Browse Month: March 2011

An Interview with an Economist – CRE Market Forecast

Straight from our commercial economist at the National Association of REALTORS®,  George Ratiu provides the February Commercial Real Estate Outlook and Forecast.  Watch and listen above as George outlines the fundamentals behind why NAR sees the CRE market entering a period of stabilization.

A highlight, George notices higher demand for space and vacancy rates coming down – although he thinks stronger rents will take longer to achieve.  Not surprising, multifamily remains the strongest sector in large part demand is high due to housing problems and the consequent need for apartments and condos.

As George points out, “Commercial economic growth always lags behind residential and sales and investments through 2009 were at record lows.  The picture improved markedly in 2010 with sales of $120 billion – up 100% over ‘09, and 2011 is well on track to best 2010.”

All markets will not recover at the same pace and properties of high quality in strong markets on both coasts are seeing stronger demand than many inland regions.  Two additional drags impact CRE – job growth continues to be a factor for as filling space is dependent on employment and NAR members report that financing is still hard to get.

Speaking of financing, NAR Research is in the process of wrapping up a survey of REALTORS® about the availability of CRE financing.  Stay tuned here for the exclusive results of this important sentiment survey.  Subscribe to our RSS feed, bookmark us, or follow us on Twitter (@commsource) or FaceBook (CommercialSource.com product/service page) for updates.

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REITs Help Commercial Real Estate Uptick

Real-estate investment trusts (REITS) are a factor in commercial real estate’s recovery, and it seems there’s still room for growth.  According to Howard Gold of MarketWatch, no sector in the U.S. market has done as well as in the past two years ago.  These publicly traded vehicles that own commercial property and pay out 90% of their income to shareholders have beaten financials and consumer-discretionary stocks during the rally from the market’s bottom in March 2009.

San Francisco-based Callan Associates reports the FTSE NAREIT All Equity REIT Index gained 10.8% annually over the 10 years ending December 31, 2010.  Only gold and emerging-markets stocks did better during that “lost decade” for the S&P 500.  Popular funds are up over 100% since 2009, and the Vanguard REIT Index returned 28.4% in 2010.

Why have REITs done so well?   Gold says it’s partly because they did so poorly in the bear market, when the NAREIT All Equity Index lost 19% in 2007 and another 41% in 2008 — much worse than the S&P’s plunge.

Two recent REIT portfolio healthcare property acquisitions by JER Partners and Ventas totaled nearly $10 million.  Brad Case, NAREIT research vice president said that this type of deal will indeed lead to improved property fundamentals.  Case says, “REIT …returns continue to be strong and the market is recognizing their strengths – their access to capital and improving fundamentals;” he adds that investors are becoming convinced that a double-dip recession has been avoided, which is also spurring investment.

So far, this confidence has translated into an 8.29% rise in the FTSE NAREIT All REITs Index for the first two months of 2011, compared to 5.88% for the S&P 500.   They’ve had a huge edge over private owners, who until recently have been frozen out by banks unwilling or unable to lend.

Read more on REITS at:  http://www.realtor.org/rmocommercial/articles/2010/1003_commercial_newsbriefs

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On The Road Again…

Lately I feel like I have been living out of a suitcase, probably because I have been.   Spending a week in Las Vegas at the RE/MAX R4 event and at the Coldwell Banker Commercial Global Conference was exhausting on my feet – but rewarding connections and engaging conversations with commercial brokers and agents from these two companies made it worth every blister.  Here are a few observations and highlights:

RE/MAX had a brand new Commercial/Investment education track at their R4 event this year, with large success due to the hard work of RE/MAX’s Kevin Bair.  One of my favorite sessions was the Commercial Networking Exchange –  a “speed-dating” like event  – where a few dozen or so practitioners were lined up along either side of a very long table.  They had a few short minutes to meet whoever was across from the, and “pitch” who they were, their area of expertise – and when the buzzer rang, they moved one spot over and repeated.    The roar of the conversations was energetic – even for me as a simple observer – and as I eavesdropped on some of the chatter, it was obvious these men and women have a lot of passion for commercial real estate.    I also attended a session on Top 5 Trends in Commercial Real Estate – which, if you follow us on Twitter (@commsource), you’d have been following along as I tweeted my way through.   The Green/Energy trend was certainly one that took a fair amount of time and deservedly so.  With over 60% of electricity in the U.S. consumed by commercial real estate property AND more than 30%of total energy (according to the US Energy Information Administration) , the opportunities exist for business – developers, investors and commercial practitioners  – to capitalize on this trend (which isn’t so much a trend as it is a new way of doing business, building, living, etc) while making a lasting impact on the environment and our future.

The second half of my week was just as engaging – at Coldwell Banker Commercial’s Global Conference – where several hundred of their finest came together to celebrate top achievements, gain knowledge, and network.     Mark Dotzour, PhD and NAR Signature Series Speaker provided a frank commercial real estate outlook which definitely captured the attention of the audience.    While I enjoyed attending some of the sessions – my best experiences here came from the conversations I had with CBC’s professionals in their vendor marketplace.     It’s very rewarding to hear straight from a REALTOR® that what NAR does for them – from advocating commercial real estate issues to providing resources like the Commercial Connections publication and the CommercialSource.com platform – are valuable things they enjoy and reap benefits from.  CBC has a great leader in their President, Fred Schmidt. Truly impressive was the time he took  to walk around and personally chat with each of representatives, like myself, from the various vendors/organizations that were exhibiting.

