The South’s Funkiest Town Gets Even Cooler

Nashvillians like to joke that the crane is the city’s unofficial bird.

After all, nearly 30 of the huge, steel species soar in the sky right now.

Music City is in the midst of a building boom, with 22 hotels under construction and more than 125 restaurants slated to open by the year’s end, according to the tourism bureau.

At the same time, there’s a creative renaissance underway, as the city’s thriving music, fashion and food scenes gain national attention. Tennessee’s capital is so happening that both Frommer’s and Travel & Leisure included it on their lists of the best places to go in 2017 and Thrillist recently named Guitar Town America’s best weekend destination.

“Nashville has always been cool, but today people seem to be more proud of the city than ever before,” says Libby Callaway, founder of The Callaway, a branding and public relations company (and former fashion editor of The Post) based there. “We’re an alternative to the coasts.”

Over the past decade, the home of country music evolved into a hipster hub with a strong “maker” culture of craft and creativity. Visitors can explore funky neighborhoods like East Nashville, 12South, Germantown and the Gulch, lined with specialty coffee shops, brew pubs, craft cocktail bars and critically acclaimed farm-to-fork restaurants.

Or scour the quirky lifestyle and clothing boutiques for local labels such as Ceri Hoover (leather bags and shoes) and Imogene + Willie (heritage denim).

Cowboy boots are always in style — Boot Country on major thoroughfare Broadway has a crazy buy-one-get-two-pairs-free deal — rocked the Coachella way.

Speaking of all-star concert extravaganzas, the world’s biggest country music celebration takes place downtown from June 8-11.

This year’s CMA Music Festival will feature more than 100 acts, including legends like Keith Urban, Blake Shelton, Miranda Lambert and Dierks Bentley.

The best part: Seven of the 11 stages are free and a number of them are outdoors.

Later this summer, produce and creativity will make beautiful music together at the 14th Annual Tomato Art Festival the weekend of Aug. 11-12.

Of course, Nashville doesn’t need festivals to be fun as hell: Cold beer and live music are on tap seven days a week. Country, blues and rock acts perform nightly at the boozy, neon-lit Lower Broadway honky tonks — don’t miss Robert’s Western World with its $2.50 Pabst Blue Ribbon and no-cover policy — and nearby Printer’s Alley, the historic nightlife corridor. Meanwhile, The Station Inn in the trendy Gulch is the premier club for bluegrass and roots performers.

Even if you’re not a country music fan, a visit to the Ryman Auditorium, the former home of the Grand Ole Opry for 31 years, is obligatory. It’s worth paying extra for the guided tour, just to walk backstage where icons Johnny Cash met June Carter in 1956.

The Country Music Hall of Fame and Museum is another must-see, with Elvis’ gold Cadillac, Gram Parsons’ “high”-fashion pot leaf-embroidered “Nudie suit” and Taylor Swift’s “Shake It Off” cheerleader outfit on display. Hatch Show Print is the historic letterpress company in the same building that has cranked out iconic show posters since 1879.

Feeling hungry? Savor a meal at one of the restaurants opened by James Beard Award-winning chefs like Donald Link (Cochon Butcher), Sean Brock (Husk) and Maneet Chauhan (Chauhan Ale & Masala House, Tànsuo and The Mockingbird, opening any day).

As Callaway says, “Nashville has gone way beyond barbecue.”


Full Article HERE

Source: New York Post

Start Date Eyed for Germantown-area Project by Blue Heron Asset Management

AUTHORS Staff Reports

The development team eyeing apartment project Gateway 808 in North Nashville anticipates breaking ground no later than early 2018.

Raleigh-based Blue Heron Asset Management and Imagine1 Co. of Nashville announced in May 2016 plans for the 330-unit building — to be located 1703 Rosa L. Parks Blvd. in Buena Vista north of Germantown and straddling the inner-interstate loop. At that time, it was called Gateway Germantown.

Recently, the team released an updated image (pictured) and the new name.

Michael Eubanks, a Blue Heron partner, said the hope is to have construction of the building completed by early 2020.

