Paula Munger, Assistant Vice President of Industry Research with the National Apartment Association, joins America’s Commercial Real Estate Show to discuss some current trends in the multifamily property market. Also discussed are some of the more important legislative issues for apartment properties today, in particular rent control. Also discussed is data they have on their site that display metrics for barriers to apartment construction, ranking 58 markets from best to worst. Also on the association’s site, related to this interview, is a report about modeling rent control effects, surely of interest to multifamily investors regardless of the market.
Video: Moody’s Analytics Reis Senior Economist Barbara Denham Delivers Office Property Market Update
Barbara Denham, Senior Economist with Moody’s Analytics Reis, appears in this episode to discuss office property market performance, future forecasts for office properties, and strategies for the commercial office real estate market.
Ms. Denham comments that the office market is “fine not hitting out of the ball park.” Net absorption was 6.8 million square feet, above that of the prior two quarters – abt of good news. This absorption was in line with new inventory of 7 million square feet, thus vacancy rates remained unchanged, as they have been now “for 6 to 8 quarters” at 16.8%, “healthy but not robust.” She notes that in the in prior expansion vacancy dropped to 10%, indicating something is different this time. What isn’t, right? There also is a bit of discussion of the WeWork debacle.
Rent growth was 2.6%, which, consistent with her not out of the ballpark characterization, she notes as “fine but just about the rate of inflation.” She discusses some of the reasons why this expansion may be different, concentrating on the characteristics of job growth in this expansion.
Ms. Denham sees cap rates as flat to rising a bit, noting that investors are cautious about rent growth projections in this office property asset class. she does not see rent growth increasing more that inflation, but is keeping an eye on aggregate and metro level job growth.
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Video: WeWork, the Numbers
Even after hipster charismatic CEO Adam Neumann’s rather spectacular ouster, WeWork continues to be one of the most talked about companies in the business world, particularly in any involved with office properties. This video runs through the most telling statistics of WeWork’s fall from grace. They note WeWork was recently taken over by SoftBank at an eight billion dollar valuation, $39 billion less than they valued the company when previously investing $10 billion in the co-working company. Their lease obligations, as disclosed in their S-1 filing in anticipation of going public, apparently totaled $47 billion. They paid $60 million for a private jet used by the now former CEO Neumann, who also received a billion in personal loans from WeWork and its lenders (One can Seinfeld; “Neumann!”). Of the $6.5 billion in the company’s rescure package, a cool billion went for Neumann (again, hearing Seinfeld). The company is also facing layoffs, and had a bunch of phone booths removed for a formaldehyde scare (once more, Seinfeld, exclaiming).
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Video: Atlanta Fed’s Brian Bailey’s Views on Commercial Real Estate 2020
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Part 2 of 2:
Brian Bailey, Subject Matter Expert with the Atlanta Federal Reserve, Commercial Real Estate, appears on America’s Commercial Real estate Show to discuss his view on the commercial real estate market, including the current economic cycle, deal underwriting, and some potential red flags to look for going forward. He talks about rent control legislation and how it has changed the multifamily market. He describes the Achilles heels as the cost of capital and the availability of capital as key to the continuing strength of the economy.
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Video: HUD Secretary Ben Carson Discusses Opportunity Zones and the Future of Housing
The Conversation: Unleashing Economic Opportunity Across America: A Discussion on Opportunity Zones
In a recent summit addressing economic development and investment in the nation’s future, Housing and Urban Development Secretary Dr. Ben Carson outlined a vision for unleashing economic opportunity across the United States, focusing particularly on the potential of Opportunity Zones. This vision was shared at the summit in Miami, where developers showcased projects revitalizing communities with the aid of Opportunity Zone investments.
Opportunity Zones, a product of the 2017 Tax Cuts and Jobs Act, offer incentives to invest in economically distressed areas. Contrary to criticism suggesting they only benefit the wealthy, Secretary Carson emphasized their potential as a win-win for both investors and communities. He highlighted the substantial impact of the program, with millions of individuals residing in designated zones across all 50 states and U.S. territories.
