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NORTH CHARLESTON, S.C. (Sept. 27, 2023) – Coldwell Banker Commercial Atlantic recently brokered the lease for a new retail space in North Charleston that will operate as a nail salon and social media influencer studio. The 11,985 square-foot space is located at 5301 Indigo Fields Blvd., Suite 101-106. Coldwell Banker Commercial Atlantic brokers represented both sides of the transaction. Jing (Julia) Donovan represented the tenant, Indigo Studio Charleston LLC, which operates Oh La La Salon. Oh La La Salon is a salon studio with hair, makeup and nail art spaces, including an influencer photo studio for photoshoots and short-form video content. Brent Case and Hannah Kamba represented the lessor, HW-Indigo LLC. The salon is in a newly developed shopping center, developed and managed by Hardy World, LLC. The shopping center fronts Dorchester Road, next to the intersection with Ashley Phosphate, and offers easy access to I-26 and I-526. The traffic count is above 40,400 vehicles per day. The shopping center has excellent visibility and access from Dorchester Road with a multitude of uses available ranging from retail, office, medical and flex. There is an opportunity for a large restaurant with a patio..About Coldwell Banker Commercial AffiliatesColdwell Banker Commercial Atlantic, an affiliate of Coldwell Banker Commercial®, provides commercial real estate solutions serving the needs of owners and occupiers in the leasing, acquisition, and disposition of all property types. With a collaborative network of independently owned and operated affiliates, the Coldwell Banker Commercial organization comprises almost 200 companies and more than 3,000 professionals throughout the U.S. and internationally. For additional information, visit www.cbcworldwide.com. Media Contact: Kevin Guhl kevin.guhl@cbhomeoffice.com973-407-5916
Retailers in the United States are defying historic lows in retail space availability by planning to launch 1,000 new stores this year, underscoring the sector's resilience amid commercial real estate challenges. Despite factors like inflation, elevated interest rates, and the closure of businesses such as Bed Bath & Beyond and Christmas Tree Shops, landlords are reporting unwavering demand for retail spaces, highlighted by The Wall Street Journal. This resilience can be attributed to the reduced retail construction since the 2008-09 financial crisis, allowing the oversaturated sector to absorb its existing real estate. Moreover, retailers are using online sales data and analytics to pinpoint ideal locations for successful stores. Contrary to predictions of online retail dominance, digital-native companies are now establishing physical storefronts after reaching their online customer acquisition limits. Shoppers are returning to stores and restaurants as pandemic restrictions ease, alleviating earlier concerns. Additionally, Commerce Department data from earlier this summer reveals that retail sales increased by a seasonally adjusted 0.7% in July compared to the prior month. American spending has risen for four consecutive months and seems to be outpacing inflation.This retail revival stands in stark contrast to the office market, which is grappling with a 30-year high in office vacancy rates of 18.2%, primarily due to the rise of hybrid work schedules. A whitepaper by Placer.ai highlights the success of Walmart, Target, and Costco amid economic challenges such as inflation and high gas prices. Despite the evolving retail landscape, these retailers serve as prime examples of how challenges can transform into opportunities. Placer.ai's Q2 2023 data suggests that shifting consumer trends are favoring superstores.In fact, both Costco and Target outperformed the broader retail sector in year-over-year (YoY) performance, with visit growth rates of 1.2% and 3.1% in the first half of 2023, compared to the overall retail sector's 0.3% decline. Conversely, Walmart seemed to be more affected by inflation, possibly due to its visitors having a lower median household income compared to Costco and Target shoppers, experiencing a 0.9% decrease in foot traffic compared to H1 2022. However, recent weekly visit data indicates a potential Walmart rebound. Between June 19th and July 24th, the chain recorded year-over-year weekly visit growth, suggesting a positive trajectory and hinting at year-over-year growth in the second half of the year.For commercial real estate investors, staying attuned to retail trends is of paramount importance. The ability to anticipate and respond to these trends can make the difference between a successful investment and a poor decision. Understanding which retailers are thriving and why, as well as grasping the nuances of changing consumer behavior, can inform strategic decisions regarding property acquisitions, leases, and developments. Incorporating these insights into investment strategies can help commercial real estate investors identify prime locations, optimize property portfolios, and ultimately maximize returns on their investments.
