Tuesday, November 29 2011
The following is the text from the NAR’s quarterly commercial real estate forecast release.
Growth in Commercial Real Estate Markets Expected in 2012
Commercial real estate markets have been relatively flat this year, but improving fundamentals mean a more positive trend is expected in 2012, according to the National Association of Realtors.
Lawrence Yun, NAR chief economist, said there is little change in most of the commercial market sectors. “Vacancy rates are flat, leasing is soft and concessions continue to make it a tenant’s market,” he said. “However, with modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year.”
The commercial real estate market is expected to follow the general economy. “Vacancy rates are expected to trend lower and rents should rise modestly next year. In the multifamily market, which already has the tightest vacancy rates in any commercial sector, apartment rents will be rising at faster rates in most of the country next year. If new multifamily construction doesn’t ramp up, rent growth could potentially approach 7 percent over the next two years,” Yun said.
Looking at commercial vacancy rates from the fourth quarter of this year to the fourth quarter of 2012, NAR forecasts vacancies to decline 0.6 percentage point in the office sector, 0.4 point in industrial real estate, 0.8 point in the retail sector and 0.7 percentage point in the multifamily rental market.
The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, an attitudinal survey of 231 local market experts,1 shows the broad industrial and office markets were relatively flat in the third quarter, in step with macroeconomic trends. The national economy continues to affect the sectors, with 92 percent of respondents reporting the economy is having a negative impact on their local market.
Even so, the SIOR index, measuring the impact of 10 variables, rose 0.6 percentage point to 55.5 in the third quarter, following a decline of 2.6 percentage points in the second quarter. In a split from the recent past, the industrial sector advanced while the office sector declined.
The SIOR index is notably below the level of 100 that represents a balanced marketplace, but had seen six consecutive quarterly improvements before the last two quarters. The last time the index reached the 100 level was in the third quarter of 2007.
Construction activity remains low, with 96 percent of respondents indicating that it is lower than normal; 88 percent said it is a buyers’ market in terms of development acquisitions. Prices are below construction costs in 83 percent of markets.
NAR’s latest COMMERCIAL REAL ESTATE OUTLOOK offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.
Vacancy rates in the office sector are expected to fall from 16.7 percent in the current quarter to 16.1 percent in the fourth quarter of 2012.
The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.3 percent; New York City, at 10.3 percent; and New Orleans, 12.8 percent. After rising 1.4 percent in 2011, office rents are forecast to increase another 1.7 percent next year. Net absorption ofoffice space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is projected to be 20.2 million square feet this year and 31.7 million in 2012.
Industrial vacancy rates are projected to decline from 12.3 percent in the fourth quarter of this year to 11.7 percent in the fourth quarter of 2012.
The areas with the lowest industrial vacancy rates currently areLos Angeles, with a vacancy rate of 5.2 percent; Orange County, Calif., 5.7 percent; and Miami at 8.4 percent.
Annual industrial rent should decline 0.5 percent this year before rising 1.8 percent in 2012. Net absorption of industrial space nationally should be 62.0 million square feet this year and 41.2 million in 2012.
Retail vacancy rates are likely to decline from 12.6 percent in the current quarter to 11.8 percent in the fourth quarter of 2012.
Average retail rent is seen to decline 0.2 percent this year, and then rise 0.7 percent in 2012. Net absorption of retail space is seen at 1.2 million square feet this year and 13.5 million in 2012.
The apartment rental market - multifamily housing - is expected to see vacancy rates drop from 5.0 percent in the fourth quarter to 4.3 percent in the fourth quarter of 2012; multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand justifying higher rents.
Average apartment rent is projected to rise 2.5 percent this year and another 3.5 percent in 2012. Multifamily net absorption is likely to be 238,400 units this year and 126,600 in 2012.
The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the commercial community. NAR’s Commercial Division, formed in 1990, provides targeted products and services to meet the needs of the commercial market and constituency within NAR.
The NAR commercial components include commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and the NAR commercial affiliate organizations - CCIM Institute, Institute of Real Estate Management, Realtors Land Institute, Society of Industrial and Office Realtors, and Counselors of Real Estate.
Approximately 79,000 NAR and institute affiliate members specialize in commercial brokerage services, and an additional 171,000 members offer commercial real estate as a secondary business.
The next commercial real estate forecast and quarterly market report will be released on February 24.
SOURCE: National Association of Realtorshttp://www.realtor.org/Research.nsf/Pages/commercialhome
Friday, March 26 2010
An Arizona-based real estate investment trust says it has completed the purchase of a five building medical office portfolio in Evansville and Newburgh for $45.2 million. Healthcare Trust of America Inc. acquired 260,500 square-feet of space currently leased to Deaconess Clinic Inc. The buildings are located near the Deaconess Hospital campus.
Healthcare Trust of America, Inc. ("HTA"), a self-managed, non-traded, real estate investment trust, announced the completed purchase of a five building medical office portfolio located in Evansville and Newburgh, Indiana for $45,256,500.
The approximately 260,500 square foot portfolio is 100% master-leased to Deaconess Clinic, Inc., an affiliate of Deaconess Health System, Inc. Deaconess Clinic, Inc. is comprised of 110 primary care and specialty physicians. The buildings are positioned in strategic locations and are adjacent to a hospital or clinic campus. The neighboring hospitals include Deaconess Hospital, a 365-bed acute care teaching hospital, and Deaconess Gateway Hospital, a new six story facility with 116 beds. Deaconess Health System, Inc. guarantees the leases on all five buildings, carries an A+ rating from both Standard & Poor's and Fitch and is the largest health system in Southern Indiana.
"The Deaconess Portfolio provides us with the opportunity to own core real estate assets essential to the healthcare delivery model in Southern Indiana," stated Mark D. Engstrom, Executive Vice President – Acquisitions. "This portfolio is consistent with the new era of healthcare which involves hospitals and physicians working together in new ways to meet the needs of their communities."
"We are impressed with the strength and quality of the Deaconess Health System. The acquisition of the Deaconess portfolio is consistent with our strategy of acquiring high quality and strategically located assets, with high quality tenants," said Scott D. Peters, Chief Executive Officer and President of HTA. "We believe these assets will have a positive accretive impact on our portfolio."
For more information on Healthcare Trust of America, Inc. and to download the current prospectus, please visit www.htareit.com.
About Healthcare Trust of America, Inc.
Healthcare Trust of America, Inc. is a self-managed, publicly registered, non-traded, real estate investment trust. Since September 2009, when HTA completed its transition to self management, it has acquired approximately $492 million in medical office and healthcare-related assets. These assets include a total of 12 acquisitions and one other real estate-related asset, representing approximately 2.3 million square feet. Since its formation in 2006, HTA has made 56 geographically diverse acquisitions valued at approximately $1.54 billion based on purchase price, which includes 187 buildings and two other real estate-related assets. HTA's portfolio totals approximately 7.8 million square feet, and includes 168 medical office buildings, six hospitals, nine skilled nursing and assisted living facilities and four other office buildings located in 21 states.
Source: Healthcare Trust of America Inc.