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

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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 abroad by investing in US real estate. Investing in US real estate provides foreign investors protection from economic

instability and foreign government corruption, while offering significant returns compared to low performing bonds. Such benefits have led foreign investors to favor direct investment in US properties and shy away from funds that may lessen risk.

Japanese investors have historically had confidence in the benefits offered by investments in US real estate. Often close partners with US businesses, Japanese investors have in the past sunk billions of yen into acquiring US assets. Recent fear about future depreciation of the yen has made investment in US real estate increasingly advantageous. Investing in US real estate allows Japanese investors to protect their wealth against the negative effects of Japanese monetary policy. Assuming that the dollar remains strong, investments in US real estate enable foreign investors to strengthen the value of their holdings. The advantages of US real estate as an inflation hedge coupled with the current high rates of return have motivated Japanese investors to continue to transfer wealth to the US.

While traditional foreign investors in US real estate have recently had a significant impact on the market’s recovery, less traditional foreign investors are increasingly likely to drive future growth. Brazilian, Russian, Indian, and Chinese investors have been eyeing the US real estate market as an opportunity for investment. Each responding to local conditions, BRIC countries have taken note of the benefits offered by investing in US real estate.

Enriched by the rapid growth of the Brazilian economy, a growing number of Brazilian investors have worked to protect wealth from the negative impact of local instability and earn profits from safe investments. While impressive returns are offered by Brazilian real estate investments, inflation and government corruption in Brazil motivate many Brazilian investors to prefer less risky US real estate investments. A fulminating public has made many Brazilian investors fearful of future political instability and economic fallout, giving another incentive to transfer wealth to the US.  Like many wealthy Central and South Americans, Brazilians have flocked to Miami, purchasing stakes in local assets.

A recent spree of acquisitions by Russian investors has surprised American real estate experts as Russians have been providing a more significant portion of capital for US real estate acquisitions. Apparently dissatisfied with the benefits of investing in art and other luxury items that fail to yield desirable returns, Russian investors have begun purchasing trophy properties in Manhattan and Miami to gain more appropriate returns and shield wealth. Following the economic crisis in Cyprus, Russian investors have been seeking an alternative safe haven. Along with the advantage of keeping wealth out of reach of the Russian government, investments in US real estate provide Russian investors with significant returns and residence in attractive locations. It is becoming increasingly possible that Russian investors will be a consistent source of capital for investment in US real estate.

Considering the volume of foreign investment in US real estate, one would think that domestic funds investing in US real estate and catering to foreign investors would raise capital with ease. On the contrary, a number of major funds have been forced to exit the market. While such funds offer the services of managers with expertise in US real estate and opportunity to diversify, many foreign investors have avoided such investments. It would seem that communication difficulties have prevented foreign investors from realizing the advantages such investment funds offer. A variety of conditions motivate foreign investors from different countries to invest in US real estate. Perhaps, foreign investors expect American funds to cater to each of their disparate needs when encouraging foreign investors to trust them with their wealth. It will be interesting to observe whether or not foreign investors remain convinced that direct investment is the optimal strategy as foreign investment continues to drive growth.

Posted on by Jacob Frydman in Commercial Real Estate, Foreign Investors Comments Off

United Realty Launches Students Scholarship Program

At United Realty Partners we believe that we can invest in our future by investing in education, which is why we have recently launched United Realty Students.  Our scholarship program is awarding $100,000 to students over the next 12 months.

In recent years the cost of attending college has skyrocketed.  Bloomberg reported that the cost of tuition and fees has risen at a rate of 1,120% since 1978, four times faster than the increase of the consumer price index.  Also, CNN Money publishes that the cost of a four-year public college has risen 4.8% in the last year. While many factors have contributed to the rise of prices, the amount of students needing help to pay for higher education is rising too.

Students Scholarship

In the years to come these students will be running corporations, taking seats in government, educating the youth and many other jobs.  We believe that students are the key to our future and we must invest in them the same way we would invest in our personal portfolios.