Read More >>The U.S. is facing a potential loss of nearly 200,000 affordable housing units in the next five years as government protections expire for hundreds of rental properties, allowing landlords to set their own rents, highlighted by The Wall Street Journal. The main program used by the federal government to encourage developers to build affordable housing is a 30-year tax credit. However, specific agreements that assisted low-income renters are set to end, giving landlords the option to charge market rates for their units instead of continuing with the government program. Due to a period of high rent growth, many landlords are expected to raise rents significantly. Between early 2021 and the summer of 2022, asking rents for market-rate units increased by 25%, according to Apartment List, a rentals website. By 2027, up to 188,000 low-cost rental apartments funded by the government tax credit could convert to market rate, as reported by Moody's Analytics. Certain cities, such as Dallas, Chicago, and Houston, are at risk of losing a significant portion of their affordable housing. During the pandemic, a considerable number of affordable housing units vanished, with a decline of 400,000 apartments and rental homes for families in poverty between 2019 and 2021, according to the National Low Income Housing Coalition, which analyzed U.S. census data. Some of this loss was attributed to the expiration of tax credits, as mentioned by Moody's Analytics.Without longer affordability agreements or new subsidies, approximately 100,000 units of tax-credit housing could expire annually by 2033, according to Peter Lawrence, director of public policy and government. Rent increases following expiration can be substantial, as affordable housing rents are typically 38% below market rates on average, but after expiration, they rise to about the same level as market-rate properties of comparable quality and location, according to a study by Freddie Mac.This situation has left some long-term renters in difficult situations. The Wall Street Journal article shares the story of an 85-year-old renter in California who lives on a monthly income of $1,000 and has experienced minimal rent increases for nearly three decades. However, in 2021, the landlord opted out of the federal tax credit program, causing the rent to more than double, going up to as much as $1,300. Landlords have been major supporters of the tax credit program, and many have built large businesses by operating affordable housing. But without new subsidies or incentives, building owners will likely take advantage of the recent hot market and raise rents to meet the rising costs of maintenance, insurance, and property taxes. The solutions to this looming challenge will require cities and government agencies to work with landlords and developers to encourage investment into affordable housing projects, while simultaneously creating the incentives to do so. It is a complex situation that won’t easily be solved but without collaboration to address the need, it is clear that fewer options will be available. That doesn’t bode well for the future of many who are in desperate need and could end up without a safe and secure place to live.
Read More >>The second in our "Beyond the Bricks and Mortar" series with our Board of Advisors. We are joined by Bob Fredrickson, President of CBC Danforth in Washington State. Bob digs deep into the idea that Simplicity is genius in CRE. He talks about his approach to the business, how a new agent can find success early, and how seasoned agents can earn more business. Focusing on relatinonships and shifting your focus from what you have always done, to where the opportunity will be 2 years from now. A true professional in the field, tune in to hear Bob's wisdom and tactics to grow your business and skill.
Read More >>The second in our "Beyond the Bricks and Mortar" series with our Board of Advisors. We are joined by Bob Fredrickson, President of CBC Danforth in Washington State. Bob digs deep into the idea that Simplicity is genius in CRE. He talks about his approach to the business, how a new agent can find success early, and how seasoned agents can earn more business. Focusing on relatinonships and shifting your focus from what you have always done, to where the opportunity will be 2 years from now. A true professional in the field, tune in to hear Bob's wisdom and tactics to grow your business and skill.
Read More >>EVERETT, WASH. (Sept. 13, 2023) – Coldwell Banker Commercial Danforth recently completed the $14.7 million sale of an industrial park in Everett, Wash. The brokerage represented buyer Mina Properties VIII, one of its long-term investor clients. The seller was BFS Operations LLC.Occupying 31.6 acres at 3200 35th Ave. NE, the park consists of four buildings totaling 94,000 square feet. With easy access to both I-5 and SR 529, the location provides easy access to ports, cities, and towns along the I-5 corridor, only nine minutes from downtown Everett and 38 miles from Seattle.Broker Michael Fear said that Mina Properties VIII intends to maintain the property as a multi-tenant investment. The seller was BFS Operations LLC.