Multi-Family Properties Might Be The Way To Multi-Millions

In the current commercial real estate market, investing in multi-family homes should be on the radar. Multi-family properties don’t always have to be 20 floor sky rise apartments in a big city. They can be smaller duplexes, town homes Read more

New Real Estate View: Why The Homeless Are Big Business In New York

It's a grim scenario: In New York, there are more than 50,000 homeless. Of that number, 21,000 are children, an increase of 21 percent from last year, according to a report by the Coalition for the Homeless, a New Read more

Red Is the New Green – Chinese Investors Eye US Assets

***This blog entry is a guest post from Elton Steinberg, Marketing Associate at United Realty*** American fund managers should be aware of current and future trends that may make the Chinese account for a more significant portion of overall foreign Read more

Gimme Shelter - Foreign Investors Seek Returns and Safe Haven in US Real Estate

***This blog entry is a guest post from Elton Steinberg, Marketing Associate at United Realty*** Foreign investment has been a significant driver of the US real estate market recovery. Investors from across the globe have been responding to negative stimuli Read more

#CRE Post

New Real Estate View: Why The Homeless Are Big Business In New York

New York Residential BuildingsIt’s a grim scenario: In New York, there are more than 50,000 homeless. Of that number, 21,000 are children, an increase of 21 percent from last year, according to a report by the Coalition for the Homeless, a New York advocacy group. Even worse, the numbers haven’t been this high since the Great Depression. But some landlords have managed to find a lucrative return from a commercial real estate angle.

Though the methods differ, and opposing views persist, the goal – more homeless individuals and families housed – is aligned, to a degree. Landlords can use their real estate to offer shelter to the percent of New Yorkers who need a place to stay. As reported by the New York Times, landlords can receive up to $3,000 (from the Department of Housing Services), and some are offering tenants up to $25,000 to move out of their current homes to make room. Somewhat problematic, these are often rooms without bathrooms or kitchens. The conditions, as reported by some, are worse, due to drug use, violence, and even prostitution.

Meanwhile, the Department of Housing Services (DHS) has been critical of Mayor Michael Bloomberg’s handling of New York’s homeless population, and recently claimed that the homeless shelter population under his administration increased by 61 percent. Additionally, the shadow of Hurricane Sandy looms rather large, albeit the numbers are not included in the report, it can be inferred that a number of displaced New Yorkers affected by Sandy are likely in the system. The DHS concludes that “for the first time since modern homelessness began, the City now provides no housing assistance to help homeless children and families move from shelters to permanent housing.”

According to the Wall Street Journal, the budget for adult shelters has gone up 43 percent to $317.2 million since 2008, while family shelters now cost $464 million a year, up 15 percent from 2008. And in the past two years, the city has added nine single-adult shelters, six adult family shelters and 11 shelters for families with children. Two hundred and thirty-nine shelters are in the system. So, a shortage of shelters, means opportunity for some land owners. Whether it takes advantage of the system (and displaced New Yorkers) is another matter best left for politicians and newspaper opinion pages.

The facts are this: in January, an average of 11,984 homeless families slept in shelters each night, which was a rise of 18 percent from the previous year. And advocates on both sides have valid arguments. Is it morally gray to offer less-than-favorable apartments to individuals and families in transitional housings? Possibly. But when the shelters are more crowded, and the options for moving from transitional housing has stalled, other solutions should at least be examined.

A policy in response to court settlements in 1979 and 2008, pushed for every homeless person in New York to have some type of housing that would be provided by the city. Landlords willing to house the homeless were given freedom to set their own rental prices and terms. In 2005, Bloomberg’s administration ended the  policy, which had up to that time allocated a share of federal public-housing apartments and federal housing vouchers to homeless families.

The action plan outlined by DHS points to ending “the so-called cluster-site/scatter-site shelter program (i.e., apartment buildings used as temporary shelter at enormous cost),” and phasing out the use of commercial hotels and motels as temporary shelter for families. New mayoral candidates have already started their stump speeches to include this issue. But, really, where does the discussion on this really begin? True, you will possibly have a number of landlords who will use the plight of the homeless as a way to make a profit. However, the idea, if properly implemented with at least a modicum of oversight, could allow for positive results to surface.

When transitional housing and commercial real estate converge – or collide – in New York, there’s bound to be a passionate response. At best, we should be able to find a middle ground. One where real estate thrives, and more people have access to a higher quality of life, moving outside the homeless system, and into independence. It’s good business for everyone.

Posted on by admin in Commercial Real Estate, Housing Market, Residential Real Estate Comments Off

The Virtual Reality of Commercial Real Estate and Mobile Technology

Real Estate and Mobile Technology
The commercial real estate market is rebounding, and with that bounce-back, comes the increased use of mobile technology.

Commercial real estate used to rely on newspapers, magazines, radio and television ads to carry the message to the consumer, but those methods simply aren’t as effective in the 21st century. A “direct line” is more often than not facilitated by satellites in space, GPS towers, and apps downloaded onto a smart phone. To reach people where they truly live, you must slip into the virtual reality inherent in cloud computing, social media, and viral Web content. In a very real context, change has indeed come.

