Browse Month: April 2013

10 Time-Saving Web And Smartphone Tips From David Pogue

Speaking of tips, a tip of the hat to Jan Hope, VP of NAR Commercial Division for forwarding this neat clip of time-saving tips for smart phones and computers.

Did you know that you don’t need the mouse to read a web page, even if you have to scroll down?

David Pogue is the personal technology columnist for the New York Times and a tech correspondent for CBS News. He’s one of the world’s bestselling how-to authors, with titles in the For Dummies series and his own line of Missing Manual books. And this clip contains ten awesome time saving tips that plenty of people don’t actually know – myself included.

How many did you already know?   The big revelation for me was the AWESOME spacebar trick for ending sentences in an SMS message.  Thanks Jan!

 

Chicago’s Central Business District: Capital Attraction Against Other Markets

IMAG0649Localism is inevitable sometimes in real estate. But when the topic is huge metro areas, at least some macro trends tend to hold up across different metro areas.  The flow of investment capital to Chicago’s downtown office market may not tell much about similar flows to CBDs in Dallas or to New York, but the ways in which capital is matched with office demand are worth study no matter what market you’re in.

This week’s Chicago State Of Office conference (follow the link for a description of the conference panel)  took a good look at the Chicago central business district’s sell and buy sides for office square footage.

Panel Moderator Ted Yi (Attorney with Quarles & Brady) asked how the state of Chicago’s and Illinois’s economy was afffecting its ability to compete with other markets.   Greg Van Schaalk (SVP, Hines) offered:

“In trying to launch RiverPoint again, which is a million-square foot building on the river that we just started construction on, we spent really the entire year of 2012 trying to find equity to start that building.  It’s a $400 million project so we were looking for at least $200 million of equity.  We ended up working with Ivanhoe Cambridge out of Canada [EDITOR’S NOTE: Regular readers of The Source will recall this pension giant’s involvement with Silicon Valleys’ recent blockbuster office deal -WG].  90% of our work was talking to them about Chicago.  Chicago was off their list.  This is the tenth largest real estate investor in the world. And they are heavy into European cities and the coasts – New York, San Francisco – but Chicago was off their list.  So our work was to try to change their perception of Chicago and we were able to do it with facts, with what [Chicago Mayor] Rahm Emanuel has been doing, bringing jobs into the city, and they’ve completely turned around.”

Van Schaalk went on: “That’s just an example of why you haven’t seen new development in Chicago. It’s because the major capital sources believe that there’s fundamental problems here with barriers to entry and overbuilding and things like that.  I think that is changing and will continue to change. I think the global capital markets are starting to circle Chicago now.”

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Chicago’s Central Business District: Office Market In A War For Talent

Bisnow 3rd Annual Chicago State of Office

At the Bisnow 3rd Annual Chicago State Of Office conference this week, a strong gathering of commercial RE pros listened to a blue-ribbon panel drawn from around Chicago’s office marketplace to hear perspectives on the local and national economy.  Gathered were:

Demographics And CBD vs. Suburban Office

From the get-go, these professionals of property management and market matchmaking described a Chicago central business district marked by a drive to capture young talent to serve the industries that rent the most CBD  space: legal, technical and professional.  Where’s the demand coming from?

“What we’re seeing quite a bit of at least in the CBD is more or less a war for talent,” said Jim Karras.  “We’re seeing a drive to the young talent, the millennials, as well as trying to secure the baby boomers as well, the empty nesters who are now living in the city.”

Andy Davidson: “Most of the demand is the younger generation, it’s IT, it’s tech,  overall.  A lot of the demand is education, the City of Chicago has a big educational base.”

Some early contention appeared over CBD vs. suburbs.  Andy Davidson was more down on the outlying areas while Jim Karras saw greater stability.  “The only reason the suburbs, I think are doing okay, is that the people who have to go out to the suburbs, the education groups, the hospital groups that have to go out to be near the client.  That’s what I think is holding up the suburbs.  There are big companies that are doing build-to-suits that aren’t lowering the vacancy when they do it, and there’s a lot of old buildings out there that quite honestly at 25% vacancy don’t make any sense to retrofit.  So I’m not as positive.”