It was a long week, indeed – but with new connections comes new resources.  Watch for future podcast interviews with leaders like Fred Schmidt, services to help you grow your business, and continued research analytics.   Stay tuned…

ROI on RPR for Commercial Real Estate

REALTORS® face the challenge of technology-empowered consumers and investors who rely on research from multiple sources in order to educate themselves. The Realtors Property Resource™ (RPR™)  https://www.narrpr.com/ was created to offer a comprehensive source of information for the exclusive benefit of NAR REALTOR® members.  Properly implemented, the RPR will result in the industry’s most powerful information source, making REALTORS® more efficient, and allowing brokers and agents to focus on customer service, generating more opportunities for the exchange of real property.

Realtors Property Resource, LLC is a wholly-owned corporation of NAR and its members.  Returns from its investment in RPR’s technologies are intended solely for NAR’s members.  No listing, seller or property level data will be released from the system, and there will be no consumer access of any kind. RPR is authorized to produce two analytic products via license agreements with participating MLS/CIE, one of which includes the list price of a property.

As of March 1, 2011 the RPR system is contracted in 225 MLSs representing over 370,000 REALTORS® and live in 94 markets across the country with 240,000 REALTORS® active.  RPR is currently in development of its Commercial application with release targeted for Q3-Q4 2011. The Charlotte Region Commercial Board of REALTORS® created a task force to work with RPR staff; Beta testing begins this Summer.  Benefits to commercial practitioners are:

  • REALTOR®-only access to nationwide parcel centric data sets on over 147 million properties, including public records and tax assessment data, liens and mortgage information, deeds and the industries largest database of foreclosure information, schools, flood maps, geo-point and aerial mapping features, community, census, demographic and psycho-graphic information, all at no charge, all in one place.
  • Customized Commercial user profiles, property displays and reporting features specifically created to express Commercial data sets.
  • Works with your MLS or CIE to integrate localized active and off-market data with RPR’s robust nation-wide datasets.
  • RPR has no public or consumer access, keeping REALTORS® central to the process of property information and provides a number of valuable reports which can be generated by agents and broker for the benefit of the consumer.

Visit the RPR web-site blog.narrpr.com/info for more information.

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30 Under 30

More than 600 applications were received this year in a quest to be named NAR’s “30 Under 30”.  I was honored.. and exhausted…to be one of ten judges who spent hours  reviewing applications and championing the top talent.  Some past honorees have enjoyed fame by being tapped for radio and TV reality shows.  For most, local celebrity status is enough.  So what’s the criteria?  Aside from age, NAR looks for candidates who have demonstrated ingenuity and creativity – those with unique personal stories, tales of triumph, and proven leadership.

I realized several things about this ambitious and well-educated group making their own way in real estate.  Some are so new to the business they don’t know any other market climate than the hard one we’ve been experiencing.  If they can thrive in this…they should be golden!  (The typical honoree has been in the business 5 years and averages $7 million in sales.)  Many of them work in – even lead– team environments, and collaboration has paid off.  These professionals – some already brokers and owners – have energy and tenacity beyond their years.

This year, videos were allowed as a supplement with applications, truly helpful in getting a sense of the “person”.   While some earned their passion from growing up in a real estate family, just as many entered this business to satisfy entrepreneurial desires.  I’m impressed with them all!  Technology is crucial to their business strategy and data management their key to staying in touch. Several have developed their own systems to maintain client relationships.  Others have saved time by utilizing tools like NAR’s Benefit partner, DocuSign.

What I found fascinating is their involvement and commitment to their communities.  They not only donate dollars, they actively participate in many charitable organizations – it’s a “want to”, not “have to” commitment.  So refreshing!

One thing is certain.  These young REALTORS® have chosen real estate as a career from an early age and they love it.  I see every indication to be proud of the next generation of real estate professionals on the rise.  The industry will be in good hands.  Seasoned professionals would do well to engage these folks in conversation.  I know you’d both learn from one another.

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It’s all in the family at Keller Williams

Last week I attended the 2011 Keller Williams Family Reunion, representing the National Association of REALTORS(R) and sat in on some of really interesting commercial sessions.  While the weather in Anaheim was downright chilly – the mood and atmosphere was been warm and energetic!  I met some fantastic REALTORS(R) – including Steven Tobias (a new commercial committee member at the Salt Lake Board of REALTORS® ), Scott Raines (Twitter contact that I got to meet in person!) and John Ziemba (really good knowledge of technology and social media).  These members, along with many other KW Commercial agents and brokers I met have an obvious passion for their business and the industry.  There is also a predominant feeling of family and teamwork amongst these agents, brokers and team leaders, which makes sense since they call their annual event a “family reunion”.  But you can definitely feel that is more than just in words alone.   

Buddy Norman and his team presented KW Commercial’s 2011 Initiatives; including a strong focus on education and networking through their Regional Masterminds and coaching program.   It’s true that small group networking and collaboration is a great way to strengthen your own professional skills, but also to create a support system – a “family” in business, and KW Commercial has systems in place to create just that.  

Commercial sessions were well attended, with 200-300 participants in each on average – sessions included 1031 Exchanges, Social Media for the Commercial Broker and a Commercial Property Exchange, featuring “pitches” by brokers.  KW is also creating a new International division – to focus on the expanding amount of foreign investment money flowing to the U.S  into real estate.  There was a true aura of optimism, creativity and networking through the events of the week.  Witnessing complete strangers from opposite sides of the country meet each other and exchange contact information for the purpose of encouragment and team building, as well as handing out red REALTOR(R) “R” pins to commercial real estate professionals were two of my personal highlights.  

It was stated that KW Commercial has set sights on being the fastest growing commercial real estate company in North America – with a goal to add 1,000 new brokers to their ranks this year.   Now that would be an expanding family.

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