I’m not sure how I missed this, but miss it I did. NAR’s June 2014 Commercial Regulatory Report is available for free download, containing updates and summaries of recent NAR actions in the regulatory space, including FAA, EPA, SEC, GSA and SBA. If any property in your portfolio involves air, ground or finance (find me one that doesn’t!) you need to check out the report.
If you haven’t investigated the REALTORS® Property Resource (RPR) by now, this is the perfect time to get an eyeful of this truly cutting-edge data and demographics tool from NAR. Help a business find the best place to locate using demographic, psychographic and spending data to identify areas with the most target customers for the retail business or desirable talent pool for office recruitment. Check out this video to learn more about your REALTOR® benefit!
When customer attributes drive location decisions, business success follows. But getting the right view of the right demographic sections is no easy task. RPR was built with the commercial client in mind at every stage, and it shows with every tool and drilldown capability. Learn more about the incredible RPR at the RPR Blog.
The NAR Commercial Forecast is out, and the news is good. With multifamily leading the pack, all sectors of commercial real estate have seen improvement in growth, lending and starts. The NAR news release reads:
The outlook for all of the major commercial real estate sectors is slightly improving despite disappointing economic growth during the first quarter of 2014, according to the National Association of Realtors® quarterly commercial real estate forecast.
Lawrence Yun, NAR chief economist, said the sluggish growth experienced in the first quarter is not indicative of the actual health of the economy. “Gross Domestic Product should expand closer to 3 percent for the remainder of the year. The improved lending for commercial loans and continuing job gains we’ve seen this spring bode well for modest progress in commercial real estate leases and purchases of properties.”
However, Yun cautions that with rising long-term interest rates on the horizon, consistent economic growth is imperative to solid commercial real estate investment in the years ahead.
National vacancy rates in the office market are forecast to decline 0.2 percentage point over the coming year, while international trade gains continue to boost use for industrial space, which forecasts a decline of 0.3 point. The outlook for personal income and consumer spending is favorable for the retail market, likely leading to a vacancy decline of 0.2 percent.
“The multifamily sector continues to be the top-performer in commercial real estate with the lowest vacancy rates. However, tight availability – despite new construction – is causing rents to currently rise near 4 percent annually in many markets,” said Yun. “Many renters who are getting squeezed may begin to view homeownership as a more favorable, long-term option.”
NAR reported earlier this month in its annual Commercial Member Profile that despite subpar economic expansion, Realtors® who practice commercial real estate saw an increase in sales transaction volume and medium gross annual income in 2013.
NAR’s latest Commercial Real Estate Outlook1 offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office vacancy rates should decline from an expected 15.8 percent in the second quarter of this year to 15.6 percent in the second quarter of 2015.
Currently, the markets with the lowest office vacancy rates in the second quarter are New York City and Washington, D.C., at 9.4 percent; Little Rock, Ark., 11.5 percent; San Francisco, 12.6 percent; and New Orleans, at 12.8 percent.
Office rents are projected to increase 2.5 percent in 2014 and 3.2 percent next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is likely to total 39.7 million square feet this year and 49.8 million in 2015.
Industrial vacancy rates are anticipated to fall from 9.0 percent in the second quarter to 8.7 percent in the second quarter of 2015.
The areas with the lowest industrial vacancy rates currently are Orange County, Calif., with a vacancy rate of 3.5 percent; Los Angeles, 3.9 percent; Miami and Seattle, 6.0 percent, and Palm Beach, Fla., at 6.5 percent.
Annual industrial rents should rise 2.4 percent this year and 2.6 percent in 2015. Net absorption of industrial space nationally is seen at 107.8 million square feet in 2014 and 107.1 million next year.
Vacancy rates in the retail market are expected to decline from 10.0 percent currently to 9.8 percent in the second quarter of 2015.
Presently, markets with the lowest retail vacancy rates include San Francisco, at 3.2 percent; Fairfield County, Conn., 3.8 percent; and San Jose, Calif., at 4.7 percent. Northern New Jersey; Long Island, N.Y.; and Orange County, Calif., all have a vacancy rate of 5.3 percent.
Average retail rents are forecast to rise 2.0 percent in 2014 and 2.3 percent next year. Net absorption of retail space is likely to total 11.5 million square feet this year and 19.6 million in 2015.
The apartment rental market – multifamily housing – should see vacancy rates edge up from 4.0 percent in the second quarter to 4.1 percent in the second quarter of 2015, with added supply helping to meet growing demand. Vacancy rates below 5 percent are generally considered a landlord’s market, with demand justifying higher rent.
Areas with the lowest multifamily vacancy rates currently are New Haven, Conn., at 2.3 percent; Ventura County, Calif., 2.4 percent; and New York City; San Diego; Hartford, Conn.; Oakland-East Bay, Calif., and San Diego, at 2.5 percent each.
Average apartment rents are projected to rise 4.0 this year and in 2015. Multifamily net absorption is expected to total 221,400 units in 2014 and 173,100 next year.
