90 North Finds Value in Suburban Office Markets

90 North Finds Value in Suburban Office Markets

February 2016

90 North Real Estate Partners made big news this week with its purchase of the Saint-Gobain North American headquarters in suburban Philadelphia. The $123 million purchase was made with investment partner Arzan Wealth.

Saint Gobain 2

The move continued a strategy 90 North has favored since it opened its Chicago-based North American headquarters in 2014: Target safe, long-term investments in strong office markets. More often than not, that strategy has led 90 North to focus its attention on the suburbs.

90 North is now in suburban Philadelphia, and its growing U.S. portfolio also includes the following properties:

  • A 351,425-SF, Class A office building in Deer Park, Illinois, leased long-term to Continental Automotive Systems, Inc.
  • A 175,155-SF, Class A office building in Denver that houses the FBI headquarters for Colorado and Wyoming
  • The 67-acre Lenovo Enterprise Campus in the Research Triangle Park, Raleigh, North Carolina. The two-building, 450,000 SF complex is fully leased long-term to Lenovo’s Global Server division
ReserveOpenHouse-002(1)

The Reserve at Deer Park, purchased by 90 North in 2014

All three properties have strong tenants that will allow 90 North to safely weather any economic downturn. The Saint-Gobain property had the added bonus of a strong international tenant that had recently signed a long term lease and spent millions renovating their complex– very good signs for any investor.

As Daniel Cooper, partner and head of North America for 90 North, told GlobeSt.com this week, “The point we’re trying to make is that the suburbs are not dead.”

Retail Sales Still on the Rise Early in 2016

Retail Sales Still on the Rise Early in 2016

February 2016Retail sales

When it comes to shopping, U.S. consumers aren’t being swayed by snow, nor rain, nor … well, you get the idea.

The month of January brought bad weather for much of the country. But that didn’t stop consumers from heading to brick-and-mortar stores or online retailers in droves. The fact that overall retail sales grew in January is remarkable considering the volatility in global markets and overseas economies. The rise in retail sales is in line with other indicators of growing economic strength.

Still, it’s a small sample size, right? Well, last month actually stands as part of a greater trend. Total retail sales jumped 3.4 percent over the 12 months that ended Jan. 31, according to research by Marcus & Millichap.

There are two factors most responsible for the growth:

  • The price of gas is low enough that consumers find themselves with more money to spend.
  • Consumers have proven themselves willing to spend that money.

Spending in categories like food and drink (as well as more frivolous pursuits) is up across the board over the last 12 months. Further evidence of consumer confidence comes in the form of a rise in sales on larger, long-lasting items. Building materials and furniture sales rose over the past 12 months. Marcus & Millichap projects U.S. retail vacancy to drop 30 basis points to 5.9 percent in 2016.

It appears consumers are taking advantage of stable employment outlook and loosening up a bit. That’s great news for retail sales.

90 North Buys $123M Saint-Gobain Campus in Philadelphia

90 North Buys $123M Saint-Gobain Campus in Philadelphia

February 2016

Saint-GobainThe Wall Street Journal has the latest on Open Slate client 90 North Real Estate Partners and its $123M acquisition near Philadelphia. Based in the UK, 90 North is known for its deep understanding of the global investment market and focus on stability and long-term value.

The 320K SF, two-building campus includes office and research and development space. 90 North and a unit of Arzan Financial Group of Kuwait bought the 65-acre campus in Malvern, PA, outside Philadelphia. Dan Cooper, head of North America for 90 North, had this to say about their strategy for buying the Saint-Gobain corporate HQ:

“We look for assets that can weather any industry or market cycle” — As global investors, 90 North looks at properties in the US and abroad and is drawn by assets that have the security of strong tenancy and the stability that the US market affords. “At the end of the day, we need to know that the asset will perform well and can weather any cycle or market downturn,” Cooper says. “When you have a tenant that has committed millions of dollars into renovating a building and then signs a long term lease, that’s what helps us sleep at night.”

Saint Gobain 2“It is a validation that suburban marketplaces remain extremely viable — The Saint-Gobain campus is 30 minutes outside of Philadelphia and is a sizable campus within a submarket known as the High Tech Corridor. With immediate access to the entire area—including downtown Philadelphia, the submarket is home to numerous innovative technology, medical, and pharmaceutical firms as well as excellent schools and residential neighborhoods.

“This type of scenario is playing out in many cities across the country,” Cooper says. “We saw it in Raleigh when we purchased the Lenovo Campus last year and we see it in cities such as Austin, Denver, Chicago, Atlanta and Dallas.”

Check out the Wall Street Journal story here.

Economy Experts Talk Rough January and Outlook for CRE

Economy Experts Talk Rough January and Outlook for CRE

February 2016

If you pay any attention to the global economy, you know January wasn’t a ton of fun.

But still, it was just one month. Can it really say anything about the future of the commercial real estate market in the United States? Bisnow.com got the opinions of six top economists, and as you might expect, those opinions vary.

