Browse Month: January 2014

BLS 8-Year Job Growth Projections: Healthcare And Retail Top The List

Bureau of Labor Statistics

 

The US Bureau Of Labor Statistics have issued fresh projections for the positions with the most job growth over the next eight years. These numbers hit the web in December and I caught up with them while doing research on projections for growth in demand for medical properties.

The table from BLS I’ve linked to points to the medical sector growing in the next ten years with very clear indicators. with the largest growth in jobs expected to be in the position personal care aides, followed by registered nurses coming in at number two.

While news like this surely brightens the mood at healthcare REIT offices and at other real estate enterprises meeting the expansion in demand for medical care coming with the greying of the population,  health care is not the only sector in the top three of BLS job growth expectations.

At the #3 position we find retail salespersons, currently at 4.4 million jobs and expected to be at 4.8 million in 2022, for a bump of 9.8%.

At #5, food preparation including fast food ( 2.9 million currently, 3.4 million expected in 2022, for a expected bump of 14.2% over next eight years).

Some interesting facts:

  • Of the top ten job descriptions, only two (nurses and nurse assistants) needed more training than high school.
  • Of the top ten, six require only grade school education.
  • The lowest-paying median annual wage on the list, food preparation, ranks fifth on the list at $18,260.
  • Four of the top five positions were in health care

Take away what you will from the Dept. of Labor’s tea leaves, but one thing is clear. We can add the BLS to the giant pile of indicators that healthcare is expanding to meet the needs of a newly insured (and aging) populace.

Commercial Real Estate News Roundup: January 28, 2014

Wall Street Journal + Ogilvy = Social Media Se...
Above: An early method of obtaining news called a “newspaper”.

General

Office

Industrial

Retail

Multifamily
(Photo credit: Ogilvy PR)

Indianapolis: A Portrait Of Recovery

View of downtown Indianapolis, , , taken from ...

The commercial property market in central Indiana has had an exemplary recovery in 2013 and 2014 appears to promise more of the same.

In Colliers’ 2013 year-end report on the Indiana region, the low-tax, low-services state is highlighted with many big industrial property deals in and around Indianapolis.  These include:

  • An 809,000 s.q.f renewal for Hachette Books in Lebanon, IN
  • Chrysler’s single-tenant purchase of 781,000 sq. ft. in Tipton
  • the 446,000 sq. ft purchase of the Hillsdale Technical Center in Indianapolis

Read the full Colliers report here.

Race To The Bottom (Of  Tax Rates)

Indiana has long subscribed to the idea that economic activity needs to be shepherded by state policy favoring production. The state has a reputation for being aggressive in keeping its low-tax appeal to business, but it’s possible that limits are being encountered in that campaign. One example of the priorities on display: Indiana is one of ten US states that does not have state-funded preschool while at the same time its state legislature is considering foregoing a further billion in tax revenue for schools and local governments by eliminating a property tax on business equipment.

The picture for 2014 politically is less clear than the state’s track record has been: the tax cut proposal from Governor Mike Pence (R), addresses the burgeoning industrial sector, but is getting little traction in the state house Republicans  and concern from local mayors.

Cassidy Turley Report: Hot Spec Construction Continues

CRE national firm Cassidy Turley sees strong fundamentals in the Indianapolis area, issuing a raft of positives at a recent event. 

The Cassidy Turley report — and State of Real Estate event — had plenty of positives to say about the industrial market in central Indiana. Cassidy Turley reported that in the fourth quarter of 2013, the vacancy rate in the Indianapolis industrial market stood at a low 4.9 percent. The market absorbed more than 1.9 million square feet, according to the report. The best news from Cassidy Turley regarding this market? Spec construction was strong in the industrial sector in 2013. It should be just as strong in 2014 as developers race to provide space for new tenants hoping to move into the Indianapolis market.

In terms of property markets, the Hoosier State’s recovery in 2013 looks terrific in the rearview mirror. Can the state maintain a rosy horizon? Only time will tell.

