Commercial Real Estate
As global markets continue to emerge from the economic downturn, recovery of the commercial real estate market will drive unfathomable flows of capital, according to executives at NAI Global. His remarks were delivered to a group of nearly 700 individuals from NAI Global firms and their clients yesterday at the NAI Global Market Outlook event in Beverly Hills, CA. Presenting at the event was Jay Olshonsky, President of NAI Global and Mauro Keller Sarmiento, NAI Global Executive Managing Director of International Business. The keynote speaker was Dr. Peter Linneman, and the presentation was opened by special guest Richard Ziman, Founding Chairman of Rexford Industrial Realty, Inc. and Founding Member of the UCLA Ziman Center for Real Estate.
NAI’s findings concluded that steady US job growth continues to drive economic recovery and its impact is evident on the global commercial real estate market. The most telling economic indicator for most commercial real estate markets remains the proportion of lost jobs recovered to date, and when lost jobs are 100% or more recovered, real estate space demand is roughly back in balance
NAI also found that diverse economic circumstances continue to exist across the US, ranging from strong job growth in Houston to struggling in Los Angeles. In December 2013, Minneapolis, Austin, Washington, D.C., Fort Lauderdale, Seattle, and Durham, were the only US markets that showed particularly durable job growth. The next best-performing markets include Long Island, Kansas City, Raleigh, and Orange County, while Atlanta, Cleveland, Philadelphia, and Miami lag far behind.
Finally, in the US, NAI concluded that the office sector is showing growth in urban core properties, but the suburban office market continues to grow due largely to job growth and the desire for access to quality public schools. The US retail market is driven by internet sales, which account for eight percent of total retail sales, up from three percent 10 years ago. Brick and mortar stores haven’t lost ground, but haven’t grown, and plenty of inventory still exists.
In the most recent edition of CCIM’s Commercial Investment Real Estate Magazine, Jay Olshonsky, President of NAI Global, was featured discussing the importance of CCIM education and the benefits of a CCIM designation. The CCIM designation is a professional designation awarded by the CCIM Institute upon completing the required courses offered by the CCIM Institute. Currently, more than 9,500 individuals hold a CCIM designation and approximately 4,000 candidates are in the process of pursuing it.
NAI Global considers CCIM education as a vital component to the professional development structure for its worldwide independent and owner-operated network. What separates CCIM education from other commercial real estate education programs around the world are their instructors, all of whom are active industry practitioners with decades of experience and expertise in the continuously changing global real estate market. “They bring market insight, real-world experience and the best practices to their courses. When they teach the courses, they demonstrate how the concepts can be applied to specific properties and situations,” notes Olshonsky.
NAI Global members who have earned the CCIM designation have a distinctive competitive advantage in the marketplace over their competitors. Olshonsky states “The designation assures potential clients that we have a common platform for training and education, which provides a high level of consistent service delivery from market to market.” The skills and practices learned through CCIM’s CI 101 and CI 102 courses are the most useful for providing a foundation for success in commercial investment real estate. “CCIM courses give our members a clear advantage. In-depth market knowledge augmented by an ability to analyze trends and cash flows provides clients with a powerful resource in NAI brokers that hold the CCIM designation,” Olshonsky concluded.
Click here to read the full article: http://www.ccim.com/
NAI Hiffman’s David Haigh reports from the second full day at MIPIM with insight on the investment climate. While MIPIM is primarily European focused, it is incredibly global in scope, reflective of today’s global economy.
Global institutional investors are bullish on real estate and according to one panelist that I saw today, allocations for real estate has increased from 9.5 to 10.3%. CalPERS, in particular has increased its allocation from 9 to11% with a target of investing 75% of its real estate portfolio in core and stabilized assets in the US.
There are fears that a rise in bond yields within the core European markets will result in a cooling of investment in these highly sought after investment markets, particularly in places such as London, Paris and Frankfurt.
The spread between core product and non-core product is tightening around the world. In London, for instance, an office building may trade at a 4% cap and in Manchester it could yield 5.75-6% cap. This 200 basis point spread was closer to 300 basis points just a year ago, so I imagine that we will see investors in Chicago start to pursue more class B product in the coming months.
There is increased activity and movement of capital from foreign and domestic sources to European Financial Hubs to infrastructure and development projects upgrading old ports and trade arteries are occurring all over the world with funds provided by Middle Eastern, Chinese and Russian investors. These multibillion dollar investments are viewed favorably because they collect loan payments for the infrastructure projects and they also control the warehousing and logistics real estate that benefits from the infrastructure work. One such project is the Atlantic Gateway and SUPERPORT, a major logistics investment opportunity. Paul Danks, Managing Director, NAI Europe, will launch a new report produced in conjunction with Liverpool Local Enterprise Partnership that analyzes the logistics land demand and supply. The project will create a superhub and increase port and container traffic to the northwest of England, including Liverpool and Manchester. We attended the launch of Peel Logistics, a new UK-based logistics company with 66 strategic development sites covering 6000 acres/60 million square feet across the north of England, and the report was referenced during their opening remarks.
