Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Here are five stories that caught our eyes in recent days:
“Space Influx Will Challenge Office Market” – by Laura Kusisto of The Wall Street Journal. Next year could be a scary year for the New York office market. With the economy in the midst of a halting recovery, more new office space is set for delivery in the Big Apple in 2013 than in any year since 1989.
But developers tell Kusisto they’re not stressed. “They note that the recent surge of new construction follows years of virtually no new development, so the city won't get deluged with new space like it did in the late 1980s,” she writes.
“I sleep well at night,” one developer told Kusisto.
Perhaps that developer should be tossing and turning: Among other warning signs, “the bulge in the delivery pipeline comes at a time when demand in the New York office market is showing signs of flagging because of the contraction in the financial-services industry,” Kusisto writes.
• “Are Institutions Ready for More Risk?” – by Beth Mattson-Teig for National Real Estate Investor. After a sustained focus on purchasing core properties in gateway markets, pension funds, life insurance companies and private equity funds may be ready to take what for them is something of a walk on the wild side by investing in higher-risk facilities in secondary markets.
“While institutions are still proceeding cautiously, they are also starting to take incremental steps toward more value-add opportunities,” Mattson-Teig writes. “‘We spent most of 2008 and 2009 curled up in a ball, hoping. Now we are slowly coming out of that defensive crouch position,’ says Jeffrey Havsy, director of research at the National Council of Real Estate Investment Fiduciaries (NCREIF) in Chicago.”
• “Social Media in CRE No Longer Just for Socializing” – by Mark Heschmeyer of CoStar Group. The commercial real estate sector hasn’t exactly been at the forefront of embracing social media websites like Twitter and Facebook, but many within the industry are starting to use the sites in the hopes of raising their profiles and increasing business.
Still, the industry remains divided on social media, Heschmeyer reports. “Many others still refuse to join the fold and flat out state they will resist until they're the last ones online,” he writes.
“Clearly social media is still a divisive issue in commercial real estate – the difference in sentiment between enthusiastic adopters and major detractors parallels the sentiments in other industries driven by client relations, such as nonprofits and law firms,” Angela Brown, external communications manager for CoStar Group, told Heschmeyer.
• “AIA Billings Index Remains Positive for Third Straight Month” – from the American Institute of Architects’ (AIA) web site. The institute’s Billings Index clocked in at 50.9 in January after registering scores of 51 and 52 in December and November, respectively. Any score above 50 reflects an increase in architectural billings.
Kermit Baker, chief economist for AIA, says the organization is expecting “modest” improvement in the design and construction sectors over the next few months. “Even though we had a similar upturn in design billings in late 2010 and early 2011, this recent showing is encouraging because it is being reflected across most regions of the country and across the major construction sectors,” he added in a statement.
• “Commercial Real Estate Vacancy Rates Improving” – from the National Association of Realtors’ (NAR) website. The most recent quarterly market survey complied by the National Association of Realtors says national vacancy rates for all the major commercial real estate sectors will decline somewhat in 2012.
The survey predicts the national office vacancy rate will drop by 0.4 percentage points, the industrial vacancy rate by 0.8 percentage points, the retail vacancy rate by 0.9 percentage points and the apartment vacancy rate by 0.2 percentage points. “Sustained job creation is benefiting commercial real estate sectors by increasing demand for space,” said Lawrence Yun, chief economist for NAR, in a statement. “Vacancy rates are steadily falling. Leasing is on the rise, and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest.”