“There have been a lot of new apartments delivered downtown over the last couple of years, and Germantown has seen a number of those new developments,” Eubanks said. “We have been closely monitoring new supply, absorption, and concessions, and we've been happy with what we've seen lately. Leasing has been strong in the Germantown submarket, properties are getting close to stabilization, concessions have been dropping, and we expect to see that pattern continue as we're just now getting into the busiest time of the year for leasing.”

The lead architect is Charlotte-based DAS Architecture, with Gresham Smith & Partners of Nashville handling interior design and landscape architecture. Civil Site Design Group, also based in Nashville, is the civil engineer. 

Eubanks said the team (Matt Gardner and Brian Heuser lead Imagine1 Co.) recently submitted for building permits and is “far along in the process of selecting a general contractor.” He said a portion of the equity for the project is being provided by one of the real estate funds that Blue Heron manages, and a joint-venture equity partner is expected.

“We also anticipate using bank or life company financing for the construction loan, and will be advancing those discussions after making a final decision about a general contractor for the project,” he added.

Full article HERE

Source: Nashville Post

South, West Metros Lead for Population Growth in 2016

Spring is in the air, and that can mean only one thing: new Census population estimates, of course. The Census Bureau just released their eagerly anticipated (among a certain set) population estimates for 2016. Of particular interest is the year-over-year population change among U.S. metros, which helps shed some light on a few apartment market trends over the last year.

Among the 50 largest U.S. apartment markets as defined by RealPage’s Axiometrics, Austin had the largest population growth rate in 2016, at 2.9%. In fact, Austin has ranked #1 in terms of annual population growth since 2011. Raleigh and Orlando both grew about 2.5% between 2015 and 2016, followed by Charleston and Las Vegas (2.2%). One thing stands out quite clearly in the rankings above: the fastest-growing large apartment markets are southern or western metros.

Full article HERE

Source: Realpage

Blue Heron is Pleased to Announce its Newest Acquisition in Durham, NC

Blue Heron is Pleased to Announce its Newest Acquisition in Durham, NC

DURHAM, NC – April 10, 2017 – Blue Heron Asset Management is pleased to announce it has successfully acquired an ownership interest in a 229-unit Class-A multi-family and 10,000 sq.ft. retail property on Ninth Street in Durham, formerly known as Solis Ninth Street. This is the sixth acquisition for Blue Heron’s Real Estate Opportunity Fund II.

The property, in the process of being rebranded as 810|Ninth, is located within walking distance of Duke University, Duke Medical Center, Whole Foods, Harris Teeter, numerous restaurants, shops, and other urban amenities including local gyms, bars, and entertainment venues. Maurice Malfatti, managing partner of Blue Heron, commented, “We are bullish on Durham and believe in its growth and innovation story. 810|Ninth – our largest single investment to date - is a solid addition to our fund, which targets investments in Southeastern US markets, like Durham, that exhibit strong job and population growth and diverse economic drivers. We love the walkability and neighborhood feel of Ninth Street and are excited to be part of the local ownership group that will own and operate the property for years to come.”


BlackRock: Make Room For Real Estate?!?!

March 20, 2017

U.S. commercial real estate has recovered, but the asset class could offer more growth amid reflation. This week on BlackRock‘s (BLK) global weekly commentary, Richard Turnill, global chief investment strategist, makes the case.

Property prices have returned to 2008 highs, but there are differences between then and now, says Turnill. For one, real estate development activity is lower and access to credit tighter. Valuations based on ratios of operating income to property values relative to the 10-year U.S. Treasuries are in the vicinity of the 20-year average.

In past rising rate cycles, strong rental income supported U.S. real estate returns, especially during gradual rate-hike environments. Turnill says: 

We see U.S. commercial real estate delivering attractive total returns over the next few years in a low-return world. We expect capital appreciation to slow but see operating income growth due to the reflationary backdrop and the potential for property managers to add value by upgrading buildings. Average yields of 3.5% are competitive with 3.4% for U.S. investment grade and an S&P 500 dividend yield of 2%. Demand is strong: Nearly half of institutions in our most recent Global Institutional Rebalancing Survey intended to raise allocations to real estate this year.

