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

real estate investment trusts

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

Foreign Investors Pour Capital into New York Commercial Real Estate Market

Real Estate Investment BankMany New Yorkers have the view that their city is the capital of the world. Recent commercial real estate trends indicate they might actually be on to something.  Investors from Russia to the Middle East are pouring capital into Big Apple real estate in record amounts.

Indeed, foreign investment in the U.S. real estate  market has been increasing for the past 12 consecutive quarters. Overall foreign investment in the U.S. is also surging.  According to the Commerce Department, the U.S. attracted $28.7 billion in foreign direct investments between January and March 2012. The investment trend has been led by Europeans seeking a safe haven from their own debt crisis and uncertainty about the Euro’s viability as a currency.  In 2011, foreign investment in the U.S. totaled $234 billion, a 14% jump over $205.8 billion in 2010. Two-thirds of that cash came from Europe.

In the real estate sector, foreign investment has about $82.5 billion in the 12-month period ending in March 2012—up about 24% from the $66 billion they spent the year before — but only 9% of all residential real estate sales come from international buyers, according to a recent report from the National Association of Realtors.

The Americas as a whole experienced a 1.5% increase in its Capital Value Index in the first quarter of 2012, while the rest of the world saw flat growth, according to the global real estate advisory firm CB Richard Ellis. That growth was concentrated in prime properties in Central Business District (CBD) areas, such as New York City. Others CBDs that saw investor focus included Washington, DC, San Francisco and Boston. Foreign investors are coming in with cash looking for assets that are tied to the value of the US Dollar in order to shelter their investments from the riskier European currencies. The New York City commercial real estate market has become an attractive investment for those foreign investors worrying more about wealth protection than income generation.

Several Real Estate Investment Trusts (REITs) and private fund offerings are attracting capital from foreign investors searching for a safe haven. That trend is expected to continue as long as yields on U.S. Treasury securities remain low and Europe continues to struggle.

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

RENT-ing is Sweet Music to Brooklyn Investors.

Real Estate NYCYou don’t need to have a Broadway hit to enjoy rent. Brooklyn is booming.

Although the American dream is still to own property, renting has taken off in the years since the Financial Crisis, especially in highly desirable neighborhoods like Brooklyn. That has caused a flurry of activity among commercial real estate investors looking to capitalize on rising rents and low financing. A recent report in the New York Times mentioned sale of 111 Kent Avenue in Brooklyn for $55.5 million, or more than $895,000 for each of 111 Kent’s 62 apartments. The NYTimes article goes on to mention that the price paid per apartment is a record for such properties outside Manhattan, according to the data company, Real Capital Analytics.

Steiner Studios recently acquired a 60-unit rental in the Carroll Gardens neighborhood of Brooklyn for $24.5 million, or $408,000 a unit, and is in contract to buy another rental building in the borough. Other big sales include Invesco Real Estate’s purchase of 75 Clinton in Brooklyn Heights for $50.8 million, or roughly $686,000 a unit. Invesco also bought the Arias Park Slope at 150 Fourth Avenue for $57.5 million, or roughly $605,000 a unit. Equity Residential bought 175 Kent Avenue in Williamsburg for $76 million, or nearly $673,000 a unit. The Naftali Group recently bought a vacant site at 267 Sixth Street in Park Slope that was intended to be a condominium and is instead building a 12-story, 104-unit rental building.

Reports point to several factors behind the trend, including a strong rental market and low interest rates. Rents in the borough increased by 10 percent in 2010 and were estimated to increase by 7 percent last year, according to a market report by TerraCRG.

Even those people who want to purchase a home are having difficulty obtaining a mortgage, according to The Times article. So they turn to renting instead. In addition to a strong rental market, Brooklyn is attracting waves of investors because of the many stalled condominium sites that are primed for conversions into rental buildings.

The Real Deal reports that studios have recently been heating up in the rental market. Previous months have shown that studios lagged behind the one and two bedroom categories for the month-to-month price change, but that is changing. Leading the way was Williamsburg with the highest monthly studio price increase.

Data from MNS shows that Boerum and Cobble Hill are listing rents that are about $100 less than last month. Although the discounts are primarily in walk-up buildings, renters looking for a hot location with a little sacrifice in luxury should hop the F/G trains and start looking. MNS reports that compared to last spring, Park Slope has achieved the highest year-on-year price increase of 33% in the borough. Two-bedrooms are up over $1,000 and new inventory, as well as rental product in condo buildings have pushed the rents up in the neighborhood.

 

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High Expectations for Commercial Real Estate

After shunning the asset class since the Financial Crisis, retail and institutional investors are tiptoeing back into commercial real estate. A batch of recent studies suggest commercial real estate should outperform nearly every other asset class in 2012. A new survey by the Pension Real Estate Association indicates investors expect an average return of 9.3 percent this year – a 140 basis point increase from what the survey indicated three months ago. PREA surveyed a total of 22 firms in the first quarter, representing investment managers, financial advisors and researchers.

The 22 member firms surveyed expect outperformance primarily in the NCREIF Property Index (NPI). The biggest returns, according to the survey, are expected in the apartment sector, with returns in the office, retail and industrial sectors expected to come in slightly lower, but still outperform.

Investor sentiment for all four property types has risen since the beginning of the year, along with the overall market. Despite the increased bullishness for 2012, the average forecast still predicts a gradual slowing in returns through 2013 and 2014 as investment in the sector heats up.  Apartments are expected to remain the hottest sector with projected annual returns of 10.9 percent. In the other sectors, respondents expect higher income returns in 2012 compared with apartments, but lower overall capital appreciation. Respondents expect the retail and office sectors to each return 8.9 percent. Industrial buildings, at 8.4 percent, was the laggard.

Looking past this year to longer term expectations reveals a different picture. Over a five year horizon to 2016, the office sector has the highest average return forecast, with industrial coming in second. It’s important to note that there is some disagreement amongst forecasters about the best performing sector over the next five years. Over one-third of respondents see the office space as producing the highest returns while the same proportion chose the apartment sector. Almost one-quarter see industrial as the best performer through 2016.

A new report from the global accounting firm Deloitte & Touche finds that Real Estate Investment Trusts (REITs) are well-positioned to outperform the market this year due to improvement in property fundamentals and market dynamics as well as their relative advantage as an alternative asset class.

Unlike pre-recession times, growth prospects of REITs are now heavily dependent on mergers and acquisitions and driving increases in rental income, due to limited development activity, the report found. Although there is no certainty about the relative outperformance of REITs over competing asset classes, an improvement in the broader economy will be the key to sustained growth for this asset class. In the long term, REIT’s may benefit from global expansion as emerging markets implement REIT provisions within their tax codes to facilitate real estate investment activity.

It is noted within the Deloitte report that the performance of REITs have been a bright spot within the CRE industry over the past two years. Improved access to capital drove significant transaction growth and REITs were able to acquire prime properties within major markets at favorable pricing due to the overall market distress. REITs continue to outperform the major markets and are favorably positioned during this economic uncertainty. REIT owners are expected to focus on property operations, leasing and property management; as well as mergers and acquisition opportunities, in order to add value until a full-fledged economic recovery resumes.

 

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