Davidson continued on demographics: “You’ve got ahuge trend of people coming downtown, I don’t see that stopping  You’ve got a  generational shift – 10,000 people who are turning 65 every single day. It’s the biggest generational shift we’ve ever had. So companies have got to get downtown, near the young.”

Watch The Source for more coverage of Bisnow’s 3rd Annual Chicago State of Office conference.

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Newest Fed Beige Book: Commercial Real Estate Improved Markedly

Cover of Federal Reserve Beige Book April 2013

Eight times annually the Fed’s Beige Book provides a helpful snapshot of anecdotal evidence of economic activity in the various Federal Reserve Districts across the country.   In the world of econometric publishing, it’s not the hardest data, collected somewhat informally and without the rigor of research studies such as NAR’s research department produces (consider our horn tooted).

Nonetheless, the Beige Book provides a useful way to take the quick temperature of various sectors and regions, particularly in contrast with each other.

Commercial Real Estate “Improved Markedly”

Nationally, demand for credit and services plus robust energy activity came with an improvement in commercial real estate:

Demand for nonfinancial services increased at a modest pace, and several Districts noted growth in freight and transportation services. Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country. Loan demand was steady to slightly up in most Districts. Reports on agricultural conditions were mixed, as drought or cold weather adversely impacted some Districts while others reported a strong agricultural sector. Oil and natural gas activity remained robust over the reporting period, with contacts in the Cleveland, Kansas City, and Dallas Districts expecting a rise in activity in coming months, while coal production continued to decline.

Employment conditions remained unchanged or improved somewhat, and reports of hiring were most prevalent in the manufacturing, residential construction, information technology, and professional services sectors. Wage pressures were generally contained, although several Districts cited upward pressures in occupations experiencing labor shortages, such as information technology, construction, and engineering. Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts.

Outlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace. Some uncertainty remained, primarily regarding fiscal policy and health care reform.

[…]

Commercial real estate and construction activity improved in most Districts. Office vacancy rates declined in the Boston District and contacts said the construction of mixed-use projects was picking up. The New York District reported that office vacancy rates continued to decline and rents rose in Manhattan. The Philadelphia District commented that there was not much change in nonresidential activity during the reporting period, but that contracts for repair work from Hurricane Sandy have yet to be approved. Contacts in the Richmond District cited a tight supply of class A office space and said there were several large projects under construction in the Washington D.C. area. Commercial construction saw widespread improvement with the New York, Atlanta, St. Louis, Minneapolis, and Kansas City Districts noting increases. Both commercial real estate development and leasing activity increased across the San Francisco District, mostly fueled by growth in the technology industry. Several Districts, including Boston, Richmond, Atlanta, and Kansas City said commercial property investment sales activity increased during the reporting period.

Contacts in the Philadelphia and Kansas City Districts were somewhat optimistic in their outlooks for the commercial real estate and construction markets in general, but contacts in the Cleveland District were cautious about near-term construction activity. Dallas District contacts said office and warehouse markets were improving, and Atlanta District respondents noted growing optimism for the office and industrial sectors.

 

To check out the full Beige Book for April 17, 2013, follow the link.

 

 

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Healthcare Real Estate: The “Retailization” Of Healthcare

Abercrombie & Fitch, 5th Avenue

One of the clearest trends in the future delivery of healthcare — and therefore in the utilization and requirements for healthcare properties — is the drive toward outpatient care.  Technological advances and ever-greater specialization in healthcare services means that patients will be spending more health care time in facilities geared toward outpatient services and less time in overnight-stay facilities.

The trend takes care from its traditional delivery center – the hospital – and distributes it to localities.  Patient trips are shorter and integrated into other day jaunts, property signage opportunities are highly valued, and local traffic patterns speak volumes about the success or failure of the modern outpatient  healthcare facility.

If any of these factors and trends sound familiar, it’s because they resemble the retail property value proposition.

