Commercial Real Estate & Business News – September 19, 2014

The red hot market in Tempe is getting even hotter as new hotel and office towers are planned on Mill Avenue alongside the landmark Monti’s La Casa Vieja restaurant. The $150 + million office-hotel project is targeted for a 2.5-acre site located at the southwest corner of Mill Avenue and Rio Salado Parkway. The development is planned by a venture formed by Douglas Wilson Cos. in San Diego, Calif. (Douglas Wilson, chairman) and Phelps Development LLC… Read more »
With hotel occupancy rates high and still rising, investors are continuing to book huge investment deals in the segment. Take today for example. NorthStar Realty Finance Corp. announced that it has entered into a definitive agreement to acquire a $1.1 billion hotel portfolio from Inland American Real Estate Trust. The portfolio is comprised of 52 upscale extended stay and select service hotels with approximately 7,000 rooms… Read more »
Scottsdale has received its first payment from the Arizona State University Foundation for its $81.4 million investment in SkySong, the ASU Scottsdale Innovation Center. In addition, SkySong is seeking an amendment to its original zoning case to allow greater building heights along McDowell Road and Scottsdale Road south to SkySong Boulevard… Read more »
The apartment industry is riding high these days. Sales volumes are at peak levels. Prices have jumped to all-time highs. Capitalization rates have dropped to long-time lows. And buoyed by strong demand and easily accessible funding, apartment construction has surged to the highest levels since the 1980s. All these high-water marks suggest an obvious question: Is multifamily housing reaching a bubble?… Read more »
When STORE Capital CEO Christopher Volk and his business partners started their Scottsdale real estate investment trust in 2011, the timing was ideal for STORE and their clients as well. The trust specializes in sale-leaseback transactions. Its goal is to encourage business owners to consider selling current properties to STORE, an acronym for single tenant operational real estate, and in turn lease them back. If they do, it could free up funds for expansion or other capital needs… Read more »

Commercial Real Estate & Business News – September 18, 2014

The Chandler City Council on Thursday night approved zoning and a development agreement for Hines to develop the Chandler Viridian mixed-use project located near the Chandler Fashion Center and Loop 101/Loop 202 interchange. The 25-acre project will include a modern brand hotel, Class A multi-family and a central plaza with 250,000 square feet of Class A office and retail options along with a pedestrian promenade to Chandler Fashion Center…. Read more »
The resurgent CMBS market is enjoying its strongest month in seven years with about $15 billion of new mortgage-backed offerings being sold. The return of the CRE financing conduit has not gone unnoticed by investors, and firms such as Cushman & Wakefield and Principal Real Estate Investors expanding their CMBS services. When September ends, CMBS issuance is projected to be up 20% year-over-year… Read more »
With the number of housing units built in downtown Chandler since 2008 set to more than double, and more office and retail space expected to follow, the city is inching toward its goal of expanding its downtown south along Arizona Avenue to Loop 202. Chandler hopes to make Arizona Avenue, where aging businesses, homes and vacant lots dot each side of the thoroughfare north from Loop 202, its grand entrance from the south…Read more »
Homebuilders today are more confident in their sales expectations than they’ve been in nearly nine years. That’s the topline conclusion to be drawn from the latest National Association of Home Builders/Wells Fargo Housing Market Index, released Wednesday. The latest HMI index shows that builder confidence in the market for newly built, single-family homes… Read more »
A pair of new surveys on commercial real estate conditions reflects the growing sense of optimism as the U.S. economy continues to slowly shift from recovery into expansion mode, accompanied by a torrent of investment capital pouring into property markets. Caution persists, however, with memories of the Great Recession still vivid. The Third-Quarter 2014 Consensus Forecast Survey, compiled by the Pension Real Estate Association (PREA)…Read more »

Commercial Real Estate & Business News – September 17, 2014

Report: Phoenix-Area Commercial Properties Less Risky

Commercial properties in the Phoenix area, especially the East Valley, are among the most undervalued in the nation and thus relatively attractive to investors, especially if interest rates start pushing higher next year. That’s the assessment from Mascia Development LLC, a New York company that evaluated 350 metro areas around the nation for investment appeal… Read more »