“This property went into contract quickly after listing, with multiple local and national prospective buyers,” said Fear. “The size and proximity to a strong industrial market with highway, port, and railroad access made this property desirable.”For further information, contact commercial broker Michael Fear at mikef@medwardscre.com | 206-755-8856, or Bob Fredrickson, CCIM, president of Coldwell Banker Commercial Danforth, at bfredrickson@cbcworldwide.com | 206-595-7232.About Coldwell Banker Commercial AffiliatesColdwell Banker Commercial Danforth, an affiliate of Coldwell Banker Commercial®, provides commercial real estate solutions serving the needs of owners and occupiers in the leasing, acquisition, and disposition of all property types. With a collaborative network of independently owned and operated affiliates, the Coldwell Banker Commercial organization comprises almost 200 companies and more than 3,000 professionals throughout the U.S. and internationally. For additional information, visit www.cbcworldwide.com. Media Contact: Kevin GuhlEmail: kevin.guhl@cbhomeoffice.comPhone: 973-407-5916
Read More >>Numerous office buildings remain largely vacant. The once rapid growth of apartment rent has decelerated and is even declining in certain areas. However, within the struggling commercial real estate industry, there is a rare positive aspect seen in housing aimed at college students attending popular universities.The rental rates for student housing are anticipated to increase due to limited availability and substantial demand at various colleges, particularly those prestigious research universities and schools affiliated with the top five highest-earning athletic conferences in U.S. college football. Nonetheless, as overall college enrollment experiences a decline, there are heightened risks for student housing, particularly in smaller colleges with less renown and diminishing enrollment, as highlighted by The Wall Street Journal.Despite the increase in mortgage rates over the past year, sales of student housing properties reached an all-time high of $22.9 billion in 2022. In contrast, the growth in multifamily rents is showing signs of cooling down from the double-digit surges observed in the previous year, with an increase of 2.3% over the 12 months ending in May 2023, as reported by RealPage. Meanwhile, student housing rents are experiencing growth at a rate of approximately 9%, according to RealPage.The COVID-19 pandemic served as a unique test for the resilience of student housing in challenging markets. Despite expectations of a downturn in 2020, occupancy rates remained stable, even during the peak of online learning. Students displayed a desire to move closer to their college campuses, even when attending classes virtually, instead of staying with their parents. The uncertainty surrounding the return to on-campus learning had a dampening effect on rental rates until the latter half of 2021, at which point they began to rise again. The combination of bustling campuses and increasing rental rates contributed to the record sales observed last year.It is predicted that sales of student housing properties this year will likely not reach the levels seen in 2022, partly due to the pent-up demand that drove sales in the previous year. While the values of student housing properties, like other commercial real estate types, have been affected by higher borrowing costs, the decline in value has been comparatively moderate. This is attributed to the robust growth in rent and sustained occupancy rates. Industry experts, including Blackstone, have expressed confidence in the enduring strength of this sector, stating that it has proven resilient over time and is likely to remain a positive prospect in the future. Blackstone backed this up by acquiring American Campus Communities for $12.8 billion. While the market is challenging right now, it’s interesting to note the steadiness and success of student housing despite the market’s current volatility. Additionally, supply constraints resulting from a lack of available sites at certain schools will further empower landlords to continue raising rental rates.
Read More >>While the overall economy has proven to be resilient to interest rate increases, the gap between buyers and sellers on cap rates is still pretty significant, which has resulted in lower transaction volumes compared to the prior year. In conversations with Coldwell Banker Commercial professionals across the country, only a few markets are seeing sellers come down on pricing to meet buyers’ expectations and create deal terms that make sense in a higher interest rate environment. The majority of property owners prefer to hold on to their assets hoping for increased valuations over last year. Buyers are trying to put deals together but believe pricing should be 10-15% less than what sellers are asking for. Properties will move only if priced right, and even then, deals are slower to close (which is an improvement from the “no-decision” days of last year). While real estate is still a desired asset class, nervousness about timing is holding buyers back. A slowing domestic economy, rising interest rates with an uncertain end and the war in Ukraine has led many investors to park their money in risk-free bonds while they wait for values to come down. Cap rate spread over 10-year US treasury yields are below historic average spreads across all property types.