At the Real Estate Journal Healthcare Real Estate April conference in Chicago, the blue-ribbon panel discussing Strategies In Medical Office Space acknowledged the retailization of the medical care delivery model  in a variety of ways.  It was agreed that efficiency and competition — as odd as it may be to hear about these time-honored determiners of commerce in the context of healthcare —  would shape the delivery of health services going forward.

Co-Branding: A Routine And An Extreme Case

Much about the outpatient-facility trend makes intuitive sense. 30 million new insured are coming to the market, a wave of consolidations will leave the country with possibly fewer than 100 healthcare networks, and the aging of the population will create radically different balances in property requirements.  Part of that rebalancing will include co-branding and shared space opportunities never before seen on a national scale.

One question from the audience asked about co-brandin trends in the midwest.  Reference was made to a plan in Menominee Falls, WI where a healthcare facility development project was said to be co-branding an as of yet unnamed health club.  I found coverage of this development in Milwaukee media coverage.  A synergy between a healthcare facility and a health club, while not common at all, makes a great degree of sense on its face; health is a concept shared deeply by the two.

But not all property co-branding in medical care has been so intuitive.  Perhaps giving a glimpse into a brave and odd new world in co-branding, was panelist Michael Noto, SVP Management Services group for Healthcare REIT:

“Urgent care operators co-branding with health systems will continue…one [co-branding] that is really kind of crazy is [clothier] Abercrombie & Fitch co-branding with Columbus, OH Nationwide Children’s Hospital. There will continue to be a trend toward co-branding, going back to providing greater visibility, getting whatever leg up ad hospital can get on its competition.  If it means they can pull in a clothing company to do that, they will.”

I wasn’t sure if I heard Mr. Noto clearly — but incredibly, I had.  After checking up, I found a New York Times piece confirming the hospital had renamed its emergency and trauma center after the vendor of preppy duds in 2008 in exchange for a $10M donation.

Long story short: get ready for more bewildering combinations as the inevitable and oh-so-American mixing of health care and commerce proceeds apace.

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Healthcare Real Estate: Looking Beyond The Indicators

English: The main office of North Carolina Eye...

With only a few exceptions, the mood was decidedly up at Thursday’s Healthcare Real Estate Conference in Chicago.  The investors, brokers, tenants, developers and managers who met at the University Club came to hear about strategies and trends in development, management and capital for medical properties ranging from medical office buildings (MOBs) to large healthcare campuses to retail outpatient facilities.

Superficially, the first indicator from 2012 was a drop in medical facility construction starts.  Usually, when a sector sees a drop in national groundbreaking, it’s kind of tough to read the tea leaves as anything other than a negative.

That wasn’t the diagnosis at the conference.

On a panel including Shawn Janus of Jones Lang LaSalle’s Healthcare practice, the drop in starts was likened to a deception associated with long-term factors finally clearing up.

“We saw a decrease due to the capital markets still rebounding, and a SCOTUS ruling on ACA, then an election,” said Janus.  “With all that behind us, we’re going to ses greater activity.  On the acute care side, that has dropped off. Community hospital starts has slowed down.  But we’re going to see higher-acuity activity driven into the outpatient environment.”

Testing Positive For Jargon

The healthcare sector of commercial real estate has a set of keywords that don’t appear elsewhere.   Let’s take a look at Shawn’s response and unpack it a bit.

  • acute care: more or less means large hospitals
  • high acuity: medical interventions for seriously ill people (acuity is another term for acuteness or severity of illness).  High acuity medecine is typically conducted on inpatients, that is, hospital patients.  But the general trend in medicine and the incentives are to take some higher acuity patients and treat them not in hospitals but in specialized outpatient settings.  One classic example of this trend is the dialysis clinic.  There was a time that dialysis for kidney patients was conducted primarily inside a hospital: that has changed in a great many places today.
  • outpatient : a patient not hospitalized overnight

What he’s describing is a trend — several trends, in medical payments, technology and facilities management — that will cause an explosion in non-hospital medical facility utilization for outpatients.  Strip mall spaces, office renovations, all manner of off-campus medical facilities are going to form the demand nationally going forward.