EDR Reit Pays $91 Million For Student Housing Project Near Asu

EdR in Memphis, Tenn. (NYSE:EDR) paid $91 million (326,165 per unit) to buy The District on Apache, a 279-unit student housing project located southeast of Arizona State University at 977 E. Apache Boulevard in Tempe. The seller in the cash transaction was Tempe Student Housing LLC, a company formed by Residential Housing Development LLC in Houston, Tex… Read more »

Home-Sales Data Belie ‘Lukewarm’ Market

An unusually strong reading for U.S. new-home sales in August might not be enough to kick the market into higher gear. The latest Zelman & Associates survey of home-builder executives overseeing 2,500 new-home communities found that orders increased by 7% on a seasonally adjusted basis in August from July and by 21% from August 2013, the largest annual gain since June 2013… Read more »

Student Housing Stats – Trends Point To Continued Growth

There was a time when student housing either meant living in an on-campus dormitory or an apartment in town. On-campus housing was often austere, and off-campus housing was likely to be a poorly maintained apartment shared with several roommates. In both cases, attitudes about student housing were pretty much the same: Students didn’t care that much about where they lived… Read more »

Retail Interest as Strong as Pre-recession

Investor interest in the retail sector is surpassing one of the strongest periods in recent history, Rick Chichester, president and CEO of Faris Lee Investments, tells In anticipation of ICSC Western Division next month, we spoke with Chichester about the trends he’s seeing in retail real estate investment and where he thinks the smart money is going… Read more »

Phoenix Housing Market Bust, But Not Really

This morning I attended the ASU Real Estate Council event and Mike Orr was the guest panelist.  He shared many new insights into the current lackluster performance of the Phoenix Housing Market and some of the recent causes for the lack of performance.

Some interesting facts:
-Jan 2011 the Avg Normal Sale/SF was $111/SF
-July 2014 that number was $128/SF -Most expensive in July 2014 was PV ($326/SF)
-Active Adult Communities are still the most active residential real estate market right now
-Supply is below normal and falling (currently 84%)
-demand is weak but stable (82%)
-Loan deliquency in 2010 was over 16%, as of 9/2014 about 4.5%
-Sellers can expect continued price weakness thru 2014 with an improvement in 2015
-Demand to buy is still weak but demand to rent is high
-Rentals have seen 11% increase in rents in 1 year with no sign of slowdown on the horizon
-Estimated value of Maricopa County Residential Real Estate Market is $400B; investment funds only purchased approx $1B of the stock–which at the peak was about 10% of the total sales

Penalty Box Buyers
-367K owners lost home to foreclosure/short sale between 2008-2013
-Fannie/Freddie lock out these owners for 7 years
-Since 2008, 19% of homeowners went thru a foreclosure (232,767)
-peak eligibility will be 2015-2018 to buy a home again

Millenial Impact on Housing Market
-Difficult to calculate and there is currently no way of gathering data accuracy greater than 60%
-Females are waiting until 29.4 years of age to have first child
-Birth Rate in USA is down to 1.7
-Many are still living at home
-Children change the perspective of the Millenials

Other interesting facts noted:
-Median Age of Realtor is 54
-We are in the “Affordable Zone” for housing
-A person from CA could buy 3 times the house in AZ vs buying in CA right  now
-We are in the weakest construction period since the 1920’s

How to get demand back to ‘normal’
-mortgage applications are at the lowest level since December 2000
-weaker credit applications must be approved (side note—not approval like was seen in 2006 but use the actual standards that should have been used)
-Millenials will join when they have kids which is potentially 7 years later than their previous generations
-normal credit should be 650 FICO or better.  Right now only loans being approved are with avg FICO over 755

A lot of information was thrown out in a short period of time.  If you were there, what other facts did you takeaway from the event?

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