Economy

Stockbrokers struggled through the worst January since 2009 this year.

Some cautioned against paying too much attention to the market (and the resulting bluster from politicians and cable news). Others predicted pain in the short-term but economic success in the long-term. The general feeling seemed to be: “Be patient, we’ve seen this before.”

Here are the highlights:

  • Robert Bach, director of research – Americas for Newmark Grubb Knight Frank: Bach confessed some angst, but told Bisnow, “If the economy muddles through, so will commercial real estate.”
  • Ray Torto, Harvard lecturer and former global chief economist at CBRE: Torto predicts a positive long-term outlook for CRE and pins the blame for short-term struggles on factors like low oil prices and China’s drooping stock market. “Hope is not a tactic to pursue right now,” he told Bisnow. “Implement careful planning and executions.”
  • George Ratiu, director of quantitative and commercial research for the National Association of Realtors: Have no fear; the CRE market has seen this before (and recently, too). “Looking at the post-recession recovery, we’ve had other periods of volatility … which had minimal impact on CRE performance,” Ratiu told Bisnow.
  • Jack G. Kern, director – research and publications for Yardi: Kern says CRE is naturally affected by global stock markets, but doesn’t see an issue as long as proper precautions are taken. “Properties bought based on solid underwriting and reasonable fundamentals will continue to do fine,” he told Bisnow. “Those acquired without recognizing the risks properly will be back on the market soon enough.”
  • Victor Calanog, chief economist at Reis: Calanog isn’t expecting 2016 to mimic last year. “Property fundamentals rocked 2015, but we expect 2016 to be a bit rockier,” he told Bisnow.

With January (thankfully) in the rearview mirror, this CRE topic will be worth monitoring as we wait to see if the global economy improves.

Multifamily Market Draws Optimism From Freddie Mac

Multifamily Market Draws Optimism From Freddie Mac

February 2016

The year 2015 is one that multifamily investors will remember fondly.Multifamily

Higher-than-expected demand helped absorb most of the rental supply, keeping vacancy rates low. Meanwhile, rent continued to rise in many markets. Experts are split as to what investors should expect from multifamily in 2016. But Freddie Mac struck a cautiously optimistic tone in its newest Multifamily Outlook 2016 report.

Freddie Mac based its outlook on continued economic growth and the following key drivers:

  • Strength in the job market
  • Reduced affordability of owning a home

So, more people have jobs, and fewer people can afford to own homes. That makes renting an attractive option, especially in metropolitan markets.

Multifamily

Freddie Mac is cautiously optimistic about the multifamily market.

Freddie Mac does expect growth rates to moderate in 2016, but not as much as the more dire projections indicate. Relatively low vacancy rates in most markets will contribute to rent growth in the year ahead.

You might ask why Freddie Mac is being cautious. Well, it admits that turmoil in the financial markets is a cause for some concern. Still, it’s not nearly enough for Freddie Mac to be scared of the multifamily market anytime soon.

Read more about Freddie Mac’s multifamily outlook from Multi-Housing News.

Ryan Companies Closes on Land in Prime Chicago Suburb

Ryan Companies Closes on Land in Prime Chicago Suburb

February 2016

Ryan Companies

The office market in Oak Brook is in high demand.

Ryan Companies is making a splash in a highly valued suburban Chicago office market.

GlobeSt.com has all the details of the Minneapolis-based CRE firm’s purchase of 11 acres at the I-88/I-294 interchange in Oak Brook. Plans call for a combined office and medical campus complete with structured parking.

As Tim Hennelly, president of Ryan’s Great Lakes region, told GlobeSt., “This acquisition continues our strategic approach for Ryan to be a leader in delivering complex, signature developments in proven markets and asset classes throughout the Chicago metropolitan area.”

Location is a key part of the transaction, which proves there are still strong suburban markets capable of attracting development. Vacancy rates for class A properties in Oak Brook are low (per NAI Hiffman’s year-end office market report), making the type of office space Ryan plans to develop extremely attractive.

Midwest Update: 18-Hour Cities and Top CRE News

Midwest Update: 18-Hour Cities and Top CRE News

February 2016

From continued optimism regarding 18-hour cities to an app that bills itself as real estate’s answer to online dating, here’s a quick look at some of the top CRE news from this week:

Top CRE news

Photo via NREI Online.

