I am humbled and flattered once more to have been asked to emcee to upcoming induction ceremony of the Ohio Military Hall of Fame for Valor.
In May, some 20 individuals will be recognized for heroism under fire during their time with the U.S. Armed Forces during a ceremony that takes place at the Ohio Statehouse in Columbus.
The OMHFV Board bends over backwards to thank me for my sacrifice in giving them a hand. And all I can think is how humbled I am to be ask to lead their program, which recognizes sacrifice by Ohio men and women in the American armed services.
More to come . . .
Friday, February 21, 2014
Monday, February 10, 2014
REPORT: Investors Looking To Create Value, Not Buy Into Unsustainably Inflated Developments
BONITA SPRINGS, Fla. -- If research coming out of southwest Florida is any indicator, and I am hoping it is, the resurging commercial real estate sector is finally jolting back to "reality."
Panelists last week at the Urban Land Institute's 2014 Market Outlook Program unanimously concluded that investors are looking for improvements in fundamentals and operations to drive returns.
Said Dean Schwanke, ULI senior vice president, "Capital will be going wide into more markets, taking on more risk and looking for yield." Further, he noted that the southwest Florida marketplace is appealing because investors are turning away from buying big buildings in primary markets. Instead they are looking for new opportunities in secondary markets.
"Money will be put into creating things instead of buying existing things at ridiculously high prices," he said. Which means all eyes will be on real estate, Schwanke said, because it is a stable investment compared to the volatile stock market, and currently has better yields than the bond market. Multifamily rents are expected to rise over the next five years while vacancy rates decline.
Those last couple of statistics are unique to the region, as many projects were finished or near completion, leaving a huge number of completed -- but empty -- multifamily housing projects, or projects that ranged from unfinished holes in the ground, to a few foundation walls up, to walls, roof and shell complete, but unfinished interiors. All of which sat for years as capital left the region, and developers scraped by to hang on, or went out of business.
The best news from the outlook meeting bear repeating -- and I hope this applies not only here but in other markets as well. That investors are looking to create value, rather than buy existing projects at inflated prices.
Many sellers now with unrealistic values/prices placed on their properties are going to be disappointed. Not all, but many of those properties now for sale just don't make sense when you perform even a rudimentary analysis. When our group looks at any property, whether because we have been asked by a potential buyer, or even when we are asked to list a commercial/investment opportunity for sale, the same analyses are conducted. And appropriate recommendations given to the seller.
I don't like dealing in smoke and mirrors. Must of CRE a decade ago, particularly in this region was just that.
Another interesting note coming out of the panel discussion is a problem facing southwest Forida. Many construction workers have moved to booming energy-producing states like Texas and North Dakota, and so have little incentive to return. That translates to higher construction costs, which -- along with higher land costs -- will raise the cost of new housing.
Further, industrial spaces are likely to be redone to serve the demands of online retailers, while offices may shrink and be reconfigured to allow for more collaboration among workers. And while multifamily projects have been eclipsing other commercial sectors, industrial, hotel and retail space should be improving, but in untraditional ways.
Finally, finding land is a challenge in southwest Florida because many of the most desireable parcels have already been tied up by national homebuilders. Infill assemblages will become more common, the panelists agreed.
The most surprising comment I heard? One panelist who said a new mixed-use community in downtown Naples was expected to draw the usual community opposition. It never came. The reason? A belief that the public, across the U.S., is more open to development now after what everyone's been through with the Great Recession.
Here's to realistic, and economically positive, improvements in 2014.
Panelists last week at the Urban Land Institute's 2014 Market Outlook Program unanimously concluded that investors are looking for improvements in fundamentals and operations to drive returns.
Said Dean Schwanke, ULI senior vice president, "Capital will be going wide into more markets, taking on more risk and looking for yield." Further, he noted that the southwest Florida marketplace is appealing because investors are turning away from buying big buildings in primary markets. Instead they are looking for new opportunities in secondary markets.
"Money will be put into creating things instead of buying existing things at ridiculously high prices," he said. Which means all eyes will be on real estate, Schwanke said, because it is a stable investment compared to the volatile stock market, and currently has better yields than the bond market. Multifamily rents are expected to rise over the next five years while vacancy rates decline.
Those last couple of statistics are unique to the region, as many projects were finished or near completion, leaving a huge number of completed -- but empty -- multifamily housing projects, or projects that ranged from unfinished holes in the ground, to a few foundation walls up, to walls, roof and shell complete, but unfinished interiors. All of which sat for years as capital left the region, and developers scraped by to hang on, or went out of business.
The best news from the outlook meeting bear repeating -- and I hope this applies not only here but in other markets as well. That investors are looking to create value, rather than buy existing projects at inflated prices.
Many sellers now with unrealistic values/prices placed on their properties are going to be disappointed. Not all, but many of those properties now for sale just don't make sense when you perform even a rudimentary analysis. When our group looks at any property, whether because we have been asked by a potential buyer, or even when we are asked to list a commercial/investment opportunity for sale, the same analyses are conducted. And appropriate recommendations given to the seller.