Population growth is key to investment activity in 2023While we are not officially in a recession, inflation is surging and real wage growth is negative. Despite two open jobs f or every one unemployed person, a shortage of labor is weighing down the U.S. economy today; labor is the critical issue above all else because you can’t grow despite demand if you can’t f ind workers to run the shop. This has culminated in slowing down CRE activity and uneven consumer spending across most of the U.S. during 3Q 2022. And now bank lending has paused as the Fed’s steep and frequent rate hike changes have made it very difficult to price a loan.All is not bad – the CRE market today is much healthier than in 2008-2009. Property owners are not overleveraged and have a lot of equity in their assets so can afford to wait for a reset. Commercial real estate is still a more desirable alternative to a volatile stock market and uncertainty in international economies.We are seeing gaps in the market between buyers and sellers and tenants that are uncertain about long- term space needs – CRE decision makers are pausing and terminating deals. There’s a big disconnect between buyer and seller expectations, as cap rates have moved up a lot (100-200bps on average) while sellers are not yet willing to accept price adjustments. Even though there are owners who want to offload property and buyers with cash to deploy, the uncertainty in the market is causing both sides to suspend any decision making. According to our industry experts, this period of “sitting on the sidelines” may last for 6-12 months as investors wait to understand pricing, interest rates and demand for commercial property assets. In the meantime, we will be in a period of def erring decisions, delaying loans and postponing deals.Exhibit 1: YoY Change in Real & Nominal Earnings and the Consumer Price IndexGrowth opportunities do exist. Sentiment is very strong in markets experiencing an influx of working- age people and big corporate relocations/expansions (e.g., Arizona, Florida, Texas). Business-friendly policies (aggressive tax credits and increased access to capital) and a much lower cost of living (compared to metros like San Francisco and NYC), are attracting excellent labor pools, big corporate growth (f rom semiconductors to hospitality & entertainment), and record numbers of entrepreneurs opening businesses. Suppliers to big companies have been relocating in droves to support the construction of megaprojects. Developments that were planned for these markets are all still taking place – with no signs of a slowdown. Investors are taking note and continuing to pay premiums for this growth. Our commercial professionals expect megaprojects to attract more suppliers and people (particularly Gen X and Millennials) to these markets over the next year, which in turn should keep driving demand for industrial, multifamily and retail in these markets.Exhibit 2: Top 10 States for Population Growth: 2021 to 2022Source: U.S. Census Bureau.For the other markets, there are pockets of opportunity – you just have to find them. While most sellers are opting to wait it out, owners that are overleveraged or have lots of vacancies will discount and put property up for sale because they need to offload it. Some owners have turned to sale-leasebacks (to generate more free cash to operate the business) and seller-financing (to get the deal done).Exhibit 3: Q3 2022 CRE Sales Volume vs. Average Investment – Top MarketsSource: CoStar (data through November 2022).Office remains bifurcated. Smaller markets and smaller buildings continue to see a lot of activity, while downtown high-rise demand keeps softening. Work-from-home is a permanent change, so people with 30 minute commutes or document processing desk jobs are not returning to the office. This could force a lot of companies to downsize their space requirements. Office leases are long-term commitments and there’s a lot of uncertainty today as businesses struggle to determine the best way to reconfigure their space to attract workers back to the office or adjust to lower in-office headcount. Low-rise and midsize buildings are seeing good activity because landlords have been approaching tenants nine months in advance and offering better amenities (like new paint and carpet cleaning). The greatest demand is coming f rom biotech, lif e sciences, R&D labs, investment banking & trading, medical doctors, and school districts. We are also seeing retailers (that provide services you can’t get online: hair salons, massage therapists, facial spas, homecare, food packaging) moving into office condos because it’s cheaper than traditional retail space.High-rise building cap rates are staggeringly high with vacancies well over 20%. Landlords are keeping asking rents high but giving out free rent and more TI allowances. Sublease space may continue to flood the market as tenants decide to adjust occupancy to current needs or mitigate the risk of long-term space commitments vis-à-vis an unknown in-office work force. Property owners may be challenged to lock-in tenants as leases expire over the next 24 months. Our commercial professionals expect to see the most impact on downtown office properties over the next two years as well as a lot of lease term restructuring and short-term leases (one to three years). With lower market-adjusted rents, well located modern Class A properties may be able to benefit from tenants moving up to higher quality properties at affordable lease rates.A tenant’s market. Over the last quarter we’ve seen landlords getting more and more nervous about where their next tenant will come f rom – setting up the stage nicely for tenants to have the upper hand in negotiations in 2023. While this is a great opportunity f or occupiers to take advantage of a slowing landlord market, the tenant still needs to have strong cash flows.Exhibit 4: Office Sector Net Absorption – Top MarketsSource: CoStar (data through November 2022)Industrial still doing very well – driven by retail demand (logistics; 3PL; distribution centers; and food companies). Vacancies in some markets are up to 1.5% f rom 0%. Demand is coming from everywhere: small mom & pop shops that need to store inventory for the first time; new businesses entering the market; and large companies looking for dropshipping storage and more parking space. Bigger metros (like Seattle and Las Vegas) are beginning to see developers slowing down and prices starting to come down to a more reasonable pace as users choose to wait for rates to come down. Even if