America’s Housing By the Numbers from Economic Focus

America's Housing By The Numbers

AMERICA'S 10 FASTEST GROWING METRO MARKETS

Metro Area Population %Gain New Residents
Austin, TX 1.9 million 2.6% 47,941
Houstion, TX 6.3 million 2.2% 127,782
Raleigh, NC 1.2 million 2.2% 26,012
Orlando, FL 2.3 million 2.0% 44,390
San Antonio, TX 2.3 million 1.9% 43,390
Denver, CO 2.7 million 1.9% 50,782
Nashville, TN 1.8 million 1.8% 31,153
Charlotte, NC 2.3 million 1.8% 40,368
Oklahoma City, OK1.3 million 1.7% 22,280
Sources: Census Bureau

AMERICA'S 10 STRONGEST HOUSING MARKETS IN 2014

Metro Area 4-yr Forecast Median Price
Bremerto, WA 44.7% $245,000
Bend, OR 33.6% $144,533
Detroit, MI 33.1% $51,000
Napa, CA 31.7% $355,000
Carson City, NV 31.6% $141,524
Panama City, FL 26.9% $158,669
Flagstaff, AZ 26.0% $278,000
Stanat Fe, NM 25.8% $187,601
Cheyenne, WY 23.7% $106,602
Anchorage, AK 20.0% $177,699
Sources: Fiserv Case-Shiller Indexes

AMERICA'S MARKETS ONCE HOT, GONE COLD

Metro Area 2013 Price Increase 2014 Projected
Las Vegas, NV 21.0% 5.0%
Riverside, CA 25.7% 5.0%
Sacramento, CA 17.0% 4.0%
Detroit, MI 16.0% 3.0%
Ft Lauderdale, FL 15.0% 4.2%
National Average 11.0% 4.2%
Sources: Trulia, CoreLogic

WHERE DEALS ARE BEING FOUND

Metro Area Investor Purchases 2014 Projected
01/2013 01/2014
Baton Rouge, LA 2.0% 16.0% 5.1%
McAllen, TX 3.0% 11.0% 5.3%
Cincinnati, OH 7.0% 12.0% 4.0%
Greensboro, NC 7.0% 12.0% 4.0%
Atlanta, GA 23.0% 25.0% 5.3%
Nat'l Average 8.0% 5.0% 4.2%
Sources: Realty Trac, CoreLogic

CCIM Tucson Forecast 2014

I was recently quoted for my attendance at the Southern Arizona CCIM Chapter 23rd Annual Forecast Meeting yesterday.

The whole article can be viewed here.

The event was well attended and had good information presented on the Tucson Market. I do believe my quote sums up the Tucson Market pretty well, "The Tucson Market appears to be four years behind Phoenix in the recovery."

Pigs Don’t Fly, But Chickens Do Come Home To Roost – by Neal Churney, CCIM

"Pigs don't fly, but chickens do come home to roost". Tucker Hart Adams, PhD. and Senior Partner with Summit Economics, LLC used this quote at CCIM's conference in Denver, Colorado to illustrate the point that there is no reason to believe that this time the economy will be different than any other time in history. Pigs will never fly and there is nothing anyone can do to change that. Economic crises have been and always will be determined by supply and demand not reaching equilibrium.

The second part of the quote, "chickens come home to roost", means that there is a natural order to the economy and there will always be consequences. Short-term trends do not predict long-term results but rather historical actions and data are the best indicators of what the future holds.

Whether the economy is booming or the sky is falling, it becomes easy to assume that a trend will continue indefinitely. For this reason, people continue to live in fear of losing their jobs, investors still keep money under their mattresses, and the public still worries whether Washington will ever resolve its differences.

Publicized revisions to projections such as employment, GDP growth, and inflation greatly affect confidence that an economic recovery is underway. Tucker further explained, "Pay attention to the direction of data revisions." If the revisions are being adjusted upward then it is good news for the economy. If the revisions are being adjusted downward then it means the economy has not fully recovered from the last cycle.

Several government sources, including the Bureau of Labor Statistics, are estimating that 150,000-200,000 new jobs will be created each month throughout 2013 and into 2014. This growth may help decrease the still higher than average nationwide unemployment rate (7.3% as of Nov 8, 2013).

Rail traffic was a final indicator mentioned at the conference as a way to determine whether the economy is truly recovering. A representative from the Federal Reserve office in Atlanta presented a statistic from the American Association of Railroads that rail traffic in the United States has been steadily increasing over the last 22 months. This indicates a continued increase in consumer spending and is often viewed as a good indicator of productivity and consumption.