Full Article HERE

Source: Barron's

Why Innovation Districts Matter

Metropolitan areas in the United States and other mature economies face out-sized challenges in the aftermath of the Great Recession. At the most basic level, U.S. cities and metropolitan areas need more and better jobs. According to the March 2014 Brookings Metro Monitor, the number of jobs in 61 of the 100 largest U.S. metro areas are still lower than their pre-recession peak; incredibly, job levels in 23 metros are more than 5 percent below their pre-recession peak. At the same time, the number of people living in poverty and near poverty has grown precipitously in the largest 100 U.S. metros—from 48 million in 2000 to 66 million in 2012— due not only to the recession but broader trends around wage stagnation and economic restructuring.10 Beyond these economic and social demands, cities are on the front lines of addressing enormous scale and environmental challenges given federal gridlock and the absence of leadership in many states.

In the face of these challenges, cities and metropolitan areas are experimenting with new approaches to economic development and sustainable development that focus on growing jobs in productive, innovative, and traded sectors of the economy while concurrently equipping residents with the skills—particularly STEM (science, technology, engineering and math) skills —they need to compete for and succeed in these jobs.11 These new approaches try to build on the distinctive assets and advantages of disparate places rather than merely pursuing heavily subsidized consumption-oriented strategies (e.g., building the next sports stadium, convention center, or performing arts facility) that yield low quality jobs or aspiring to unrealistic economic goals (“becoming the next Silicon Valley”).

Innovation districts are a key part of the new wave of local economic development and advance several critical objectives...

Full Research Report HERE

Source: Brookings Institute


Durham's Innovation District Finally Breaks Ground

In a crowded outdoor tent on a chilly Thursday morning, about 150 people gathered with circus performers and stakeholders from Longfellow Real Estate Partners and Duke University to launch the first phase of new construction on the Durham Innovation District in downtown.

The event marked the start of close to $100 million in new construction at the corner of Morris and Hunt streets for two seven-story office buildings – one of which has been fully preleased to Duke Clinical Research Institute – and a 1,200-vehicle, eight-story parking deck.

“To the people of Durham, this is your innovation district, and these will be your buildings," said Adam Sichol, co-founder and managing partner of Boston-based Longfellow, adding that he now considers Durham a “second home” with business trips to the Bull City almost weekly. "Today we’re betting on the future of Durham and its people.”

“Some other cities are constrained by ceilings and roofs, but in Durham, we know that the sky is the limit,” Sichol said, with a chuckle from the crowd at the expense of basketball great Michael Jordan’s “ceiling is the roof” blunder during a halftime speech at the recent UNC-Duke basketball game in Chapel Hill.

The Durham.ID office buildings, known as 200 Morris and 300 Morris, will together total nearly 350,000 square feet of office, research, retail and restaurant space on land that was previously a parking lot. Delays in the launch of construction have moved the completion timeline from spring 2018 to summer 2018.

Full Article HERE

Source: Triangle Business Journal

Five Trends in Commercial Real Estate to Watch in 2017

The U.S. property market landscape in 2017 will be characterized by continued strong fundamentals, increased investment flows, and high transaction volume. The broader U.S. economy should continue to grow moderately and add jobs. U.S. employment gains continue to be strong, with unemployment dropping below 5 percent in 2016, adding to demand for commercial real estate in a variety of sectors.

Many are surprised that the economy has not reached the end of the current growth cycle, but the fact that the recovery was so protracted and growth relatively anemic over the past seven years leads us to believe that the economy may have another two years left in the current growth cycle.

The U.S. Federal Reserve made it clear in December that it sees U.S. growth as relatively stable, notching the federal funds rate higher by a quarter point early that month—only the second time since 2006 it has raised rates (the last time was in December 2015). “Economic growth has picked up since the middle of the year,” said Fed chair Janet Yellen. “We expect the economy will continue to perform well.”