The Commercial Real Estate Outlook is published by the NAR Research Division. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial community includes commercial members; commercial real estate boards; commercial committees, subcommittees and forums; and the NAR commercial affiliate organizations – CCIM Institute, Institute of Real Estate Management, Realtors® Land Institute, Society of Industrial and Office Realtors®, and Counselors of Real Estate.
Approximately 70,000 NAR and institute affiliate members specialize in commercial brokerage and related services, and an additional 283,000 members offer commercial real estate services as a secondary business.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1million members involved in all aspects of the residential and commercial real estate industries.
Frederik Heller, our manager of Library and Archives here at NAR is an invaluable resource for answers about just about every historical aspect of the real estate business. I’m happy to say Mr. Heller has contributed a fascinating article about the REALTORS® Land Institute and I’ll be posting it here at The Source in a mini-series. Here’s the first installment of “70 Years Of The REALTORS® Land Institute — Plus 24 More” – WG
The REALTORS® Land Institute (RLI) is celebrating 70 years of serving and representing the country’s land professionals. In January 1944, the National Association of REALTORS®’ Board of Directors met in Chicago and approved the formation of an Agricultural Institute, to meet the “growing demand for a strong national association of all farm brokers.” By June, the Institute had already established its first two chapters (Michigan and Iowa), changed its name to the Institute of Farm Brokers, launched its newsletter service, and was busy recruiting members.
But although RLI as a national organization got its start in 1944, their story actually began many years earlier. And that story doesn’t just tell how RLI came into being — RLI’s story also tells how the real estate industry came to look the way it does today. Land professionals and RLI played a vital role in shaping the real estate landscape and in the development of the REALTOR® organization.
To find out how the idea that evolved into RLI originated, we have to set the time machine back a few more decades. It’s important to understand first that when the National Association of REALTORS® was founded in 1908, real estate was a completely different world than the one you enjoy now. There was no 30-year mortgage, no real estate license laws, no Code of Ethics, the term REALTOR® didn’t exist, and even written contracts and multiple listing were relatively new concepts.
The job of a real estate broker was also much more all-encompassing than it is today. In 1908, real estate professionals didn’t refer to themselves as residential brokers, or commercial property specialists, or farm brokers. A real estate broker’s job often included work with all types of property, along with appraisals, mortgage finance, zoning, subdivision development, and other duties that we consider separate professions today. Property specialties and niche marketing were not recognized concepts at that time. If your job was concerned with any aspect of the transfer of real property from one owner to another, you were a real estate broker. The National Association of REALTORS® was organized in 1908 to give a unified voice to the general real estate broker, no matter what aspect of real estate they dealt in.
Right after World War I, however, that generalized notion of the real estate broker began to change, and it was farm and land professionals who first brought about that change. The majority of NAR’s first members came from urban and suburban areas, but it was the brokers in rural areas who first set themselves apart as a specialized branch of real estate practice. They came to understand that their businesses and clients were different from those of real estate brokers in the cities. They dealt primarily with farm and ranch land, and their clients were mostly farmers and others who lived and worked on the land.
Watch for the next installment of Fred Heller’s “70 Years Of The REALTORS® Land Institute — Plus 24 More” right here at The Source
The challenge of urban planning is eternal, but its vocabulary and techniques evolve. The latest wrinkle in the field is the concept of placemaking, a friendly word encompassing the dirty details and hard work of turning around underused and uninviting features of a community. Vacant lots, dilapidated sidewalks, stretches of vacant storefronts, poorly maintained streets all serve to drive down community morale, lower property values and to repel imagination and the investment that follows it. Fixing these problems is not easy, as government and community and landowners and real estate pros all need to get on the same page.
Placemaking addresses the fact that markets alone can’t always combat blight and that planning and community direction of some kind must co-exist with purely commercial approaches in order to successfully turn blighted areas into inviting, usable, accessible and safe places.
REALTORS® On Point (As Usual)
Naturally, REALTORS® and their associations are in ideal positions within their communities to see up close what areas need work and to have an advanced sense of what is needed to revitalize an area. Even though that’s a significant head start, the challenges remain: how exactly does need translate into action steps?
Packed with examples from around the country, “Placemaking for REALTOR® Associations” will open your eyes to credible, proven solutions to thorny problems of blight and accessibility. Unsurprisingly, we find that when REALTOR® associations take the lead in their community efforts against dilapidation, it greatly increases the chances of success.
NAR Commercial’s latest quarterly collection of data from commercial REALTORS® is in, the tabulation is done, the pivot tables are set in stone and the temperature has been taken of the national CRE market. Lots of good news this time around: here are the highlights.
Space brokers are brokering more space: leasing activity is rock-solid, with a 5% rise from 1Q 2013
Commissions are flowing more freely: sales volume took a double-digit jump.
Six out of ten REALTORS reported completing a sales transaction in 2Q 2013.
