Category: US/Texas Market Reports

The Impact of U.S. Commercial Real Estate Development and Operations Grows; Supports 9.2 Million Jobs, Contributes $1.14 Trillion to the Economy

Posted on by Sarah

The impact of new development and of the ongoing operations of existing commercial real estate buildings in the United States – office, industrial, warehouse and retail – has grown to support 9.2 million American jobs and contribute $1.14 trillion to the U.S. GDP in 2019, an increase from 8.3 million jobs and a contribution of $1.0 trillion to GDP in 2018. Based on the existing stock of commercial buildings — totaling 49.6 billion square feet at the end of the third quarter of 2019 — direct spending on building operations totaled an estimated $173.0 billion and contributed $464.0 billion to GDP. In addition, 563.3 million square feet of new office, industrial, warehouse and retail space newly constructed in 2019 has the capacity to house 1.4 million new workers with a total estimated annual payroll of $83.5 billion. The findings were presented in the annual study, “Economic Impacts of Commercial Real Estate, 2020 U.S. Edition,” released this week by the NAIOP Research Foundation. The study measures the contributions to GDP, salaries and wages generated, and jobs created and supported from the development and operations of commercial real estate. The study broke out several key measures by commercial real estate industry sector: Click to read more at www.naiop.org.

Emerging Trends for 1031 Investors

Posted on by Sarah

Because of the increased interest in 1031exchanges, we invited a group of industry experts to talk about the trends they’re seeing in the market, including trading into Delaware Statutory Trusts (DSTs) and how to exchange oil and gas. “… you want the diversification …” The first topic out of the gate was umbrella partnership REITs (or UPREITs). An alternative
to 1031 exchanges, UPREITs offer a way for an investor who is looking to liquidate some real estate to defer taxes. You would sell or contribute that property to the REIT. “That REIT gives you operating partnership units, then you can control the liquidity. There are no taxes on that whatsoever until you transfer those operating partnership units to shares of the stock.
Once you transfer that share stock, that’s not real property and you’re going to be taxed there,” explained Jay Dobbs, senior managing partner of
Effective 1031 Planning. “That REIT gives you operating partnership units,
then you can control the liquidity. There are no taxes on that whatsoever until you transfer those operating partnership units to shares of the stock.
Once you transfer that share stock, that’s not real property and you’re going to be taxed there,” explained Jay Dobbs, senior managing partner of Effective 1031 Planning. Click to read more at www.rednews.com.

Oil & Gas Investing Redefined

Posted on by Sarah

What a 4th Generation Oil & Gas Entrepreneur has learned about the
Industry and the Cycles of Investing in Oil and Gas for our Future

Jay R. Young
Founder & CEO, King Operating Corporation

In the new shale-dominated world, we all know that the industry is changing. With threats ranging from geopolitical issues to the rise in electric vehicles and alternative fuel sources, we need repeat investors now more than ever if we’re going to stay in business. If we turn people off by doing deals in which they lose money over and over, why would they ever want to invest again? Given all of this, I knew I had to start doing something different about the way we did business at King Operating Corporation. The way the vast majority of oil and gas investment deals have traditionally been structured has left limited running room and little diversification. If something goes wrong—and in a complex system like drilling for oil, things can certainly go wrong—there are few ways to fix it without pouring more money into a literal hole in the ground. In these types of cases, it becomes nearly impossible for the investors to recoup their investment. Click to read more at www.rednews.com.

Investment Intel

Posted on by Sarah

All too often, you hear that commercial real estate is all about who you know, though any real industry expert will tell you what you know
is far more valuable. That’s why REDNews has made it a mission to gather best-in-their-field panelists for our now-monthly summits. Most recently we gathered in Dallas for the Texas Net Lease & 1031 Summit, covering legal and tax updates for tax-deferred transactions, the status of the current net lease market, understanding your lease and credit and emerging trends for 1031 investors which was moderated by Gavin Kam with Net Realty Advisors. In the following pages, we’ll cover some of the highlights and important details gleaned from our panelists and next month you’ll have a recap of current net lease market conditions in Texas also led by Gavin Kam. The effort is being led by the Federation of Exchange Accommodators (FEA), which says it is “heavily promoting taxpayer-friendly legislation,” an umbrella under which 1031 exchanges certainly fall. A 1031 exchange is a vehicle by which an owner can sell an investment property, then acquire another “like-kind” property while deferring capital gains tax. Otherwise, a federal tax of at least 15 percent is applied to your capital gains, along with a 3.8 percent surtax if your net investment income exceeds $200,000 and any state taxes. Click to read more at www.rednews.com.

Sunny With a Few Clouds

Posted on by Sarah

Turning the calendar over to a new year is a good time to reflect and reassess. That holds true in commercial real estate, especially in reallocating capital and realigning investment strategies. There’s no shortage of white papers and research on capital markets by all industry sectors of commercial real estate, ranging from banking and brokerage to debt and equity sources, but what today’s CRE practitioner is searching for is a reconciliation of the plethora of data and conflicting views into an outlook that puts events and trends into perspective and paints a clear picture of what lies ahead in 2020.

Chapter 1: Heavy Investment in Debt
First, let’s set the stage for this summary of the capital markets entering 2020. Chapter 1 begins against the backdrop of $4.36 trillion of investments on the debt side of the ledger, according to Moody’s Analytics, the highest since before the Great Recession — from all the CRE lending entities, including REITs, pension funds, government-sponsored enterprises (such as Fannie Mae and Freddie Mac), construction lending banks, and permanent debt sources like CMBS. The U.S. economy is still chugging along into its 11th year of recovery (125 months at year-end 2019), with the November gross domestic product revisions back up to 2 percent — and December’s surprising Bureau of Labor Statistics report showing 266,000 jobs created in November; U3 and U6 unemployment levels declining to 3.5 percent and 6.9 percent, respectively; and a 3.1 percent year-over-year wage growth. Click to read more at www.ccim.com.

Berkadia outlook: Multifamily stays strong in 2020

Posted on by Sarah

The mortgage banking and investment sales pros with Berkadia expect the multifamily sector to remain a strong one throughout 2020. But what could bring at least a minor hiccup to the sector? Interest rates and the presidential election. That’s according to Berkadia’s 2020 Outlook Powerhouse Poll, a collection of insights from more than 150 Berkadia investment sales brokers and mortgage bankers across 60 offices. According to the poll, investment sales brokers and mortgage bankers expect interest rates and the presidential election to have the greatest impact on multifamily investing and financing this year. A total of 86 percent of bankers cited interest rates in the study, while 44 percent pointed to the election. Rounding out the top three expected major trends, 44 percent of bankers cited GSE reform. For trends impacting multifamily investing, 77 percent of investment sales brokers cited interest rates, 63 percent the presidential election and 40 percent debt underwriting. The survey found, too, that 91 percent of mortgage bankers expect GSEs to see the most activity in 2020. Click to read more at www.rejournals.com.