Nevertheless, underlying inflation is extremely tame in the United States and major emerging markets (some sectors and countries are worried about deflation), providing no impetus for significantly higher rates. Lending rates and fixed-income rates of return will still be very low by historical standards, inducing continued leveraged purchases of real estate assets.

Regarding the elephant in the room: what are potential impacts of the new administration? Though President Trump has pledged to make massive changes in the U.S. economy, regulatory environment, and government, it remains to be seen—even with a Republican majority in both houses—how much change can really take place.

The following five trends can be expected to play a significant role in commercial real estate in 2017.:
Global Economic and Political Uncertainties

Continued Strong Foreign Capital Flows

Low-Interest-Rate Environment

Volatile Energy Markets

Slowing New Supply for Commercial Real Estate

Read more specifics on each topic HERE

Source: Urban Land Institute

Nashville: One of the top 10 markets in the US for office Rent growth in 2016


Q4 2015 Rent: $19.78/SF

Q4 2016 Rent: $22.99/SF

Growth: 16.2%

Nashville’s office market remained extremely tight last year, with its suburban vacancy rate — 4.7% — ranking second-lowest among the markets CBRE tracks. Cross said though there is roughly 3.7M SF of new construction underway within the metro, most of the space is pre-leased, meaning vacancies will likely remain within the single digits over the next couple of years, while rents continue to rise.  “The lifestyle [in Nashville] kind of has the cool factor similar to a market like Austin or Portland. And from a company perspective it has lower costs [compared] to a lot of the markets in the Northeast so there’s been migration of tenants into Nashville, along with other markets in the South and the West.”

Read Full Article HERE

Source: Bisnow

Will new supply outpace demand in Triangle apartment markets in 2017?

Even while adding nearly 2,800 new apartment units over the past six months, the Triangle’s vacancy rate for apartments in the region remained a steady 6.1 percent in the second half of 2016, according to the most recent AptIndex report by Charlotte-based Real Data.

And, as for now, its looking like increasing demand for apartment units in the Triangle is expected to keep up and even exceed all the new construction across the region.

“The overall market is doing great and is expected to continue with average vacancies around 6 percent,” says Engle Addington, a multifamily analyst for Real Data’s AptIndex surveys in North Carolina and Virginia.

At this point, the Triangle is tracking below the Southeast U.S. Index average of close to 7 percent, and could drop below 6 percent vacancy over the next 18 months. The Triangle had 5,894 units under construction, as of late January when Real Data’s survey was conducted. The market has another 4,381 units proposed for future development.

Addington points out that even the submarkets with higher-than-average construction levels, like downtown Raleigh, are keeping pace. Downtown Raleigh had an average vacancy rate of 7.5 percent in January with 1,700 units under construction. “So, vacancy rates could approach 10 percent in Downtown Raleigh in the next year, but that’s still not too shabby for that much new construction in one area.”

Full article HERE

Source: Triangle Business Journal

Raleigh, Durham region lands on top 10 list of ‘Best Places to Live’ by US News & World Report


The Triangle has accrued another accolade – this time from U.S. News & World Report.

Listed as “Raleigh & Durham,” the Triangle ranked seventh on the list of “ Best Places to Live” in the country. Raleigh and Durham are recognized by the federal government as two separate metropolitan areas, though it is not uncommon to see the area referred to as “Raleigh-Durham.”

U.S. News ranked 100 cities using surveys from local residents, and data from the U.S. Census Bureau, FBI and the Bureau of Labor and Statistics. It also considered its past rankings for “Best High Schools” and “Best Hospitals.”

The report recognized the region for its unemployment rate of 4.4 percent, average annual salary of $51,150, median home price of $219,466 and an average commute time of 24.6 minutes. “Raleigh, Durham and Chapel Hill are known for their research/technology roots and collegiate rivalries,” says the report. “[It] is luring nearly 80 new residents a day with strong job growth and a high quality of life.”