MIPIM 2014 started off this week with high visibility and networking opportunities for the NAI Global team attending the event.Paul Danks, Managing Director, NAI Global and David Haigh, Vice President, NAI Hiffman, attended an event chaired by Baroness Susan Williams, Executive Director, Atlantic Gateway. Liverpool Mayor Joe Anderson, Officer of the British Empire (OBE) and Sir Howard Bernstein, CEO of Manchester City Council, addressed a distinguished group of international investors, developers, occupiers and owners at the “Back to the Future” opening session on Monday, March 10. The discussion focused on the Atlantic Gateway, a combination of over $1.7 billion of infrastructure investment projects in the North West UK, designed to transform the entire region. One of the major projects addressed is SUPERPORT, a logistics freight hub in Liverpool that is poised to transform freight capability in the northern UK.
A new report, “Liverpool City Region Local Enterprise Partnership SUPERPORT: An Analysis of the Supply of, and Demand for Distribution Space Within the Liverpool City Region,” was coordinated by a team led by NAI Global on behalf of the Liverpool City Region Local Enterprise Partnership (LEP), leader of the Liverpool SUPERPORT freight hub program. The report examines the factors that will drive demand, from investment in SUPERPORT assets and capabilities to current and planned supply of sites that can meet the future demand for logistics facilities. A press release supporting the report was issued on Monday, and NAI Global will present the findings of the report to potential investors, developers, owners, operators, clients and media at an event aboard the NAI Global yacht, Costa Magna, on Thursday, March 13.
Preliminary press coverage of the report includes articles in Place North West (link to article) and in the Liverpool Echo (link to article) quoting Paul Danks: “Logistics is a recognized growth sector in the UK and internationally as businesses adapt to changes in customer demand and methods of sourcing, manufacturing and delivering goods and services. SUPERPORT will help Liverpool secure its position as an innovative, competitive multimodal port, and create opportunities for investors, developers, occupiers and real estate brokers and others active in the global industrial and logistics property market.”
NAI Global president, Jay Olshonsky, said: “Currently, 45% of North American trade enters the UK via Liverpool, and the location is ideally positioned to benefit from increased Atlantic activity and the growth of Latin and South American economies, providing outstanding opportunities for NAI Global members and their clients, developers investors and occupiers to take advantage of the enhanced competitiveness of the Liverpool City Region for logistics and manufacturing operations.”
Stay tuned for more coverage from MIPIM!
Congratulations to NAI Hiffman on its multiple wins for its Management Services team in the 2013 TOBY (The Outstanding Building of the Year) Award competition, sponsored by the Building Owners and Managers Association of Suburban Chicago (BOMA/Suburban Chicago). In addition, the firm was also named to the Chicago Tribune’s list of Top Workplaces for 2013, ranking 33rd among 126 firms.
“We are very proud of NAI Hiffman for both of these achievements,” said Jay Olshonsky, President, NAI Global. “The external recognition underscores our strength in local leadership and commitment to client service, not just in the Chicago area, but throughout the NAI Global network.”
Through the prestigious TOBY program, BOMA chapters worldwide recognize properties that exemplify outstanding quality and management. NAI Hiffman won four out of six categories:
• Under 100,000 Square Feet Category: Summit Oaks in Oakbrook Terrace, managed by the team of Paul DiCosola, Tammy Sullivan, Donna Eyre, and Bill Mareska
• 100,000 – 249,999 Square Feet Category: 909 Davis Street in Evanston, managed by the team of Tom Murphy, Chris Rackham, Stephanie Crump, Scott Wilson, and Matthew Dineen
• Renovated Building Category: Edens Corporate Center in Northbrook, managed by the team of Tom Murphy, Elizabeth O’Connor, and Rodolfo Ricardo
• Suburban Office Park – Low Rise Category: Butterfield Centre in Lombard, managed by the team of Melissa Woolsey, Chris Zivalich, Donna Monterubio, Ed Cosme, and Luke Hannon
The winners will advance to a regional competition later next year. The TOBY Award is the most comprehensive program of its kind in the commercial real estate industry. All facets of the building’s operations are thoroughly evaluated during the judging process, including tenant relations programs, preventative maintenance, community involvement, emergency preparedness, energy conservation and continuing education for building personnel.
NAI Hiffman is one of eight real estate firms on the Chicago Tribune list of 126 companies and organizations as Top Workplaces 2013. These companies have been recognized as Top Workplaces based solely on surveys about the workplace completed by their employees. According to the survey, companies ranked as Top Workplaces are not only better places to work but are more likely to be successful than peer organizations.
“These awards are a testament that we have the best people and a workplace that contributes to providing optimal results for our clients” said Dave Petersen, CEO, NAI Hiffman.