The Ultimate “Dirt Business” Domain Name Is Up For Sale

Domain Names

The commercial real estate business has long had its online counterparts: bustling markets in online development (aka web sites) and space rental (aka hosting) are each circulating many billions a year as the commercial internet moves into its third decade.  That includes the market for internet domain names, the closest thing the web has to a location-based property market.

Parallels

The parallels between real estate and online real estate are far from perfect, but the two do share one immutable principle: location drives commercial property value. Online, the closest analogue to how physical location works in commercial real estate is expressed in the way brands and domain names work online. As a commercial property’s prime physical location attracts traffic and commerce, so to with the prime domain name, a word/brand that nobody needs to search for because it’s so memorable. Earning “mindshare” or high traffic online with an unforgettable domain name is akin to earning the favorable traffic patterns and proximities that only come with prime commercial real estate.

The market in internet domain names is a fascinating value laboratory. Wikipedia’s list of the 21 Most Expensive Domain Names is worth a look, demonstrating eye-popping sums, some of which makes sense, some of which are head-scratchers dating back to the first internet bubble of the late 1990s. The average price in dollars of the top 20 domain names at press time: $7.68 million 

Flippa

In my opinion, the site best dedicated to the exchange of internet domain names is Flippa, itself a domain name based upon real estate slang (“flipper”). During a recent visit, I spotted the Flippa listing for Dirt.com and immediately thought of the real estate connotations. (Important note: I do not know the seller and have no relationship with the site — I just don’t commonly see a prime real estate domain name up for sale that often and thought it would make a neat post.)

Dirt Is A Four-Letter Word

At a premium in the domain name space are domains with few letters, as these were snapped up relatively early in the commercialization of the internet in the middle 1990s. Dirt.com is one of these, having been registered first in 1995.

Beyond its brevity, Dirt.com has brand value in multiple applications. Check out this fun excerpt from the sales listing:

Dirt.com has so many applications, they are almost too numerous to list. As far as motivation, a four letter, top level domain name such as this only comes along once in a long while. Buyer Motivation comes from scarcity and the yearning for building a world class brand.

Here is list of potential “category killing” opportunities for the domain:

  • Celebrity Gossip
  • Political Gossip
  • Reputation Management
  • Cleaning Supplies 
  • Cleaning Services
  • Organic Supermarket
  • Organic Superstore
  • Outdoor Supplies
  • Tools
  • Vacuum Cleaner
  • Outdoor Superstore
  • ATV superstore
  • Dirt Bike superstore
  • Landscaping directory 
  • Landscaping supplies
  • Outdoor Contractors
  • Scandals
  • Motocross Superstore
  • Background Checks
  • Social Reputation 
  • Big Data
  • Adult
  • High Schools Sports
  • College Sports
  • Pro Sports
  • Sports Niche
  • Outdoor Niche

Did you notice which one they forgot? Land!

(Photo credit: ivanpw)

The Land Bank: Selling Vacant Properties From City Hall

Philadelphia skyline.

When the City of Philadelphia passed an ordinance this week, they became the largest city in the US to create a municipal land bank. They certainly wont be the last.  As new techniques are sought to tackle the nationwide problems of unused, foreclosed and abandoned property, chances are a municipal land bank is headed to a commercial real estate market near you.

Created under Pennsylvania’s Land Bank Act of 2012, the Philadelphia Land Bank takes on the problem of portfolios of tax-delinquent property using an updated, streamlined approach as compared to decades past. Before the law, such properties in Philadelphia were administered by multiple governmental departments with differing constituencies and purposes. Selling a foreclosed property has its significant challenges even without city involvement — as many agents who dial the phone into bank REO departments can attest.  Add multiple bureaucratic layers of city government into the process, and you’ve perfected a recipe for inertia with a side of gridlock.

With 40,000 vacant parcels of land in Philadelphia, a quarter of which are owned by the city, the effort to reduce that number needs to cut through the red tape, and the land bank certainly appears to fit the bill. The problem for the city is twofold: reduce the number of vacant parcels held, while, ironically, increasing the same number.  The first requirement of any two-way street is that it be wide enough, and the legislation has laid the groundwork for heavy traffic.