Full Article HERE

Source: Triangle Business Journal


Raleigh makes Forbes Travel Guide "Top 12 Destinations Of 2017"

We’ve screamed of the charms of North Carolina’s capital city before, but now that eight restaurants (including James Beard-nominated chef Scott Crawford’s Crawford & Son and the 22,000-square-foot Morgan Street Food Hall and Market) have decided to open their doors by spring, we can back up our fawning with a bit of flavor.

But just as new places around town start to find their culinary groove, Raleigh-area standards are keeping their kitchens cooking with a commitment to fresh ingredients and a calendar stuffed with epicurean fun (Forbes Travel Guide Five-Star Herons’ four-course Valentine’s Day dinners, February 10 to 14).

Full List

Source: Forbes

This Nashville restaurant was the nation's most-visited eatery by Lyft riders

One Nashville restaurant was visited by more Lyft passengers than any other restaurant in the country in 2016, the San Francisco-based ride-sharing service announced Wednesday.

Acme Feed & Seed, which reported selling $14.8 million worth of food and drink in 2015, bested the rest of the nation's restaurants in drop-offs by the ride-sharing company.

In October, restaurant industry magazine Restaurant Business reported that the restaurant served the ninth-most meals of any independent restaurant in the country. The Lyft announcement notes that Acme is particularly popular with tourists and millennials, which should come as little surprise due to its Lower Broadway location.

The restaurant and bar, which doubles as a popular honky-tonk, was placed by Lyft in the restaurant category. Los Angeles' The Abbey was the country's most-visited bar, the company said in a news release.

Nashville's most-visited bar, according to the release, was the Tin Roof on Demonbreun Hill near Music Row.

The announcements came as part of the ride-sharing service's second-annual "Lyftie Awards." For last year's awards, Acme was categorized as an event venue and topped that category locally. With its shift to the restaurant category, it replaced Five Points Pizza as the city's most-visited eatery and allowed Bridgestone Arena to become the city's most-visited event space.

Germantown received a "Lyftie" for being the city's "trending" destination.

Full article HERE

Source: Nashville Business Journal

Nashville named a top travel destination for 2017 by Travel + Leisure

Travel + Leisure, the travel publication with a global audience of more than 10.5 million, has named Nashville one of its 50 Best Places to Travel in 2017. Music City was one of seven U.S. cities included on the list, which included destinations on every continent on the globe sans Antarctica.

Writing for the magazine, Nashville-based Kristin Luna wrote that 2017 would be a "banner year" for the city, because the Ryman Auditorium, Country Music Hall of Fame and Bluebird Café are all set to celebrate anniversaries and multiple prominent restaurants are set to open.

The city hasn't made the prominent list since 2014, when its inclusion was part of a string of international media mentions that gave a noticeable boost to the city's recent boom. 

Read full article HERE

Source: Travel and Leisure Magazine and Nashville Business Journal

Nashville, Durham, Raleigh Top List of Best Cities for Job Seekers in 2017

To identify the best places for job seekers in 2017, NerdWallet analyzed federal data for the 100 largest U.S. cities to determine where Americans will find opportunities and also where their paychecks will go further.

We factored in each place’s October 2016 unemployment rate from the U.S. Bureau of Labor Statistics, as well as the increase in the working-age population from 2010 to 2015 with U.S. Census Bureau data. These two metrics, which represent the health of a city’s job market, were given the most weight in our analysis. Our methodology also includes census data for median earnings and median monthly rent in each city to provide a gauge of cost of living.

The top 10 cities for job seekers

Austin, Texas, claimed the No. 1 spot in our analysis, followed by Denver; Nashville, Tennessee; Seattle; and Durham, North Carolina. Atlanta; Minneapolis; Lincoln, Nebraska; Irving, Texas; and Raleigh, North Carolina, round out the top 10.

Source: Nerdwallet

Full Article HERE

Maryland developer buys big Apex land for $12.4M

A Chapel Hill real estate investment group that in 2012 took a 92-acre tract of land in Apex all the way through entitlements for a mixed-use community of 900 homes and 550,000 square feet of commercial space has sold out.