As tuition costs have continued to raise so has the average amount of student loan debt students are graduating with.  Government aid, parents’ and students’ incomes have not increased in conjunction with the rising cost of tuition.  Students are more motivated to look for alternative ways to pay for their education.  Scholarships provide great opportunities for students as they are awarded and are not required to be paid back.

United Realty Students is providing students with multiple prizes, awarded every two months.  Investing is at our core of our beliefs and we would like to hear from students about their thoughts on investing.  Entry for the scholarship is for students to submit a short, original, previously unpublished written response to the scholarship question, “How Do I Invest In My Future?”  Students can win scholarships ranging from $5,000 to $10,000 — just by writing a response to this short essay. Scholarships will be awarded on an ongoing basis.  The first submission period has begun, and will run until March 1, 2013.

Click here to Apply.

Posted on by Eric Fischgrund in News, United Realty News Leave a comment

Real Estate Thoughts: Hotel Markets

The hotel market is one that remains in a state of flux.

Hotel Room in Hotel Real Estate

Over the last several years there has been a significant lack of new construction of hotel properties, primarily due to the financing markets, as well as a decline in tourism nationwide. As our economy begins to recover there will a need for additional hotel capacity. At the same time, while the European economy suffers, this may result in a reduced demand for US hotel rooms from European tourists who will be traveling less frequently, creating a forecast for a relatively shaky market. The best opportunities appear to be in larger central business districts of major cities where occupancies are at or exceed 75%.

New York is a unique market, given that the cost of hotel rooms has risen to be generally unaffordable, except at the very top of the market. Therefore, the opportunity in a city such as New York is to convert non-hotel properties that lie outside of the central business areas but are connected by transportation hubs, so that tourists can find affordable hotel rooms close to but not in Manhattan. A current example of this is Brooklyn, a good bet for new or converted hotel rooms, especially with the construction of The Barclay’s Center. In other markets, one might wish to consider a prime location with an older property that has fallen into disrepair or lack or high vacancy. Buying those hotels both on “the cheap” and repositioning them, or renovating them and “putting a flag on them” (i.e. Marriott, Wyndham, etc.) could be an opportunity as well.

 

 

 

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

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.

 

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

Taking The LEED

The 2011-12 BOMA/NY Pinnacle Awards were handed out earlier this month and included the highest total of LEED- and Energy Star-rated buildings in the competition’s history. The Pinnacle – New York’s competition of the TOBY (The Building of the Year) Awards of BOMA International – is the highest award given to owners and property managers in Gotham’s commercial real estate industry. This year’s competition recognized a number of green buildings.

The Norman Foster-designed Hearst Tower became the first LEED for New Construction Gold-certified commercial office building in New York City to subsequently earn Platinum under the LEED for Existing Buildings: Operations and Maintenance rating system. Tishman Speyer manages the building in cooperation with Hearst. Since 2006, total annual energy consumption has dropped by 40 percent and water usage by 30 percent.

According to Crain’s, tenants looking for older, environmentally friendly buildings have a slightly better chance of finding one on the West Side than on the East. However, a mere 37 existing buildings in Manhattan have obtained LEED certification from the U.S. Green Building Council, or USGBC, which bestows the distinction.

There are 19 building on the West Side that were certified after renovations and retrofits, compared with 18 on the East Side, according to data from USGBC. The data does not include new building such as 11 Times Square or 7 World Trade Center, new skyscrapers that were designed with LEED certification in mind.

Three new speculative, LEED-hopeful office buildings are slated to come on line in 2013. Together, One World Trade Center, Four World Trade Center, and 51 Astor Place will deliver 6 million square feet of new space into the Manhattan office market.  The Wall Street Journal points out that the success of leasing efforts at the 2013 towers will have repercussions for other high-profile projects who will also seek LEED certification. 7 Bryant Park510 West 22nd Street and Related’s Hudson Yards project on the far West Side are three such projects.  While the more efficient use of office space is great for the environment, it’s not good for developers and landlords looking to fill up their buildings.

Posted on by Jacob Frydman in Commercial Real Estate 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