Consider it a retailizaton of medicine.

IT First, Space Solutions Next

And the trends in healthcare facilities are moving in a particular order, creating further deception in the recent numbers.  The Affordable Care Act contains mountains of incentives for the adoption of healthcare information technology (HIT) including electronic medical records (EHR).  Tina Waldrup, VP of HealthDirections, an Illinois consulting firm, put it this way:

“From the provider perspective: ACA is causing providers to spend much more on IT and thereby less on real estate [and creating] lots of repurposing of office space. ”

In other words, the changes are marching to the beat of the federal drum, placing priorities on reworking existing space — for now.  But approximately 35 million more Americans will be insured  – and that population, plus the “silver tsunami” of baby boomers aging into high medical care use – means a major explosion in demand for medical space is coming.

Watch The Source this week for more coverage of the Healthcare Real Estate Conference.

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Healthcare Real Estate: Construction Starts Down, But Market Optimism Reigns

While I’m working on transcriptions and summaries from today’s Illinois Real Estate Journal conference on Healthcare Real Estate, enjoy this clip of conference panelist Todd Lillibridge of Lillibridge Healthcare Services / Ventas.  Todd serves as the Chief Executive Officer and President of Lillibridge Healthcare Services Inc. Mr. Lillibridge is responsible for the strategic focus, vision, and overall leadership of the firm. In this field since 1978, he has vast experience in general management, property investments, debt and equity financing, and property operations. He has been an Executive Vice President of Medical Property Operations at Ventas Inc. since July 2010. He serves as member of many organizations including the Economic Club of Chicago, the World President’ Organization (WPO), and he serves as on the Board of the Joffrey Ballet.

 

Commercial Real Estate Beige Book Breakdown: March 6, 2013

English: The Marriner S. Eccles Federal Reserv...

 

The Federal Reserve publication entitled the Beige Book is not, as its title might suggest, a handbook for interior designers with a preference for inoffensive colors.  It is an eight-times yearly published report of the Federal Reserve Board also known as Commentary On Current Economic Conditions.  The reports gather “anecdotal information on current economic conditions” in each of the eight Federal Reserve Bank Districts.

 

The Beige Book publication schedule for 2013 is:

 

  • January 16
  • March 6
  • April 17
  • June 5
  • July 17
  • September 4
  • October 16
  • December 4

 

The commercial real estate industry finds good news in the most recent beige book, along with somewhat mixed indicators.  March 6, 2013’s Beige Book reports:

 

Most [Federal Reserve] Districts reported expansion in consumer spending, although retail sales slowed in several Districts. Automobile sales were strong or solid most Districts, and tourism strengthened in a number of Districts. The demand for services was generally positive across Districts, most notably for technology and logistics firms. Transportation services activity was mixed among Districts, although the majority of contacts were optimistic about future activity. Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries. Residential real estate markets strengthened in nearly all Districts and home prices rose amid falling inventories across much of the country. Commercial real estate activity was mixed or improved slightly in most Districts, and financing for commercial development remained widely available. Overall loan demand was stable or slightly higher across nearly all Districts, and several bankers noted stiff competition for qualified borrowers. Agricultural conditions varied across the country, with some areas continuing to suffer from drought while others reported considerable precipitation and improved soil moisture levels. Districts reporting on energy activity indicated modest expansions in crude oil and natural gas exploration, while mining activity slowed.