The buyer, an affiliate of The Halle Companies in Silver Spring, Maryland, has paid $10.8 million for the land at the site of the proposed future Westford development, according to county records. Halle’s investors also paid another $1.55 million for an adjacent eight-acre site owned by a neighbor to round out the deal near the U.S. 64 and Highway 540 interchange.

The Westford project is expected to be a continuation of The Halle Companies’ focus on new development projects in southern Wake County. It was also the developer of the 202-acre Villages at Apex project that opened in 2008 and has other projects underway in Holly Springs, Garner and Durham.

A fund managed by Blue Heron Asset Management of Chapel Hill acquired the Apex land at auction in 2009 for $4 million. Maurice Malfatti, managing partner at the firm, says they saw “great potential” for the property when the initial investment was made five years ago. “Working collaboratively with the town, we were able to execute our business plan and add significant value through the entitlement and approval process,” Malfatti stated in a news release about the land sale.

The HFF investment sales team representing Blue Heron in the 92-acre sale was led by Justin Good and Allan Lynch. Representing the sellers of the eight-acre site was Moss Withers of NAI Carolantic Realty.

Source: Triangle Business Journal

Read article HERE

Blue Heron Asset Management Sells 92 Acre Land Site in North Carolina

December 8, 2016 – Holliday Fenoglio Fowler, L.P. (HFF) announced today that it has closed the $10.825 million sale of an approximately 92-acre land site in the rapidly-growing Apex, North Carolina, area.

HFF represented the seller/developer, Raleigh, North Carolina-based Blue Heron Asset Management, LLC (Blue Heron), in the transaction. The Halle Companies (Halle) purchased the site free and clear of existing debt. Concurrent with the transaction, Halle also purchased an adjacent eight-acre parcel, which was separately brokered by an outside firm, to control the entire 100-acre Westford planned unit development (PUD).

The Westford PUD (Westford) was entitled by Blue Heron for up to 900 residential units and 550,000 square feet of commercial development. The site is ideally positioned at Jenks and Wimberly Roads near the U.S. 64 and Highway 540 interchange. Additionally, Westford is situated approximately 10 miles south of the Research Triangle Park and 19 miles west of downtown Raleigh. Other nearby amenities include the 23-mile American Tobacco walking and biking trail, Apex’s historic downtown district and Jordan Lake State Recreation Area.

The HFF investment sales team representing the seller was led by Justin Good and Allan Lynch.

“Since the opening of interstate-grade Highway 540 in 2012, the surrounding Apex area has been transformed into one of the region’s most sought-after suburbs claiming the top spot on Money Magazine’s Best Places to Live 2015 list,” said Good. “The area’s explosive growth made it especially attractive to developers.”

“We saw great potential in Apex when we made our initial investment five years ago,” added Maurice Malfatti, managing partner of Blue Heron. “Working collaboratively with the town, we were able to execute our business plan and add significant value through the entitlement and approval process.”

Article posted HERE

Source: Blau Journal, Global Real Estate News



Rises in the federal funds rate and US 10-year Treasury yields are causing ripples of concern regarding their potential impact on multifamily cap rates and property values. The Federal Open Market Committee (FOMC) will meet on December 13th and 14th and is anticipated to increase its benchmark interest rate for the second time since the onset of the recession. The Federal Reserve enacted the first increase in December 2015 from 0.0% to a target range of 0.25% to 0.50%. Despite this change, U.S. interest rates remained low throughout 2016.

Concerns, however, can be assuaged by the fact that cap rates historically have been proven to be “sticky” in
the face of these monetary forces when economic, demographic, and multifamily fundamentals are solid. “Upon close technical analysis, the correlation between cap rates and Treasury rates turns out to be tenuous,” as Morgan Stanley Investment Management notes, a conclusion that TIAA Global Asset Management echoes in their “Real estate: The impact of rising interest rates” 2016 article. Perhaps
The Financial Times’ following analysis puts the current situation into historical context most succinctly: “Even if they concede a quarter-point increase by the end of the year, it will leave the Fed on track for the shallowest rate-lifting cycle in modern times.”