Not just more commissions: juicier ones: prices rose 2.3% year-over-year
Landlord reps rejoice: rent concessions are down as vacancies also fall. 4% fewer rent concessions were reported than last quarter.
The downside: credit remains tight, inventory’s tight in all sectors and buyers and sellers face significant pricing gaps between each other.
As downsides go, we’ve all seen worse. After all, if not for pricing gaps, the devastating charm and negotiation acumen of our industry’s commercial property professionals would just go to waste, no?
With the last three years’ job growth numbers resembling a sideways line more than a incline, office real estate market indicators have been held to similarly less-than-spectacular showings. With an average job growth of 190,000/month through April ’13, office vacancies and rents can only trail and never overtake the leading indicator. On the new product side, construction and new completions are also at low levels, says REIS VP of Research & Economics Victor Calanog. How low? Most remarkable: REIS’s numbers showed onlu 1.7 million square feet of new office space coming online in 1Q 2013, the lowest level of new completions REIS has published on a quarterly basis since they began publishing quarterly numbers in 1999.
Economist Spotted In The Wild
In a move that some* might say subtly reflects the persistent malaise in the office space market, Dr. Calanog’s video was apparently not shot in the office interior setting customary to videos looking at market data. Instead, a lively park bustles behind the economist, bringing to mind how the internet and wireless access has become nearly universal, freeing consumers of office space from their cubes in previously unheard-of numbers. While it’s easy to make too much of the trend, outdoor sightings of economists among the squirrels leads one to imagine that, speaking broadly, space demand must be held down to at least some degree by the evolving workplace expectations of “digital-native” millennial generation workers.
*Okay, nobody says this but me. “Some” actually means “I”. Also, judging by the audio, he almost certainly wasn’t actually outdoors and used a chroma-key instead.
The REALTORS® Commercial Real Estate Market Survey measures quarterly activity in the commercial real estate markets. The survey collects data from REALTORS® who are commercial practitioners. The survey is designed to provide an overview of market performance, sales and rental transactions, along with current economic challenges and future expectations.
2013.Q1 Survey Highlights:
REALTOR® commercial markets recorded improved conditions for both sales and leasing.
Sixty-four percent of commercial REALTORS® closed a sales transaction during the quarter.
Sales volume rose 3.0 percent from a year ago.
Sales prices inched up 0.3 percent on a year-over-year basis.
Leasing activity advanced 5.0 percent from the previous quarter.
Rental rates increased 1.0 percent compared with the previous quarter.
Concession levels declined 5.0 percent on a quarterly basis.
Financing remains at the top of the current challenges list, followed by pricing gap between buyers and sellers.
The estimated average transaction slid from $1.2 million to $1.1 million from the prior quarter.
For the past 13 years, the fine folks at REALTOR® Magazine have been recognizing REALTORS® whose volunteer work makes difference in their communities. This year being no exception, the 14th Annual Good Neighbor Awards are kicking off today.
REALTOR® Magazine is seeking nominees for the 14th annual Good Neighbor Awards, which recognize REALTORS® who impact their communities through volunteer work. Five winners will be recognized at the 2013 REALTORS® Conference & Expo in San Francisco and will receive travel expenses to attend the show and a $10,000 grant for their community cause.
What Constitutes Volunteer Work?
Volunteer work might include affordable housing initiatives, youth mentoring, homelessness prevention, or anything else that makes a community a better place to live. Entries must be received by May 20, 2013.
For more information and an entry form, go to REALTOR.org/gna, see our ad in REALTOR® Magazine, or contact Sara Geimer at [email protected]. Check out this video featuring some of 2012’s winners:
Because commercial real estate practice needs its own support system, NAR Commercial Division encourages and supports existing associations to create of Commercial Overlay Boards devoted to such support. In 1992, The Board of Directors of NAR authorized the establishment of Commercial Overlay Boards of REALTORS®. A Commercial Overlay Board co-exists and shares (overlays) geographic jurisdiction with one or more REALTOR® associations, in order to better serve members in a commercial market area. At the same time, the territory currently assigned to existing associations remains intact as well as their right and obligation to provide services to their members. COB jurisdictions may be local, multi-market, state-wide and inter-state.
How Do You Research The Market To Create A COB?
Identify Leadership: Identify a core group of respected, dedicated and committed commercial members to lead the effort to propose and create the COB.
Define the COB Jurisdiction Area: The market area in which the COB commercial members’ practice defines the targeted jurisdiction.
Founding Members (15) And Firms (10): List the founding members and firms of the COB.
Identify Potential Members And Firms: Identify the potential number of COB members and firms within the proposed jurisdiction.
Assess Market Conditions, Member Needs, Services And Allied Organizations: Appraise the local market conditions and list the ways a COB can assist commercial practitioners to increase their transactions. Only promise what the COB can deliver.
Develop A Strategic Plan: Summarize the information gathered during the assessment stage and give the COB direction