Doing Both Sales And Acquisitions

The city needs not only to reduce the time to market for foreclosed and abandoned properties it already owns; it also needs to speed up its own acquisitions process for tax-delinquent properties that need to go to market but can’t.  You can’t have tax delinquency without tax delinquents, and these parties tend not to make the most conscientious property owners.  Consolidating management of  these properties presents at long last a single point of negotiation for private market actors to engage; the process of returning these plots to private ownership can only get faster.

According to JD Supra, the land bank created by the City Council still needs to be incorporated, the city needs to provide it a budget, appoint a board of directors, and assign it the vacant land.  When that happens…

[…] the city anticipates that developers and other prospective purchasers will have a much easier time navigating the administrative process and acquiring city-owned property. Further, because the land bank will be able to acquire tax-delinquent property more easily, purchasers may have the opportunity to acquire larger blocks of land all at once without having to track down private owners or purchase at tax sales.

As for other benefits, the city also anticipates an increase in its tax revenue as formerly vacant land is developed, and city residents can look forward to enhanced safety as formerly vacant properties are developed.

Not Just The 2008 Crisis

The longer-term decline in industrialization seen by many areas, added to the wave of foreclosures from the 2008 recession amounts to a tenacious problem in both property markets and civics.  New ideas to cut these properties loose from government and send them back into private hands are welcome ideas.

(Photo credit: Flodigrip’s world)

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JCPenney Announces Closure Of 33 Stores

English: JCPenney store at the Holiday Village...

Citing 33 stores as “underperforming”, retailer JCPenney announced the closure of nearly three dozen stores and the elimination of 2,000 jobs late on Wednesday. The wave of closures hits 21 states with Wisconsin the hardest hit, and is intended to produce $65 million in savings for the beleaguered retailer.

“As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly,” said Myron E. (Mike) Ullman, III, chief executive officer of JCPenney.  “While it’s always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success.”

The full list of closures is below.

Miami Convention Center Project Runs Up Against Mayor, New Referendum Rules

The ambitious renovation project for Miami’s convention center has come up against significant obstacles: second thoughts, an election and a lawsuit.

The development plan, selected after a worldwide competition, came from South Beach ACE, a team headed by uber-developer Dan Tishman in a partnership with architect Rem Kooolhas.  The $1.2 billion plan (see video below) involves a pretty thrilling reworking of the current truck-depot ho-hummery that characterizes the convention center today.  Of particular interest is the inclusion of a 800-room hotel on top of the convention center structure, a sweeping, deco-inspired edifice that Tishman’s team claims is essential to the success of the project:

Reconsidering The Hotel And Public Land For Retail

Following the November election of Miami mayor Philip Levine, it was the hotel and retail aspects of the project that came under added scrutiny.  In a memo from Levine’s office, the mayor called upon the City Commission to scrap the plan and current negotiations with South Beach ACE, and start a new bid process for a much smaller renovation plan that excludes a hotel and only uses the cash Miami has on hand.

Included in the winning plan was 90,000 square feet of retail on public land under a 99-year lease currently under negotiation with the developer. As Christina Viega reports in the Miami Herald, that requirement is likely on its way out:

The size, scale and price of the Beach’s proposed convention center renovation was a hotly contested campaign issue during the city’s November elections. A new slate of candidates — one that supported a smaller and cheaper renovation plan — was swept into office.

At the same time, Commissioner Jonah Wolfson won a legal battle he waged to make a convention center project more difficult to pass in a required voter referendum.

The original plan, as proposed by the city, called for Miami Beach to lease out public land to a private developer as a way to help pay for the project. On the land, the private developer would build a hotel, shops and restaurants.

When the city picked ACE for the project, the city’s rules called for a voter referendum to approve the lease of city land to any private entity. Only a simple majority was required for the lease agreements to pass.

But Wolfson launched a petition campaign, financed largely by the Fontainebleau hotel in Miami Beach, to change the city’s rules regarding a referendum. He won, and now at least 60 percent of voters would have to approve the lease of any convention center land. Wolfson also took his own city to court to remove a ballot question approving the current plan from the November ballot. His lawyer argued successfully that voters didn’t have enough information to vote on the issue.

