Each Wednesday, The Wrap presents a compilation of recent noteworthy commercial real estate stories from a variety of publications. Below are five stories that caught our eyes in recent days.
• "USBC Postpones, Renames New LEED Standard" – by Randyl Drummer of Costar.com.
While the popularity of LEED certification continues to grow, the implementation of new LEED standards continues to experience delays. The U.S. Green Building Council recently announced the vote to approve the new standards could be delayed until as late as June 1, 2013.
Even though LEED committees have been working on the new version — formerly called LEED 2012 but now referred to as LEED v4 — for more than three years, building industry professionals want more time to prepare for the changes, Drummer reports.
“This is 100 percent in response to our members’ desire that we give them a bit more time to absorb the changes in this next version of the rating system,” USGBC President and CEO Rick Fedrizzi tells Drummer. “We want to do everything we can to ensure that the market can fully embrace LEED v4 because it represents significant progress on carbon reduction and human health.”
• "Demographics, New Assumptions Drive Commercial Real Estate" - by Susan Piperato of NREI.
This isn’t your grandfather’s – and maybe not even your father’s – commercial real estate industry. The assumptions that once drove the commercial real estate market have shifted, according to a recent panel discussion at the Strategic Real Estate Conference in New York.
Echo Boomers (those born between 1982 and 1995) want to live in more urban, walkable areas than previous generations of young people, and they require less living space. “They like to live in cities, and if they don’t live in New York they like to live in cities that behave like New York — like Austin or Denver,” said Gunnar Branson, president and CEO of the National Association of Real Estate Investment Managers.
Meanwhile, Baby Boomers also are challenging previously held ideas, often retiring later than 65 and no longer flocking to retirement communities as they once did, preferring to stay near family and more affordable housing, other panelists noted.
• "Tenants Continue to Rule the Market" - by Mark Heschmeyer of CoStar.com.
Job growth numbers released by the U.S. Department of Labor for the month of May were disappointing again, meaning tenants continue to have the upper-hand in negotiating lease rates.
"Landlords are keenly aware of the limited tenants in the marketplace and the need to maintain occupancy in a highly competitive market,” Carl Concellor, principal of NAI Desco, tells Heschmeyer. “Landlords will continue to be aggressive in structuring leases to capture tenants as early as possible, while blocking them from the competition."
"We are still seeing activity from medium to large tenant requirements but the bread-and-butter transactions are lacking," says Mark H. Fowler, senior vice president of Weichert Commercial Brokerage Inc. “I am not sure that demand will worsen as a result of the numbers but we probably face a long, slow summer.”
• "CRE Values Up, but Treasury Troubles Loom" - by Jacqueline Hlavenka of GlobeSt.com.
With limited new construction in the commercial real estate market these days, property values for existing buildings are rising, according to speakers at the Urban Land Institute’s second annual “Real Estate Finance and Investment” conference in New York.
“The most important thing are fundamentals: net operating income, rental level growth and occupancy. NOIs are actually moving upward quite nicely, and they will continue to move up nicely unless we hit a traumatic double-dip recession,” said keynote speaker Stephen J. Furnary, chairman and CEO of Clarion Partners.
Jacques Gordon, global strategist at LaSalle Investment Management, said his firm experienced a 48 percent higher transaction volume in the first quarter compared with the same time last year, but he remains wary of U.S. treasuries. Gordon noted that a rise of the historic low interest rates is something to “worry about big time,” citing the adverse affect an increase would likely have on property values.
• "Feds Report Stronger Demand for Commercial Real Estate Loans" - by Michelle A. Samaad of Credit Union Times.
Atlanta’s commercial real estate market has taken a beating over the past several years, but a report from The Federal Reserve Board provides an indication that things are improving at last. The Fed’s recently released Beige Book says the demand for commercial real estate loans picked up in Atlanta in April and May when compared with the preceding two months.
Most of the Fed’s other 12 districts – which include Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, Va., San Francisco and St. Louis – reported improving loan demand as well.
“Given the woes from the past couple of years, whether intellectually or emotionally perceived, the reports should be seen as good news for the industry,” Brian Turner, director and chief strategist at Catalyst Strategic Solutions, tells Samaad.