Category: US/Texas CRE News

Remember the 2019 Office? JLL Survey Suggests That it’s Long Gone

Posted on by Sarah

Has office work changed forever? Are companies taking a new approach when searching for new office space? Those are questions that JLL asked in its recently released The Future of Work Survey 2022. And according to the opinions of more than 1,000 strategic decision-makers in businesses across the globe, it looks like COVID-19 and the resulting work-from-home movement have brought big, and more than likely permanent, changes to the office world.

The office world of 2019? That’s likely not coming back anytime soon, according to JLL’s report.

In its report, JLL says that hybrid working is here to stay and that companies that want to attract the best workers should focus on investing in quality office space, something that should be a priority over simply expanding their footprints. The report found, too, that companies are ready to create office spaces that focus more on collaboration and less on busy work.

The numbers from JLL’s survey of business decision-makers paint a clear picture of an office environment that has changed rapidly during the last two years.

According to JLL, 53% of organizations will make remote working permanently available to all employees by 2025, while 77% agree or strongly agree that offering remote and hybrid work is now a key to attracting and retaining talent. The survey found, too, that 69% of organizations have already introduced or will introduce this year technology to boost in-office collaboration.

Survey respondents have also taken a new view of the office space, with 45% saying that the primary purpose of this space is to facilitate collaborative working. This means that companies are recognizing that there is some work that employees can do just as well from their homes as they can from a cubicle or conference room. When it comes to working together on projects and ideas, though? Respondents said that working in office is best to promote fresh ideas and brainstorming.

In good news for CRE professionals, the majority of survey respondents said that they expect to maintain at least some office space. JLL’s survey found that 72% of respondents agreed that in the long term, the office will remain central to their organization. The type of office space companies seek, though, will probably change. A total of 77% of respondents to JLL’s survey said that investing in quality office space is more important than expanding their total footprint.

And 73% of respondents said that they have planned or are planning to make all office spaces open and collaborative with no dedicated desk spaces.

Financial Pain on the Way? Trepp Survey Suggests it’s True

Posted on by Sarah

Is more pain coming for commercial real estate companies? A new survey suggests that an uncertain economy will bring plenty of it before 2022 ends.

That doesn’t mean, though, that commercial real estate professionals don’t have hope that this pain will be relatively short-lived.

According to a new survey from Trepp, commercial real estate professionals are concerned about rising interest rates and inflation, and expect that both will hurt their businesses before 2022 ends. But they also think that commercial real estate will escape the worst effects of these economic headwinds.

That’s according to the Trepp 2022 CRE Sentiment Survey. From July 13 through Aug. 1, Trepp polled its more than 20,000 clients, blog readers and listeners for their opinions on the near-term future of the commercial real estate and commercial mortgage-backed securities markets.

And what did respondents say? In little surprise, 70% of them said that they expect the office sector to suffer the most from economic challenges throughout the remainder of 2022. This sector, of course, has been hit hard throughout the COVID-19 pandemic, with many employees still working from home. Respondens said that they expect the next several months to remain challenging for this sector.

A total of 83% of survey respondents predicted that during the next six months that delinquencies will increase in both the commercial real estate and commercial mortgage-backed securities industries.

And more than half of respondents said that economic conditions and higher interest rates would impact their businesses negatively.

There was some hope, too, from the survey. For U.S. equities, almost two-thirds of respondents predicted that the S&P 500 would not fall below 3200. Only 27% believed oil would top $150 a barrel. And the results were evenly divided between those who felt that the 10-year Treasury would rise above 4.5%.

A total of 58% of respondents predicted that the multifamily sector will see the highest transaction volume during the next six months. And in a glimmer of hope for the office sector, 70% of participants reported that they are working in the office at least three days a week.

Just under three-quarters of respondents said that their firms were either unchanged or growing when compared to 2021. A total of 88% of participants said that they are either keeping their companies’ current headcount or hiring new employees as needed. Despite this, more than half of respondents said that economic conditions will have a negative impact on their businesses by the end of 2022.

geniant Joins Forces with Eastlake Studio to Transform the Nature of Design Consulting

Posted on by Sarah

Today, geniant, a next-generation experience consulting company, announced the acquisition of Eastlake Studio, a Chicago-based architecture and interior design firm. Together, the forward-thinking teams will collectively transform the nature of experience consulting by integrating architecture and digital solutions to deliver exceptional experiences for employees and customers.

“We’re entering a new era in workplace design,” says geniant CEO of Physical Space David Dewane. “To meet future demands, we must think about the employee experience holistically – space, people, and technology. Eastlake is a best-in-class design firm that instantly brings geniant’s capabilities to a new level.”

“As we’ve been examining unique hybrid work models, we are finding that additional skill sets and methods are needed to truly understand the evolution of the modern workplace,” says Eastlake Studio Architect and Principal Kevin Kamien.

“geniant provides our team with experience research expertise that, when integrated with architecture and design, can shape the future for organizations in this critical moment in history,” added Eastlake Studio Interior Designer and Principal Christina Brown.

As consultants who have partnered with top companies around the country, geniant believes that the experience and performance of information workers can be radically improved. The modern office has not kept pace with the rapid changes in technology and lifestyles. The pandemic exposed this misalignment and has called the status quo into question.

To effectively adapt the employee experience to this new reality, geniant employs contextual research methods, producing crucial, actionable insights for optimal workplace performance — this has specific implications for workplace design, as well as cultural and change management programs.