It boils down to the following: a Fed interest rate hike is a by-product of strengthening economic conditions, which truly strike at the core of multifamily commercial real estate investment. Various factors provide buffer for such fluctuations, as detailed below.

Job Growth – The U.S. economy has added an average of approximately 180,000 jobs per month in 2016. The nation is in its 7th year of economic recovery and consumer confidence returned to a normal range in 2014. The Conference Boards’ Leading Economic Index (LEI) takes into account a broader range of indicators beyond GDP— unemployment claims, manufacturing new orders, building permits, stock prices, interest rate spreads, consumer expectations, and other factors—to provide an assessment of the U.S. economy and its direction. The U.S. LEI is currently positive; it increased by 0.1% to 124.5 in October 2016 (compared to 100 in 2010) and indicates that the economy will continue to expand in 2017.

Unemployment Rate – The U.S. unemployment rate as of October is 4.9% and has demonstrated nominal fluctuations since August 2015. With an average of 180,000 of new jobs being created monthly and a steady unemployment rate, there is more room for recovery without stirring up inflation.

Investment Horizon & Underwriting – Robust rent growth and value-add programs have fueled NOI across product tranches. Compounding annual NOI increases from strong fundamentals mitigate rising cap rates over an extended period. Further, underwriting standards already factor in cap rate increases into valuations as assets age. As TIAA Global Investors notes, “Investors should not fear cap rate increases that they expect, only the ones that they do not anticipate.”

Relative Investment Value – A reported 75% of sovereign debt carries 1% or less yield and a third of the debt is negative; therefore, the prospect of 8% to 10% cash-on-cash returns has continued to drive investment to the multifamily sector in 2016. Further, the U.S.’ relative economic stability and rule of law remain compelling factors for foreign investment in the U.S.

Moderated Pipeline – Submarket multifamily development pipeline trends can be misleading; overall, multifamily unit deliveries are below historical peaks in the majority of markets and construction costs are keeping multifamily development in check. Further, the current homeownership rate as of the third quarter is 63.5% (65.0% in the South region). This is the lowest the rate has been since 1965 and represents a significant decline from a high of 69.2% in fourth quarter 2004. Therefore, multifamily rental demand is on the rise. 

Source: Cushman & Wakefield

Full Article HERE

Counting on Disruptive Innovation-Work/live/play in one community still important to Millenials

We live in a time of disruptive innovation. Tech giants such as Amazon, Netflix, Apple and Google have redefined such seemingly well-entrenched fields as retail, entertainment, personal computing and advertising—and newcomers such as Airbnb and Uber have already transformed their industries.

So far, the impact on commercial real estate of these disruptive innovators has varied from sector to sector. For instance, Netflix’s success drove Blockbuster into bankruptcy, which in turn flooded the real estate market with millions of square feet of retail space. In other cases, the effect has not been as dramatic.

During his keynote address at this year’s ULI Washington Real Estate Trends Conference, James Chung described three enablers of disruptive innovation that provide a context to understand fundamental shifts already underway in commercial real estate. Chung is president of Reach Advisors, a New York-based strategy, research, and predictive analytics firm. The three enablers he identified are the shared economy, the assortive economy and the data economy. He describes them as follows:

  • The shared economy: Dominance today is driven by coordination of community assets rather than control of private ones.
  • The assortive economy: Dramatic demographic clustering is replacing predictable longstanding demographic patterns, redefining consumer behavior.
  • The data economy: Data is now a differentiator rather than a by-product.

The shared economy: Work/live/play in one community

The concept of the shared economy is intertwined with the values of the Millennials who are its chief exponents. As Chung pointed out, Millennials embrace the kind of peer-to-peer, shared relationships embodied by Uber and Airbnb. But there are other characteristics that we can fold into Chung’s shared economy. Millennials would rather rent—whether it’s music, bicycles, or an apartment—rather than own. They also embody contradictions. They desire community, preferring to live, work, and play in a single neighborhood. At the same time, they hesitate to put down roots, valuing the flexibility that enables to switch jobs when a better opportunity arises.

Source: CP Executive and Capital One Bank Real Estate

Full Article HERE