I don't like dealing in smoke and mirrors. Must of CRE a decade ago, particularly in this region was just that.
Another interesting note coming out of the panel discussion is a problem facing southwest Forida. Many construction workers have moved to booming energy-producing states like Texas and North Dakota, and so have little incentive to return. That translates to higher construction costs, which -- along with higher land costs -- will raise the cost of new housing.
Further, industrial spaces are likely to be redone to serve the demands of online retailers, while offices may shrink and be reconfigured to allow for more collaboration among workers. And while multifamily projects have been eclipsing other commercial sectors, industrial, hotel and retail space should be improving, but in untraditional ways.
Finally, finding land is a challenge in southwest Florida because many of the most desireable parcels have already been tied up by national homebuilders. Infill assemblages will become more common, the panelists agreed.
The most surprising comment I heard? One panelist who said a new mixed-use community in downtown Naples was expected to draw the usual community opposition. It never came. The reason? A belief that the public, across the U.S., is more open to development now after what everyone's been through with the Great Recession.
Here's to realistic, and economically positive, improvements in 2014.
Thursday, February 6, 2014
Campus Student Housing Continues To Command High Market Rates
One of the hottest segments of multifamily housing is student housing, an area I have worked in since my earliest days in commercial/investment brokerage. Considered virtually recession-proof, I have watched student housing projects continue to climb in value.
There are few financial setbacks, perhaps only if an owner lets a property become dilapidated or obsolete. Typically, however, student housing annually remains at capacity occupancies because:
1) The economy is bad, therefore students stay in school longer, going back for more degrees or degree work to avoid going into a tough jobs market where salaries are stifled or devolving, or
2) The economy is good, prompting students get in and out of college quickly, moving on to solid job opportunities. Right behind them are younger students wanting to get their education quickly, and grab their own brass ring ASAP.
Student housing is not simply targeted, market-rate apartments. Any apartment developer, or new investor, thinking of jumping into this arena must come to understand that not only is the "lingo" different (we talk about beds, and not units), but designing for people who you know will move out after nine months, or for people who will have roommates that they may not even know, is a process that's not only very different, but sometimes has you scratching your head.
It means considering everything from how the common wall between rooms is constructed in order to ensure privacy, to how several individuals share a single pantry. In a new build you have to think about ways you heat hot water, particularly if four people will be getting ready for the day at the same time, each in his or her own bathroom. It's just different. And, that's just in a single unit.
So how do you retrofit, or design, housing for students? The effort can be challenging. Aesthetically, you want it to feel fresh and forward-looking, like the population it serves. The problem: it needs to serve generations of students and a myriad of changes in taste and preference that accompany them from year to year.
It's important that even though you are designing for students, the buildings don't look childish. Today's students are worldlier and more design savvy than ever before. The focus is less-is-more; simple, clean, adaptable, and, ultimately, timeless. Not timeless in the sense of fitting into some historic mold, but timeless in a way that it's not trendy or edgy or filled with the fad of the moment, on the outside that is.
In this way, we borrow a lot from hospitality design. The exteriors, which are not easily changed, are simple and straightforward with a few flourishes that can be changed with the times. On the interior, assume a remodel every few years. This is important. Students are going to wear it out. So the furnishings, technology, paint and interior materials will push boundaries. They can be fun, of-the-moment and offer the latest in connectivity and comfort.
Students go to college to learn, but equally as important is the collegiate "experience." Strive to create an environment for students that allows them to have the best possible social experience in a setting that is safe and still fosters an academic mission. It needs to speak to the students' sense of fun and adventure, but also to the parents' sense of practicality, security and pocketbook.
We want the student amenity spaces to offer a variety of experiences and levels of community. A ground-floor amenity creates the opportunity for the residents to be a part of the larger community and opens the door for that interaction and integration to occur with a visual and physical connection to the street and nearby campus. Fifty years ago, open spaces allowed students to play cards, or watch that new-fangled contraption, the single TV. Today, students' mobile devices are their up-to-the-second connection to the world. So Wi-Fi is a given, and often the large space may include a handful of private nooks to plug in a tablet/surface or laptop, without heading up to their bedroom.
For high-end developments, incorporating a rooftop pool deck is the latest trend, a more private area for the residents and guests, and offers indoor/outdoor spaces for them to gather and form their own community within the building, while still maintaining visual connectivity to the campus. In addition to the pool, the rooftop deck offers lounge spaces, fire pit chat areas, an expansive sun deck and fitness facilities.
Seem a little out there? It's what students are coming to expect in campus-area multifamily housing, particularly with new builds.
Existing student housing, as long as it is regularly updated to reflect students interests and needs, even without a swimming pool, enables investors to keep rents at the high end of the market. Often students come back to the same bedroom/property year after year.
Remember, as an investor, its not about what you think students' need. Its what they want and are willing to pay for.
