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.
• “Malls, Self-Storage Led REITs in First Quarter” by A.D. Pruitt of The Wall Street Journal.
The performance of real estate investment trusts (REITs) exceeded analysts’ expectations in many cases during the first quarter, and REITs focusing on luxury shopping malls and self-storage facilities saw the largest gains, Pruitt reports.
Upscale malls and outlet centers that appeal to a wide range of shoppers haven’t been significantly impacted by online competition, according to Alexander Goldfarb, an analyst with Sandler O’Neill + Partners.
Additionally, self-storage REITs have performed strongly because of rising rents and strong tenant demand, Pruitt notes.
Office and apartment landlords continued to see earnings growth, but at a slower pace than in past quarters because of lackluster employment growth and increased competition, Pruitt reports.
• “Property Values Hovering Around Market Peaks” by Carisa Chappell of REIT.com.
“Five years after the onset of the global financial crisis, bellwether pricing indices indicate that commercial property values appear to have reached — if not surpassed — the market peaks of 2007,” Chappell writes.
According to the Green Street Advisors’ Commercial Property Price Index, commercial property values increased 1 percent in April, putting them above 2007 levels.
Another index showed that the unlevered property values of REIT-owned properties nationwide were almost even at the end of April with their January 2007 levels, Chappell reports.
• “Colliers: Shopping Centers’ National Vacancy Rate Down in Q1” by Marianne Wilson of Chain Store Age.
Shopping centers absorbed nearly 4.5 million square feet in the first quarter, causing the national vacancy rate to drop ever so slightly, from 10.09 percent to 10.06 percent, according to Colliers International’s “2013 Q1 North American Retail Highlights” report.
As the housing and job markets improve, consumers’ confidence is rising, and they’re spending more, the report notes. The six North American markets with the most shopping center leasing activity are also cities that are experiencing significant long-term employment growth and strengthening housing markets, according to the report.
• “Expect Fed Decisions to Impact Lodging” by John Salustri of GlobeSt.com.
The Lodging Industry Investment Council’s annual member survey shows concern over the impact that sequestration and Obamacare will have on the market.
Sequestration is “anticipated to negatively impact hotel owners,” the report says. “Fifty-five percent believe that the current government sequestration will cause ADR to decrease 1 percent to 5 percent in markets that rely heavily on government spending.”
Increased labor costs stemming from the new federal healthcare law and the sluggish economy are also expected to affect the industry, Salustri reports.
• “Running to Stand Still: The Office Sector Sees Marginal Improvements” by Brad Doremus and Victor Calanog of National Real Estate Investor.
With sluggish job growth leading to equally sluggish growth in demand for office space, the national office vacancy rate declined just 10 basis points during the first quarter to 17 percent — the exact amount it declined in the prior quarter, Doremus and Calanog report. More expansive job growth would have a dramatic impact on the rate “since supply additions are virtually nil,” they add.
Asking and effective rents grew by 0.7 percent during the first quarter. “Despite 10 consecutive quarters of rent increases, rent levels are still anchored at benchmarks last observed in late 2007,” Doremus and Calanog report.
Still, tech- and energy-heavy markets are outperforming the national average in terms of asking and effective rent growth, Doremus and Calanog note.