“As designers, our curiosity has led us to deliver award-winning solutions for our clients over the past 35 years,” says Eastlake Studio Principal Emeritus Tom Zurowski. “This next step is a natural evolution. It allows our teams to gain even more insights into the clients we’re designing workspaces for,” added Jon Salzmann, principal emeritus of Eastlake Studio.

Eastlake Studio recently received an Interior Design Firm of the Year award at the 2022 Chicago Commercial Real Estate Awards and frequently has projects awarded by the International Interior Design Association (IIDA) and the American Institute of Architects (AIA). The firm’s work has appeared in publications including Metropolis, Interior Design, Architect, and Crain’s Chicago Business.

“Experiences happen in physical spaces, between people and through technology, shaping the world we live in,” says Chairman and Co-CEO David Lancashire. “The addition of Eastlake Studio is a key step in our strategy to provide a complete suite of services to help businesses optimize their entire brand experience.”

Laramar Group: Record-low Vacancy Rates Mean a Good Second Half of 2022 for Multifamily

Posted on by Sarah

Resilient. That’s how a new report from The Laramar Group describes the multifamily market across the nation and the Midwest.

According to the Laramar Group’s Mid-Year Multifamily Review, record-low vacancy rates and double-digit rent growth will continue to fuel the multifamily market across the United States.

This doesn’t mean that this sector won’t face challenges throughout the rest of 2022 and into next year.

Interst rates remain a major concern. Laramar Group says that rising interest rates during the second quarter of this year have already had an effect on capital markets, resulting in lower loan-to-value ratios, increased borrowing costs and an uneven transaction market.

“We are expecting continued upward trajectory for rents in the multifamily sector, especially in the Southeast and Mountain states where demand drivers such as job and population growth are strong,” said Bennett Neuman, chief investment officer with Laramar. “At the same time, the recent dislocation in the capital markets may present interesting acquisition opportunities on a selective basis.”

According to Laramar, investment volume will remain elevated but may decrease from recent record levels. The multifamily market saw $63 billion of sales in the first quarter of 2022, a year-over-year increase of 56%.

This was the strongest first quarter on record for overall multifamily activity, according to CBRE research. But rising interest rates will have an impact on investment activity and pricing through the remainder of 2022.

Laramar predicts that multifamily construction will continue at a steady pace. Given population shifts and housing demand, Gateway and Texas markets are leading the way for new supply.

During the first quarter of 2022, the multifamily market saw the highest absorption in more than 20 years. New York topped the list for absorption in the first quarter, with 105,600 units.

Among the other top 15 markets noted by CBRE are high-population growth markets such as Denver, which ranked ninth, and Orlando, which ranked 12th, as well as mature markets such as Chicago, which ranked fifth, and Washington, D.C. which ranked sixth.

Another study, commissioned by the National Multifamily Housing Council and the National Apartment Association, said that the United States needs 4.3 million new apartments by 2035.

In the Midwest, markets such as Indianapolis and Columbus will each need 3,000 additional units annually by 2035 to meet market demand. Apartment construction represents a notable segment of the economy, generating $984 million for the local economy in Columbus and $779.5 million in Indianapolis, according to the NMHC/NAA study.

CBRE research from the first quarter of this year shows several Midwest markets with 10% or higher yearly rent growth, including Detroit (10.4%), St. Louis (10.4%), Kansas City (10.5%), Cincinnati (10.6%) and Indianapolis (13.0%).

“Strong and Vibrant”: All Property Types in Texas Appeal to Investors

Posted on by Sarah

After two fed rate hikes in as many months, it’s worth checking in on capital markets in Texas. What was predicted to create both short- and long-term headwinds for investors doesn’t seem to be slowing down deals here.

“We’ve been able to help keep deals moving along with the rising construction costs and interest rates,” says Dustin Gabriel, vice president of origination of Petros PACE Finance, which is based in Dallas. “Our cost of capital is significantly less than alternatives and our rate is fixed for long term.”

That’s important as demand for investment in all property types grows.

“The four main Texas markets (Dallas – Fort Worth, Houston, Austin, and San Antonio) have been strong and vibrant, across all the main property types,” says Walter Bialas, senior insight analyst for research at Avison Young.

He explains that after an investment pause in 2020, commercial real estate roared back to life in 2021.

“To illustrate the volume of business, the number of 2021 sales for office, industrial, apartment, and hotel were almost 40 percent higher than in 2019, pre-pandemic,” Bialas points out. “This same momentum continues to influence 2022, with first quarter sales suggesting that it will be another record year at a pace fully 10 percent above the number of transactions in 2021.” Click to read more at www.rednews.com.

Ripe for Relocation: Major Corporations Target Texas

Posted on by Sarah

Now home to 53 Fortune 500 corporate headquarters, Texas can boast more than any other state in the U.S. (New York has 51 and California has 50.) The list, which includes giants such as Exxon Mobil, AT&T, Valero Energy, American Airlines and USAA, just got longer. The Lone Star State will soon add a 54th: Caterpillar, which announced in June that it too plans to move its headquarters to Irving, Texas from Deerfield, Illinois.

“We believe it’s in the best strategic interest of the company to make this move, which supports Caterpillar’s strategy for profitable growth as we help our customers build a better, more sustainable world,” Chairman and CEO Jim Umpleby said in a statement announcing the move.

Caterpillar, the world’s leading manufacturer of construction and mining equipment, boasted sales and revenues of $51 billion in 2021.

“Caterpillar’s global headquarters relocation is a major win for the people of North Texas and the entire state,” Governor Greg Abbott said in a statement. “I am proud to welcome Caterpillar’s headquarters to Texas and am excited for the economic opportunities this will create for Texans.” Click to read more at www.rednews.com.