  • Suburban Pricing on the Rise — Want to invest in the downtown area of a top suburb? You’re probably going to pay for it. Investors are paying higher-than-average prices for the best suburban properties, recognizing that proximity to jobs, amenities and transit make them attractive options. Millennials and older baby boomers are responsible for driving the trend. (NREI Online)
  • Investment Outlook — Is there such a thing as too much buying in the world of commercial real estate? At least one expert asked himself that question after reviewing the Colliers International Global Real Estate Outlook report, which found that more than half of the 600 investors it surveyed plan to increase their allocation to real estate in 2016. (Real Money)
  • Listing Option for Small Tenants — If you’re a small tenant who has wished finding office spaces was as easy as ordering a cab or setting up an online date, meet Crelow, a Minneapolis-based tech app. CEO and co-founder Jim Simpson described Crelow as “an eHarmony or Uber or Priceline.com for office space.” There are no listings on Crelow. Instead, the tenant lists information about itself and hopes to make a great impression to attract landlords. (San Jose Mercury News)
Ship-to-Store Strategy Gains Popularity Among Retailers

Ship-to-Store Strategy Gains Popularity Among Retailers

ship-to-store

February 2016

Buy it online. Pick it up in the store. This new twist on e-commerce is taking hold with many retailers, but is it working? A new report from Retails Systems Research/SPS Commerce reveals that a growing number of retailers — including giants like Walmart, Lowes, Home Depot and Target — are offering customers a buy online, pickup in the store service.

According to the report — reviewed by Bisnow here — 61 percent of retailers offered a ship-to-store option as of September of 2015. That’s an even larger majority than the 53 percent of retailers who offer a 2-day delivery fulfillment option.

For retailers, the benefit of this strategy is twofold. The shipping fees for delivery of online purchases can be enormous, even for high-volume retailers. A ship-to-store option can bring those expenses down. It also gets customers in the door of a brick-and-mortar store, where they are more likely to make impulse buys.

Consumers appear to be warming up to the idea. A survey by UPS found that 38 percent of shoppers will now choose a ship-to-store option. That’s an uptick of 3 percent from 2014, with the potential to grow even more in the years ahead.

The Dangers of Ship-to-Store

Ship-to-storeThe Ship-to-store strategy is not foolproof, however.

Just last year, a JDA Software Group Inc. survey of more than 1,000 U.S.-based online shoppers revealed some troubling numbers. Of the 35 percent who opted for a ship-to-store option in the previous year, 50 percent reported having problems retrieving their purchases.

This approach only works if it is convenient enough that it doesn’t drive customers away. The ship-to-store strategy can be an excellent tool, but only if the stores are staffed to handle the additional volume.

The Top Commercials From the Super Bowl

The Top Commercials From the Super Bowl

No disrespect to Peyton Manning and the champion Denver Broncos, but everyone knows the commercials are the star of Super Bowl Sunday. There was a lot of variety, with Amazon making its Super Bowl debut, Mountain Dew causing a stir online and a series of real estate commercials.

These commercials represent a significant financial investment — it’s been reported that CBS set its base rate for 30-second advertisement at $5 million — so we rounded up the best of the bunch. What’s your favorite?

Amazon

Amazon produced one of the most talked-about commercials of the night, packing in the star power with Alec Baldwin, Dan Marino, Missy Elliot and Jason Schwartzman. The spot also starred the Amazon Echo, a product that can “stream music, order things and … turn on the lights.” And as a bonus, viewers got to see Baldwin lob insults at Marino. National treasure, indeed.

Quicken Loans

The mission: Make getting a mortgage sound cool. Quicken Loans aimed at younger homebuyers with this 60-second commercial for its new Rocket Mortgage phone app. “What if we did for mortgages what the Internet did for buying music, plane tickets and shoes?” the lender asks. The central thesis is that a boost in home buying — brought on by the simplicity of the Quicken Loans app, of course — will strengthen other sectors of the American economy.

Mountain Dew

Puppy. Monkey. Baby. This commercial was, frankly, terrifying. But it did get people talking. Of course they were mostly talking about the Puppy Monkey Baby and not the product, which was Mountain Dew (in case you didn’t notice).

Apartments.com

Here’s one for the multifamily crowd. Actor Jeff Goldbloom returns in the latest installment of this well-known ad campaign for the online apartment listing service Apartments.com. In this commercial, Goldbloom’s Brad Bellflower plays the piano and sings “Movin’ On Up,” the theme song from the TV show “The Jeffersons,” as he’s being raised (by crane) up the side of an apartment building. At one point, he even meets George and Weezy … just not the George and Weezy you’re probably expecting.

Realtor.com

Actress Elizabeth Banks stopped by to remind you that if you don’t use Realtor.com‘s app, you don’t like “sunshine, three-day weekends or puppies.” Shame on you.

Denver Hot Spots for Watching the Super Bowl

Denver Hot Spots for Watching the Super Bowl

February 2016

DenverWith the price of a Super Bowl ticket starting around $3,000, the average football fan won’t be able to make it to Levi’s Stadium in San Francisco on Sunday.

So what’s a Denver Broncos fan to do? Bisnow has a nice rundown of the top seven Denver bars where fans can watch the Broncos and Panthers face off.

The list starts with Diebolt Brewing — home of the $16 pitcher and $1 hot dog — and only gets better from there, with spots like Elway’s, Sports Column and more. Check it out!

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