[…]

Overall commercial real estate conditions were mixed or slightly improved in most Districts. Commercial real estate activity grew modestly in the Philadelphia, Richmond, Atlanta, and St. Louis Districts, and activity in the San Francisco District expanded. Boston and New York reported mixed activity, while the Kansas City and Dallas Districts noted few changes. Although some modest growth was reported in the Chicago District, the level of activity remained weak, and commercial contractors in the Cleveland District noted a slowing in activity, particularly for defense-related projects. Office vacancy rates declined across most of the New York District, and industrial vacancy rates in upstate New York posted their lowest levels in three years. Richmond contacts described the supply of Class A office space as tight, which they attributed to the absence of new construction. Commercial development and leasing activity increased in the San Francisco Bay and Seattle markets, fueled by sustained growth in the technology sector. Commercial construction improved by varying degrees in the Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Respondents in the Boston District expressed concerns about overbuilding in Boston’s apartment market and office sector, while Philadelphia contacts noted an increase in energy-related projects and repair work resulting from Hurricane Sandy. Cleveland, Atlanta, and Chicago reported high demand for manufacturing space, with some Chicago manufacturers leasing temporary space to accommodate increased demand. Credit for commercial development and transactions was widely available, although Boston noted a large decline in loan demand and contacts in the Cleveland District said financing difficulties continued.

[…]

Loan demand was steady or increased across all the Districts that reported. Residential real estate loan demand was strong in the Philadelphia, Cleveland, Richmond, Atlanta and Chicago Districts, mainly driven by refinances due to continued low interest rates. Demand for commercial real estate loans was also strong in the Cleveland, Richmond, and Kansas City Districts. Auto lending increased in the Cleveland and Atlanta Districts, and Philadelphia and Dallas cited growth in energy-related loan demand. San Francisco continued to report a slowdown in venture capital and private equity activity, but contacts noted an increase in the number of private technology companies moving toward an IPO.

Asset quality improved at banks in the Philadelphia, Kansas City and San Francisco Districts. Philadelphia, Richmond, Atlanta and San Francisco lenders reported high competition for qualified borrowers. Borrowing standards were reported to have been loosened in some Districts. Atlanta contacts noted additional loan capacity, but continued to be cautious with loan activity. Cleveland bankers considered cost cutting measures, including layoffs, due to shrinking net interest margins. New York contacts indicated a decrease in loan spreads for all loan categories, particularly residential mortgages, and bankers in the Chicago District said that very few mortgage originations were being kept on their balance sheets and that interest rate swaps were being utilized to hedge against a potential rise in interest rates. Bankers were generally optimistic about future activity in the Philadelphia and Dallas Districts for the near term, but Atlanta bankers expected activity to ease toward the middle of the year.

Find the entire Beige Book for March 06 2013 after the jump.

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Video: Tax Aspects Of Commercial Real Estate

Just watched a great webinar from California attorney Roger Royse that runs almost an hour on the tax aspects of commercial real estate transactions. While situated in California law, plenty of universal CRE principles are covered.  Roger’s style is clear, concise and sharp, delivering helpful information to beginners and pros alike on:

  • Sales and exchanges
  • Non-recognition transactions
  • Deductions
  • Leases
  • Financing
  • Distressed Property
  • FIRPTA (Foreign Investments in Real Property)
  • Tax and estate planning
[DISCLAIMER: As usual, never, ever take anything published or linked here at The Source as legal advice. Always retain qualified commercial real estate counsel!]

 

 

Google Apps For Commercial Real Estate

I’m generally a fan of Google, and I will usually check out their app offerings.  But they really offer a mixed bag of solutions that fit what I need to do only with varying degrees.  And the fact that they are an unaccountable platform definitely has its drawbacks.  As a user of a free Google application provided as a service, I don’t have control over important things such as what version I’m running, where my data lives or wether the application will work offline.

I don’t even have control over what software I’ll be using next month, because Google alone has control over what products it will provide and which it will cancel. I was reminded of this most recently when Google announced two weeks ago that it would be phasing out its Google Reader application.  This hit very close to home for me – I use Google Reader daily, several times a day, on my desktop and on my Android phone.  Without it to keep tabs on RSS feeds of content coming from all over the worlds of commercial real estate and finance, I’m not much good as a researcher.  So the hunt is on for a replacement.

Google Apps For Commercial Real Estate

All that said, there are plenty of benefits Google Apps can provide to the commercial real estate professional.  Exactly what they are — and aren’t — are the subject of the following video by Michael Griffin, CEO of ClientLook CRM, a mobile CRM solution.

 

 

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