There are few financial setbacks, perhaps only if an owner lets a property become dilapidated or obsolete. Typically, however, student housing annually remains at capacity occupancies because:
1) The economy is bad, therefore students stay in school longer, going back for more degrees or degree work to avoid going into a tough jobs market where salaries are stifled or devolving, or
2) The economy is good, prompting students get in and out of college quickly, moving on to solid job opportunities. Right behind them are younger students wanting to get their education quickly, and grab their own brass ring ASAP.
Student housing is not simply targeted, market-rate apartments. Any apartment developer, or new investor, thinking of jumping into this arena must come to understand that not only is the "lingo" different (we talk about beds, and not units), but designing for people who you know will move out after nine months, or for people who will have roommates that they may not even know, is a process that's not only very different, but sometimes has you scratching your head.
It means considering everything from how the common wall between rooms is constructed in order to ensure privacy, to how several individuals share a single pantry. In a new build you have to think about ways you heat hot water, particularly if four people will be getting ready for the day at the same time, each in his or her own bathroom. It's just different. And, that's just in a single unit.
So how do you retrofit, or design, housing for students? The effort can be challenging. Aesthetically, you want it to feel fresh and forward-looking, like the population it serves. The problem: it needs to serve generations of students and a myriad of changes in taste and preference that accompany them from year to year.
It's important that even though you are designing for students, the buildings don't look childish. Today's students are worldlier and more design savvy than ever before. The focus is less-is-more; simple, clean, adaptable, and, ultimately, timeless. Not timeless in the sense of fitting into some historic mold, but timeless in a way that it's not trendy or edgy or filled with the fad of the moment, on the outside that is.
In this way, we borrow a lot from hospitality design. The exteriors, which are not easily changed, are simple and straightforward with a few flourishes that can be changed with the times. On the interior, assume a remodel every few years. This is important. Students are going to wear it out. So the furnishings, technology, paint and interior materials will push boundaries. They can be fun, of-the-moment and offer the latest in connectivity and comfort.
Students go to college to learn, but equally as important is the collegiate "experience." Strive to create an environment for students that allows them to have the best possible social experience in a setting that is safe and still fosters an academic mission. It needs to speak to the students' sense of fun and adventure, but also to the parents' sense of practicality, security and pocketbook.
We want the student amenity spaces to offer a variety of experiences and levels of community. A ground-floor amenity creates the opportunity for the residents to be a part of the larger community and opens the door for that interaction and integration to occur with a visual and physical connection to the street and nearby campus. Fifty years ago, open spaces allowed students to play cards, or watch that new-fangled contraption, the single TV. Today, students' mobile devices are their up-to-the-second connection to the world. So Wi-Fi is a given, and often the large space may include a handful of private nooks to plug in a tablet/surface or laptop, without heading up to their bedroom.
For high-end developments, incorporating a rooftop pool deck is the latest trend, a more private area for the residents and guests, and offers indoor/outdoor spaces for them to gather and form their own community within the building, while still maintaining visual connectivity to the campus. In addition to the pool, the rooftop deck offers lounge spaces, fire pit chat areas, an expansive sun deck and fitness facilities.
Seem a little out there? It's what students are coming to expect in campus-area multifamily housing, particularly with new builds.
Existing student housing, as long as it is regularly updated to reflect students interests and needs, even without a swimming pool, enables investors to keep rents at the high end of the market. Often students come back to the same bedroom/property year after year.
Remember, as an investor, its not about what you think students' need. Its what they want and are willing to pay for.
Big Shout Out To Sister Company -- Berkshire Hathaway Home Services
My firm's two sister residential companies, Prudential One, REALTORS and Prudential Select Properties, have a new name and look . . .
Berkshire Hathaway HomeServices.
It's part of a new brand and emphasis on a new way of looking at residential realty. Prudential Real Estate was purchased by Warren Buffet's Berkshire Hathaway holding company -- the world's most respected company, according to Barron's magazine.
The coolest part of this? This is one of the few of the large successful holding company's affiliates ever to be entrusted with the Berkshire Hathaway name.
Nevertheless, our residential company has offices in Cincinnati, Beavercreek, Dayton, Lima, and Greater Cleveland, and many places in between. In addition to agents in Kentucky, three Berkshire Hathaway HomeServices residential agents work out of my Prudential Commercial Real Estate office in Columbus.
Go Team!
Berkshire Hathaway HomeServices.
It's part of a new brand and emphasis on a new way of looking at residential realty. Prudential Real Estate was purchased by Warren Buffet's Berkshire Hathaway holding company -- the world's most respected company, according to Barron's magazine.
The coolest part of this? This is one of the few of the large successful holding company's affiliates ever to be entrusted with the Berkshire Hathaway name.
Nevertheless, our residential company has offices in Cincinnati, Beavercreek, Dayton, Lima, and Greater Cleveland, and many places in between. In addition to agents in Kentucky, three Berkshire Hathaway HomeServices residential agents work out of my Prudential Commercial Real Estate office in Columbus.
Go Team!
Subscribe to:
Posts (Atom)