottleneck. “We have had structural things that were happening before COVID-19 that were heading us toward supply chain disruption,” says K.C. Conway, CCIM, MAI, CRE, chief economist of the CCIM Institute and principal and co-founder of Red Shoe Economics.

The pandemic also highlighted the dependence the U.S. has on imports from Asia and the dominant role China plays in the global world of manufacturing. “When China shut down, effectively because of COVID-19, that was the traffic accident on the 405 that backed everything up,” says Richard Thompson, international director, Supply Chain & Logistics Solutions, Americas at JLL. Even after they cleared the wreckage and started to reopen, there was a bullwhip effect on the rest of the world, he adds, as demand disruptions traveled throughout the supply chain, from end-user to manufacturer. Global supply chains are still dealing with the enormous ripple effects, including large queues of ships at the ports. Click to read more at www.ccim.com.

Austin Office Market Report Q1 2022

Posted on by Sarah

Austin continues to lead the US in office job growth and provide a glimpse of the tech market’s return to office strategy post-pandemic. Job growth has surged to all-time highs, with 60,000 new office jobs added since February 2020 while leasing activity continues to be driven by the tech industry.

Under construction
Over 5.0 msf of office product is currently under development while availability, particularly within the CBD, dwindles which is sparking new groundbreaking announcements as landlords work to keep up with demand.

Net absorption
Overall net absorption remained positive, but relatively limited as many of the large tech leasing deals signed in recent months have yet to commence.

Net absorption
Overall net absorption remained positive, but relatively limited as many of the large tech leasing deals signed in recent months have yet to commence.

Click here to download the report and read more at www.avisonyoung.us.