A recent report by inMotion Real Estate cited that mobile usage in commercial real estate is up 61 percent. And we can reasonably expect an increase this year if the trend holds. The report lists the iPhone, iPad, Sony Ericsson LT 15i Xperia Arc, HTC EvO 4G and the Motorola Droid X, as the top mobile devices of last year, with 25 percent of Internet consumption in the U.S. derived from mobile devices. In short, we carry the future of commercial real estate in our pockets. And more people are taking advantage of this technology.

Last month, the BE-Mobile app (from Building Engines), marked 1,000 downloads, and this should come as no surprise. The app helps the user to manage key operational tasks including work orders, preventive maintenance, incidents, and inspections – it’s all paperless.

And here’s something else to consider: Google Maps can now host your property with its Google Maps Floorplans app, which allows tenants or investors to better understand a building’s accessibility, suite layout, parking field and more. Additionally, it can be combined with Google Maps in 3D and a 360 Panorama by Occipital and you have a real virtual reality tour.

See? The future is truly occurring in real time. Mobile technology is the great equalizer at play in today’s society. How we capitalize – and innovate – within this seismic shift will depend on our ability to embrace this new present for a profitable future.

It’s a reality, however virtual, worth pursuing.

Posted on by Jacob Frydman in News Leave a comment

Assisted Living Needs No “Assistance”

A recent report from the National Investment Center for the Seniors Housing & Care Industry showed overall, the average occupancy rate for seniors housing properties in the second quarter of 2012 was 88.6 percent, an increase of 0.3 percentage points from the prior quarter and a 0.9 percentage point increase from a year earlier. The seniors housing average occupancy rate has risen consistently during the past nine quarters and is 1.6 percentage points above its cyclical low of 87 percent in the first quarter of 2010.

The occupancy rate for independent living properties in the second quarter of 2012 averaged 88.5 percent, and the occupancy rate for assisted living properties averaged 88.7 percent. Both independent living and assisted living showed improvement over the prior quarter, rising 0.2 and 0.3 percentage points, respectively. The average occupancy rate for independent living is now 1.7 percentage points above its cyclical low, while occupancy in assisted living is 1.5 percentage points above its respective cyclical low. “Occupancy is now at a four-year high, and the supply-demand fundamentals suggest that the recovery will continue in the near-term,” said Michael Hargrave, vice president of NIC MAP®.

 In a recent column for Commercial Property Executive Magazine, Mel Gamzon, president of Senior Housing Investment Advisors Inc. said,  “Despite all the uncertainty in the capital markets, seniors housing witnessed its second-best year ever, with a more than $16 billion transaction volume, catalyzed by the ultra-aggressive healthcare REITs. From the second half of 2010 into 2011, the REITs closed more than $20 billion worth of portfolio transactions in this space using the REIT Investment Diversification and Empowerment Act (RIDEA) and triple-net-lease structures. The REITs and their institutional capital partners have put the seniors housing sector front and center with prospective industry investment sources that are seeking returns greater than other real estate asset classes can offer.”Seniors Housing Complex in Construcion

And a large, Ohio-based real estate investment trust has bought the Windsor at Lakewood Ranch assisted-living center and a memory care operation for $30 million. Health Care REIT bought the 70,000-square-foot and 35,000- square-foot centers, at 8220 Natures Way, from companies belonging to Timothy J. Buchanan and Stephen D. “Pete” Russell.

 

According to the Herald Tribune, Health Care REIT, founded in 1970, manages a $14.9 billion portfolio of senior-living centers, medical office buildings and inpatient and outpatient medical centers around the country.

Finally, NREI has a new report that says seniors housing pros expect more access to capital and an increase in construction starts during the next six months.

Posted on by Jacob Frydman in Housing Market Leave a comment

There Are Still Clouds Amid Housing Sector’s Silver Lining

Real Estate ContractAmid mounting evidence that the extended real estate market recession is finally abating, investors are still advised to display considerable caution before jumping back into the market without the advice of competent investment counsel. Over the past few sessions, newly released industry and government data would seem to raise recovery hopes as the residential home market has shown some encouraging signs of reversal. Sales of new homes as well as resales have suddenly ratcheted upward and prices in key markets have been recovering from multi-year lows. This enthusiasm was further encouraged by Toll Brothers’ fiscal year 2012 second-quarter results which showed its revenues rose to $373.7 million with deliveries of 671 units, as compared with revenues of $319.7 million and 591 deliveries in the year ago period. But of greater market impact, according to analysts, was the fact that Toll said it ended the second quarter of its 2012 fiscal year with a backlog of $1.50 billion, for 2,403 housing units, an increase of 49% in dollars terms and 37% in units, compared to the year-ago second-quarter-end backlog of $1.01 billion and 1,760 units.