Between 1953 and 2011 the average 10-year treasury yield was 6.57%. As of today, the 10-year treasury yield is approximately 2.75%. Even though most of the speakers at the CCIM conference were projecting only modest increases (approximately 50 basis points) in 2014, inevitably the 10-year yield will eventually "come home to roost" closer to the historical average. This means that now is still an excellent time to lock in long term fixed rate loans. Economic cycles happen; understanding where the station of the current cycle is the key to making the best decisions.

2013 IREM/CCIM Economic Forecast Recap by Nick Miner, CCIM – Part 2 Office Panel

Part 2:

Following the Industrial Panel was the Office Panel. Let's just say that they were in good spirits given the fact that the vacancy rate has dropped to 24.7% in the Valley. One of the panelist made a comment about the peak valley leasing rate on a full service basis was $35.75/SF. As of November 2012, that number was down to $25.75/SF.

For the West Valley Office Market, issues still remain that Corporate America is not locating out there. There are a lot of 2,500 to 10,000 SF user in the market, but no big occupiers of space like the CBD and East Valley.

Average tenant improvement costs are ranging from $40/SF to as high as $65/SF for Medical Office. Office condos are average about $50/SF for tenant improvements.

The panel believes that cap rates for Class A properties have compressed and cannot go any lower than what has been seen (6.5% range). Class B and C office properties cap rates are all over the board and largely dependent on the tenant mix and lease terms.

Medical, the bright spot of office, is "recession resistant, not recession proof" as quoted by Julie Johnson, CCIM. She also discussed medical cap rates for properties are around 7.5% and higher with properties on-campus being in the 7-7.5% range. There was further discussion that the traditional "hub & spoke" model of medical did not work any longer and that Primary Care is being purchased by Hospitals.

Part 3 tomorrow - Apartments and Retail!

Commercial Real Estate & Business News – December 19, 2012

I hope you have a Merry Christmas and Happy New Year!

Today is the last Daily News for 2012! I hope you have enjoyed receiving the Daily News and look forward to sending it again in 2013!

Now, here are the news articles you might find interesting today for commercial real estate and business:

Mountain Park Ranch Sells in Phoenix Washington-based Kunz Investments LLC purchased the Mountain Park Ranch apartments located at 4221 E. Ray Rd. in Phoenix, AZ from Equity Residential for $30.85 million, or about $128,500 per unit. The 230,560-square-foot, 240-unit multifamily community is situated on 12.5 acres in the South Tempe / Ahwatukee submarket of Maricopa County. View article...

Oaktree Capital Management buys Fender Headquarters for $29.85m Bruce Karsh of Oaktree Capital Management has purchased The FNBA Building in the Perimeter Center Business Park from WDP Partners. The building is the current headquarters for Fender Musical Instruments, and was formerly the headquarters for First National Bank of Arizona. The two-story office building is located West of the Southwest corner of Princess Road and Loop 101 at 17600 N Perimeter Drive in Scottsdale. View article...

Phoenix Retail Bldg Sells for $1.5M Tousa Homes, Inc. sold the 7,020-square-foot retail building at 42420 Vision Way in Phoenix, AZ for $1,546,000, or about $220 per square foot, to R & D Enterprises. The property was 100 percent occupied by O'Reilly Auto Parts on a 15-year lease that will expire in January 2020. View article...

Whispering Wind Corp Ctr Sells for $12.2M The Mack Company sold the Whispering Wind Corporate Center to a private investor for $12.2 million, or about $162 per square foot. The center consists of two buildings located at 2205 and 2225 W. Whispering Wind Dr. in Phoenix, AZ. W.L. Gore occupies one building totaling 38,308 square feet. The second building is also 38,808 square feet and is occupied by multiple tenants. Both buildings are fully leased and were built in 2006. View article...

Off Madison Ave. expands office after merger with SpinSix A Phoenix advertising agency is expanding its office space after merging with a marketing firm. Off Madison Ave and Scottsdale-based SpinSix Strategic Marketing Design LLC merged in September. The combination - now called Off Madison Ave + Spin Six - is based at the former's Phoenix office, and is adding 4,000 square feet in office and conference space. View article...

Saladworks expanding into Arizona market Pennsylvania-based Saladworks will open its first Arizona location this week at the corner of Loop 101 and Frank Lloyd Wright Boulevard in Scottsdale. The build-your-own salad restaurant will open Dec. 19 at 15768 N. Frank Lloyd Wright Blvd. View article...

HOUSING:
Fannie Mae: Housing Market to Press On While Economy Lags After rising in the third quarter, overall economic growth is expected to decline this quarter and in early 2013, according to Fannie Mae. However, the GSE anticipates further strengthening in the housing market. Economists at Fannie Mae anticipate economic growth of less than 2 percent for the first half of 2013 followed by more accelerated growth for the remainder of the year. View article...

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