The essence of Opportunity Zones lies in their ability to attract private investment into neglected communities. Secretary Carson cited examples from various regions, including Erie, Pennsylvania, where a $50 million fund is fostering the development of a Culinary Arts Center, and rural Nevada, where plans for a vast distribution, manufacturing, and commercial center are underway, promising significant job creation.
Moreover, the initiative extends beyond traditional urban areas, with projects in Wilmington, Delaware, focusing on innovative solutions like vertical farming and employing formerly incarcerated individuals. Secretary Carson emphasized the importance of second chances, particularly for those re-entering society from the penal system.
Opportunity Zones have garnered support not just from private investors but also from philanthropic organizations. The Rockefeller Foundation, for instance, has allocated grants to six cities, aiming to enhance community capacity and attract responsible investments.
Reflecting on America’s history, Secretary Carson drew parallels between past industrial magnates’ investments in national infrastructure and the current push for economic revitalization in distressed communities. He underscored the importance of unity and opportunity in combating societal challenges, urging a focus on community-driven development.
In response to questions, Secretary Carson addressed concerns regarding the designation of Opportunity Zones, emphasizing the involvement of state governors in identifying areas in need of stimulation. He also discussed HUD’s efforts to incentivize affordable housing within these zones and streamline regulations to encourage innovation in housing construction.
Secretary Carson expressed optimism about HUD’s progress in promoting self-sufficiency among individuals and communities, highlighting initiatives like the EnVision Centers, which consolidate resources to empower residents. Despite challenges, he remains committed to fostering an environment where opportunity transcends barriers and empowers all Americans.
As the conversation concluded, Secretary Carson reiterated the importance of unity and cooperation in realizing the full potential of Opportunity Zones. He encouraged individuals to engage with the initiative, emphasizing its long-term benefits and transformative impact on communities nationwide.
In summary, the discussion underscored the transformative potential of Opportunity Zones as a catalyst for economic revitalization and social empowerment. Secretary Carson’s vision resonates with the principles of unity, opportunity, and community-driven development, reaffirming the commitment to building a brighter future for all Americans.
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Video: Don Peebles Opines on the Miami Real Estate Market
Don Peebles, a South Florida-based developer with projects across the country as the founder, Chairman, and CEO of Peebles Corporation, took a moment at a recent Miami real estate conference and showcase to speak about the Miami real estate market. Some key insights from his comments include:
- “I think the market in Miami’s always an ebb and flow it’s a volatile market which is good for developers…”
- “I think what’s propelling South Florida in general now is the high tax states around the country especially in the Northeast like New York Massachusetts New Jersey and others…”
- “Three hundred people a day leave New York City and two-thirds of them are coming to the state of Florida so I think Florida’s outlook is very positive…”
- “The key though for Florida and South Florida in particular is that Miami needs to grow its talent base and it needs to aggressively pursue some larger financial services firms to relocate here…”
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Video: Multifamily Market Forecast is Shared by RealPage Market Analytics Senior Manager Carl Whitaker
Carl Whitaker, Market Analytics Senior Manager at RealPage, appears on a commercial real estate show with its host Michael Bull to chat about the multifamily property market. They discuss multifamily units supply, occupancy rates, and performance metrics for each multifamily property class.
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Chart: Miami-Dade County Unemployment Rate Creeps Up, but Remains Low at 3.5%
Miami-Dade County Unemployment Rate Five Years Ending August 1, 2019
As can be seen in the accompanying chart, the unemployment rate remains low at 3.5%. It has, however, crept up from its recent even lower -the lowest since 2007 – levels of 3.0%. These minuscule levels of unemployment are a marked improvement from the 12.4% peak reached in 2009 following the subprime mortgage crisis. An uptick like this current one may very well be only a blip – let’s hope – but every uptick is worth carefully watching. There are economic storm clouds around the world, with large swathes of sovereign debt priced at negative yields, and the Fed right here in the good ol’ USA seems to be at least somewhat concerned. Thus, this little blip seems ever more worth watching.