As the leading builder of luxury homes, analysts consider Toll’s encouraging results to be a possible bellwether for the housing sector in general. Nevertheless, some housing market economists have suggested that the price recovery may be more a reflection of dwindling supply, as new construction has been sharply curtailed over the past couple of years. It will take a couple of months of sustained growth in new starts numbers coupled with firming prices to confirm that a turnaround is taking hold. In the meantime foreclosure activity in outstanding mortgages from the boom years of the mid-2000s continues as a drag on the sector and the pace of loan modifications still appears to be lagging expectations. Sub-prime mortgage securitizations from the issuance boom in 2007-2008 remain well under water and even senior tranches are available at distressed sale levels. The situation is being acerbated by the reluctance or inability of banks or servicers to actually take responsibility for maintaining foreclosed properties. As a result they often are caught in unwanted litigation from tenant or tenant groups over property maintenance. Litigation serves to further delay any corrective activity leading to even greater property deterioration with the result that property values recede even further below outstanding mortgage balances.

Nevertheless, astute investors that avail themselves of well researched market intelligence should be able to identify deals that are discounted to such levels that astute management and patience should be well rewarded. For this reason it is important to seek out professional management that has experience in dealing with such mortgage instruments and that is also in touch with the market and aware of the current state of actual ground level conditions. Such an organization will be able to guide investors towards the best opportunities at any given time. But more important, they will be able to keep investors away from situations that may appear lucrative on the surface but that may actually be fraught with longer term dangers.

Posted on by Jacob Frydman in Housing Market, News Leave a comment

Banks Compete For CRE Lending

According to a recent report from the CoStar Group, banks have picked up their lending activity to commercial real estate in recent months – a sign the slow-but-steady economic recovery is beginning to pick up steam.

The report says banks that are lending again see lower risk owner-occupied properties and multifamily properties as preferred targets. But with lenders focusing on the same ‘safe shelter’ property sectors, it is creating widespread competition for the better-quality borrowers in those areas. The real battle ground may be next year from the coming opportunities in construction and development lending.

“The area of lending that we see being the most competitive on pricing continues to be the commercial real estate arena, with a lot of players in and including the life insurance companies,” said Kirk W. Walters, senior executive vice president and CFO of People’s United Financial Inc., a bank holding company in Bridgeport, Connecticut.

Kelly S. King, chairman, CEO and president of BB&T Corp. in Winston-Salem, NC, told CoStar the competition is not yet so fierce that existing customers are getting picked off, but he did say banks are looking for more diversity as their own customer base is dwindling. Richard K. Davis, chairman, president and CEO of U.S. Bancorp in Minneapolis, MN, told the website the two coasts are where the activity is most competitive. And Joseph Ficarola, chairman, president and CEO of New York Community Bancorp, said that his $42 billion holding company in Westbury, NY, is only targeting the best borrowers.

In its quarterly survey of senior loan officers, the Federal Reserve found that business lending, or commercial and industrial loans, was enjoying increased demand – and greater competition among banks. The Fed reported that this was the second consecutive survey in which reports of stronger demand for such loans by domestic banks outnumbered reports of weaker demand. Reflecting this, commercial loans at commercial banks in the U.S. have risen about 15% between March 2011 and April 18, according to Fed banking-industry data.

Within this loan study, The Fed says most domestic banks generally reported having eased their lending standards and having experienced stronger demand over the past three months. Standards on C&I loans to large and middle-market firms, and to small firms, were about unchanged. However, moderate to large net fractions of domestic banks eased many terms on C&I loans to firms of all sizes, with most indicating that they had done so in response to more aggressive competition from other banks or nonbank lenders.

Domestic banks also reported an increase in loan demand from firms of all sizes. In contrast, a small net fraction of foreign respondents again reported a tightening of their lending standards on C&I loans and a decrease in demand for such loans. A moderate net fraction of domestic banks reported having eased standards for commercial real estate (CRE) loans. As has been the case recently, significant net fractions of domestic banks reported that demand for CRE loans had strengthened. On net, foreign branches and agencies reported that standards and demand for CRE loans were little changed.

Posted on by Jacob Frydman in Commercial Real Estate, News Leave a comment

Welcome To The “#CRE Post” Blog

Greetings,

Commercial real estate and investing are the foundations of United Realty. Without large commercial properties and the people who invest in them, our company, staff and current roles in the real estate ecosystem would not exist.

Making the decision to blog on behalf of United Realty was not an easy one. The information we hope you find on this blog will need to be informative, relevant, professional, and most of all – consistent. These responsibilities fall on the shoulders of our staff and each other.

We look forward to sharing our commercial real estate insight and experience as well as our capital markets insight and experience with those who choose to read the blog. Expect to find our thoughts on industry transactions and trends, as well as what we believe the future holds with respect to what we specialize in. You will also find content related to our role as corporate citizens and the social responsibilities and charitable efforts that we hold close to our hearts.

We look forward to your comments and feedback. We hope that the #CRE Post results in sharing, learning, and turning online connections into offline relationships.

Thank you,

Jacob Frydman, Chief Executive Officer

Jacob Frydman

Posted on by Jacob Frydman in United Realty News 1 Comment