industrial demand slows, increased space availability may help return markets to historical norms.Exhibit 5: Industrial Rent Growth, Top Markets // Exhibit 6: Retail Rent Growth, Top MarketsRetail is in high demand across all markets. Neighborhood centers are filled with small, less leveraged local businesses looking to expand (e.g., boutiques; tap rooms; coffee shops; ice cream parlors; gyms; exercise shops; small bank branches; independent pharmacies). Strip malls are focused on getting really good anchors (grocery; restaurants; hair & nail salons; bubble tea shops). Malls are pivoting to experiential and service-driven tenants – replacing Macy’s with f un houses for adults, kids’ playgrounds, sit-down restaurants, medical spas, and co-working space. Every landlord wants a salon in their center and all developers want a gym tenant on their property. Other spaces in the mall are turning into “pop-up” shops. Uncertainty and concern on the landlord side is enabling whatever concepts are doing well to win space (even if they are not the traditional type of tenant).Urgent cares keep medtail in high demand. Walgreens is accelerating plans to go into the urgent care business by creating standalone centers in addition to carving out space inside their stores. AdventHealth, University of Florida, Cleveland and the Mayo Clinics are all competing now to have urgent cares brought into their neighborhoods. At the same time, big hospital operators (like HCA) are building standalone ER spaces within 20 minutes of their hospitals across Florida. Aggressive expansion of "local" point of care locations are quickly taking up spots in neighborhood shopping centers, standalone retail boxes (ER), and inside grocery stores.Multifamily is slowing down. After years of strong double-digit rent growth, we are now seeing condensing family units (in response to the steep rise in the cost of living and recession f ears) creating more vacancies in the market. Many homebuilders are worried about the impact of further rate hikes (as they navigate a challenging bank financing, construction cost, and labor shortage environment), so they are temporarily stepping back from building new product. Many builders are offering free rent concessions just to get occupants in the building. Our commercial professionals expect to see increased rent concessions and slow rent growth over the next year.Exhibit 7: Multifamily Rent Growth, by MarketSource: CoStar (data through November 2022).Note: Includes markets with 75,000+ units inventory.Are property conversions happening? It’s a mixed bag. Big box retail spaces are being converted to storage, indoor kids playgrounds and climate controlled warehouses. Hotels are being converted to affordable housing. Outlets and big malls are being converted into multifamily and entertainment town centers. Boat storage and truck parking spaces are also in high demand. Converting high-rise offices to multifamily is much harder and a longer-term process (as you need to make sure it's zoned for that new use) and will likely require the building owner to sell at a loss. When this happens it’s not a cap rate deal, it’s a completely different acquisition model – it’s done because there is no other choice. Our commercial professionals expect to see a rise in this type of activityConclusion. As many CRE investors sit on the sidelines waiting for interest rates to stabilize, all-cash buyers and 1031 exchanges have been driving the bulk of activity today. While the universe of investors willing to put up all equity is not big, there are enough out there and if you can find this type of buyer, it’s very advantageous for a seller because it takes the guesswork out of whether or not the deal will close quickly and easily. Notably, all-cash buyers have been paying for cap rates that are much lower than current borrowing costs. 1031 exchange investors are also in the market to buy today (and willing to pay a premium) – however, preferences have been for high population growth markets. As such, our industry experts expect deal f low over the next six to nine months to slowdown. Over time the difference in pricing expectations between buyers and sellers should narrow; rates will have to come down. In the meantime, property owners should focus on preparing product now (to be ready to release in the middle of 2023) and investors just need to pick their spots and ride out this next year.Jane Thorn Leeson is a Research & Resources Analyst with Coldwell Banker Commercial. Coldwell Banker Commercial®, provides commercial real estate solutions serving the needs of owners and occupiers in the leasing, acquisition and disposition of all property types. With a collaborative network of independently owned and operated affiliates, the Coldwell Banker Commercial organization comprises almost 200 companies and more than 3,000 professionals throughout the U.S. and internationally. Updated: January 24, 2023
Following record-highs from 2021, commercial real estate activity has remained elevated in 2022 – led by multifamily
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The second in our "Beyond the Bricks and Mortar" series with our Board of Advisors. We are joined by Bob Fredrickson, President of CBC Danforth in Washington State. Bob digs deep into the idea that Simplicity is genius in CRE. He talks about his approach to the business, how a new agent can find success early, and how seasoned agents can earn more business. Focusing on relatinonships and shifting your focus from what you have always done, to where the opportunity will be 2 years from now. A true professional in the field, tune in to hear Bob's wisdom and tactics to grow your business and skill.
The second in our "Beyond the Bricks and Mortar" series with our Board of Advisors. We are joined by Bob Fredrickson, President of CBC Danforth in Washington State. Bob digs deep into the idea that Simplicity is genius in CRE. He talks about his approach to the business, how a new agent can find success early, and how seasoned agents can earn more business. Focusing on relatinonships and shifting your focus from what you have always done, to where the opportunity will be 2 years from now. A true professional in the field, tune in to hear Bob's wisdom and tactics to grow your business and skill.
On this episode with Dan Spiegel, Managing Director of Coldwell Banker Commercial, we discuss that even though there are concerns over the economy and differences in pricing expectations, CRE activity is still happening, while we dig into CBC’s newly published Midyear Outlook.