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Video Montage of Comments About Sea Level Rise from Miami Developers and Brokers
In this short video, a set of Miami developers and brokers offer their views on the effects of sea level rise on the Miami real estate market. These comments were made backstage at a TRD forum held recently at Mana Wynwood. Among those that commented are: Melissa Rose, Managing Director at Ackman-Ziff; Phil Gutman, President of Brown Harris Stevens; Dob Peebles, CEO of The Peebles Organization; Jules Trump, Co-Founder of The Trump Group; Lissete Calderon, CEO & President of Neurology Life Development Group; Mike Pappas, President of The Keyes Company.
Comments in this video indicate a mix of sentiments with regard to the potential impact of climate change on Miami:
“I do worry about sea-level rising a little bit you know.”
“I live on the ocean.”
“I live right on the beach.”
“It’s a concern; it needs to be addressed and there’s a lot more work that needs to be done, but we’re not seeing a lack of flow of capital to South Florida.”
“You know we have questions about sea level rise because the media talks about that a lot, but I can honestly say that no one has told me that they have not purchased here because of sea level rise.”
“Sea level rise is something that I’m actually dealing with right now personally.”
“I happen to live in a residential neighborhood where they’re trying to raise the streets.”
“Rising sea levels are a real issue confronting South Florida and other coastal cities, however, Americans have a short memory and those memories don’t go from generation to generation.”
“So right now it’s a younger generation that is focusing on rising sea level.”
“If sea levels don’t wipeout rise and wipeout Miami Beach it’ll be an afterthought.”
“We’re building in terms of the worst worst possible tsunamis; we’re safe for that.”
“People still want those views.”
“They want to be in areas where they can see the water, and I think that that will continue to drive sales.”
“I have to say you know at the city of Miami has done a very good job taking a proactive approach and thinking about sea level rise and the impact.”
“I just sold a house to an interesting young tech guy and he had an opportunity to do some homework on the subject and what he revealed to me was that he felt that there’s a lot being done to counter on the sea level rise and a lot of technology that’s out there, but of course we don’t hear that in the media.”
“Five years ago ten years ago you never heard about sea level rise. Today you’re starting to hear about it, but it’s still distant and it’s still in the future.”
“I don’t think it’s affecting anybody today, but I think as we move on in the next five or ten years we’re gonna need to address it and I think we are starting to.”
“What is happening is a premium between waterfront properties and non waterfront properties is narrowing which is a good thing for urban infill of South Florida especially Miami.”
“I think there’s a concern and I think people are more reluctant to buy homes single-family homes that are waterfront and they’re thinking twice about the condos on the waterfront.”
“When I first moved here 1997 we always were dealing with flooded streets. Did it get a little bit worse? Yes, a little bit. But, nothing I don’t think for us to panic over if we’re going under so is New York and the rest of the East Coast in my opinion.”
“I would like to say that it doesn’t come up in conversation, but I think that people are seeing that the pleasure of having something here in the city is kind of shadowing that concern at the moment.”
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Video: Kaseya COO Joe Smolarski Discusses Benefits of its International HQ Location in Downtown Miami
In this Miami DDA produced video, Joe Smolarski, Chief Operating Officer for Kaseya®, discusses benefits of its downtown Miami location. Kaseya® refers to itself as the leading provider of complete IT Infrastructure Management Solutions for managed service providers (MSPs) as well as for internal IT organizations. The company notes that through its open platform and customer-centric approach, it (Kaseya) delivers best in breed technologies that allow organizations to manage, secure, and backup IT efficiently. Their Kaseya IT Complete platform is, they say, the industry’s most comprehensive, integrated solution suite purposely engineered to help IT both run and grow the business.
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