Under Levine’s proposal, however, it’s likely that no referendum would be needed. That’s because Levine proposes to nix a convention center hotel and “any requirement for retail or other private commercial uses.”

The Politics Of Competition?

While a complete picture of the conflict over the plan is far from clear, the business interest of the Fontainebleau hotel in the proposed creation of 800 new rooms “down the street” so to speak is impossible to overlook.  Any claims of pure democracy in the rewriting of the referendum rules should probably be taken with a grain of salt (and a delicious Cuban medianoche sandwich).

Parties interested in the outcome of the new struggle over the project should keep an eye on the City of Miami City Commission meetings page, along with agendas and streaming video.

A Business Plan System For Commercial Real Estate Agents

Not provided as an endorsement – more like an interesting take on how to organize the work commercial real estate agents do – but I found this clip well put together in its linking of  listings, prospecting, targets and goals, territory definition, competition and all the rest.  I’m also a fan of the mind-map presentation style, where concepts are linked visually in both big-picture and smaller-picture format. Yes, Mr. Highman appears to be Australian, but most of what’s covered is universal to commercial real estate, with a little translation.  (When you hear “solicitor” you should think “lawyer”, for example. “Franchise group” might be something closer to a REIT in the US.)

 

 

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Commercial Real Estate News Roundup: January 9, 2014

A building under construction in downtown San ...

General



Office
Industrial
Retail

Multifamily

Land

 

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Reach: What CRE Pros Should Know About Recent Facebook Changes

Facebook logo Español: Logotipo de Facebook Fr...

Many thousands of agents, managers and brokers use Facebook to great benefit  in their commercial real estate careers.  As with other social networking platforms, Facebook helps maintain the year-round business networking that professionals need.  The cost in dollars is zero to set up a presence such as a page dedicated to your business, and millions of professionals have taken to the site to take advantage of the free networking.

As the site closes in on its tenth birthday, having passed major business milestones such as its 2012 initial public offering, subtle changes in how Facebook works are underway, all aimed at bolstering the company’s bottom line.  Facebook makes its money not as a social networking platform, but as a delivery vehicle for highly targeted online advertising. Increasingly, that revenue is going to come from Facebook users — wether they know it or not.

Reducing The (Free) Reach, Accentuating The Paid

Facebook’s business plan includes directly monetizing the value it provides.  For a commercial real estate professional, that value is in the reach the professional enjoys.  When a property broker (just to take one example of a CRE pro) creates a page dedicated to her practice and posts material on that page, the basic expectation is that everybody who has “liked” that page, e.g. her followers, will see that content in their own newsfeed.  She reaches her followers with her sharing of content.

That was the basic expectation with Facebook for years, but much evidence has come in that the company has radically changed the reach it allows.  The unpaid reach (the industry calls it “organic” reach) is, according to many analysts on the sharp decline:

So far, it looks like brands are suffering pretty hard from the update. Ignite Social Media has put out a report after analyzing 689 posts across 21 brand pages of a variety of sizes and industries, finding that since December 1st, organic reach and organic reach percentage have each declined by 44% on average. Some, it says, have seen declines of up to 88%. One page out of the bunch saw an increase (5.6%).

“As reach declined, the raw number of engaged users plunged as well, falling on average by 35%,” writes Jim Tobin on the Ignite blog. “Some pages saw engaged users fall as much as 76%. Only one page in the data set had an increase in the number of engaged users, coming in at 0.7%.”

“Facebook once said that brand posts reach approximately 16% of their fans,” he writes. “That number is no longer achievable for many brands, and our analysis shows that roughly 2.5% is now more likely for standard posts on large pages. So, a year ago a brand could expect to reach 16 out of 100 fans and now that brand is lucky if they get 3 out of 100. Chilling news for brand pages who have invested resources to ‘build’ a large following of fans.”

Owners of business and brand pages on Facebook now face an altered playing field.  In order to keep up the levels of reach that make involvement with Facebook worthwhile, Facebook offers paid promotion as a means of extending that reach.  The ins and outs of paying for reach on Facebook is a topic for another post – but for now, because users aren’t told about the decline in reach, it’s important to understand that Facebook is increasingly switching to a pay-to-play networking model.

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