We're back with our popular "Two for Tuesday PLUS" edition providing education for you about relevant issues. Here's our list of things YOU should know about:
PLEASE NOTE: The City’ s submittal portal Accela Citizen Access (ACA) will be “under construction” on Thursday, June 1st thru Sunday, June 4th. ACA will re-open on Monday, June 5th. CLT Development Center
Rob Nanfelt, Executive Director of REBIC, take: Anything that can be done to smooth out the process and provide more certainty is a positive. We appreciate staff taking the initiative on this. The additional reviews that will come with the new stormwater and tree requirements will be where some delays are inevitable - probably as much as 5 to 7 business days. It will take some time to get this right.Originally published on May 30, 2023, by Jennifer Lefurgy, Ph.D. for NAIOP.
The NAIOP Research Foundation, as part of its Industry Trends meeting, recently hosted a panel discussion on what’s next for the office sector. Analysts from leading service firms joined NAIOP Research Foundation Governors and office developers Greg Fuller, president and COO, Granite Properties and Paul Ciminelli, president and CEO, Ciminelli Development, to discuss problems and potential opportunities. The panelists agreed that the sector will undergo a shakeout that will include transformation, streamlining, new approaches to work and holistic solutions.
Remote work and economic headwinds have created a negative demand shock in the office sector and a temporarily “broken” market that has not yet reached stability. Before the pandemic, office workspaces were densifying, with less square footage assigned per employee. Remote work and downsizing accelerated this trend, with tenants now needing less space per employee. Although office-using employment has rebounded from the brief pandemic-induced recession, office space demand has declined sharply. Phil Mobley, national director of office analytics at CoStar, estimated that the gap between office-using employment and previously expected demand could be as much as 400 million square feet. As supply continues to come online, vacancy rates will continue to climb over the next three years with negative absorption levels higher than during the Great Financial Recession.
Originally published on May 25, 2023, by Jim Fraser for NAIOP.
A recent report from the American Institute of Architects shows that nonresidential construction spending is expected to slow to a growth rate of 5.8% in 2023 (down from 10% in 2022) and then fall to a mere 1% growth rate in 2024. Recent years brought new stresses on the industry – COVID-19 shutdowns, supply chain woes, labor shortages and bank failures have slowed projects or put them entirely on hold.
Associated Builders and Contractors predicts that the construction industry will need to attract more than 500,000 extra workers in 2023 – on top of the normal pace of hiring – to meet labor demand. Real estate valuations are softening and have negatively adjusted in many markets as well. In Los Angeles, for instance, office building valuations declined by 40% in the first two months of the year, according to data from Yardi Matrix.
At the same time, the cost of capital has risen considerably. Starting in March 2022, the Federal Reserve began hiking interest rates to quell inflation, which hit the highest level seen in four decades in late 2022. While the Fed’s efforts appear to have slowed inflation, a number of macroeconomic factors suggest a rough patch still lies ahead for the economy. This includes volatility in the bond markets and turbulence in the banking sector. Silicon Valley Bank’s failure in March was the largest since the Great Recession. Signature Bank shuttered days later, and Credit Suisse was swallowed up by a rival in the wake of its struggles. In turn, economists are seeing a pullback in bank lending — a trend that will affect commercial construction in the months ahead.
Originally published on May 23, 2023, by Shawn Moura Ph.D., for NAIOP.
NAIOP National Forums members attending last week’s annual Symposium had the opportunity to tour several projects in the office and life science markets in East Cambridge, Somerville and the greater Boston market. The tour, led by Rob Dickey, Executive Vice President at Leggat McCall Properties (LMP), included site visits to two mixed-use projects that are currently under development.
East Cambridge is a central hub for life science and technology firms in the Boston area, with 8.0 million square feet of office space and 8.6 million square feet of lab space, and an additional 3.6 million square feet of office and lab space currently under development. The market enjoys low direct vacancy rates (2.9% for office, 1.8% for lab) and high rents ($102 gross per square foot asking rent for office space, $116 triple net lease asking rent for lab space, according to JLL). Prominent organizations in the area include MIT, Sanofi, Moderna, Novartis, Eli Lilly, Google, Apple, IBM, Microsoft and Biogen.
Originally published on May 19, 2023, by Kathryn Hamilton, CAE for NAIOP.
Opening with an image of a sailboat, National Forums Symposium keynote Heidi Learner said the photo captures the whipsaw tone of economic news today, with sudden shifts in unexpected directions.
Learner is head of innovation with Altus Labs and spoke to 800+ NAIOP National Forums members during their annual meeting this week in Boston. Here are some key takeaways from her remarks:
Originally published on May 19, 2023, by Kathryn Hamilton, CAE for NAIOP.
The Boston seaport has been continually reshaped since the 1800s, devolving from what was once a thriving area of commerce to acres of muddy parking lots and a few restaurants. Today, it is being reimagined again in a rapid and remarkable transformation that includes soaring office and lab towers, high-end residential, and all the retail services you could imagine.
Members of NAIOP’s National Forums toured two components of the seaport during their annual Symposium this week in Boston, hearing from the developers, investors and advisors shaping the site today.
Boston Global Investors is a leading partner and developer of Seaport Square, a 6.3 million square foot urban revitalization and the city’s largest master-planned community to date. Kevin Benedix, chief operating officer and chief financial officer, walked Forums members through the history of the project, its inspiration, and how it’s continued to evolve.
Originally published on May 19, 2023, by Kathryn Hamilton for NAIOP.
Opening with an image of a sailboat, National Forums Symposium keynote Heidi Learner said the photo captures the whipsaw tone of economic news today, with sudden shifts in unexpected directions.
Learner is head of innovation with Altus Labs and spoke to 800+ NAIOP National Forums members this week during their annual meeting in Boston. Here are some key takeaways from her remarks:
Originally published on May 11, 2023, by Brielle Scott for NAIOP.
California’s Title 24, the state’s energy code, has required solar for all low-rise multifamily projects since 2016, but new provisions have gone into effect this year, impacting any projects permitted since Jan. 1, 2023.
To help navigate the regulatory landscape and explain how solar and energy storage can benefit building owners and developers, Rachel McCafferty, director of business development for CalSolar Inc., shared her expertise during a NAIOP webinar on the topic.
“The solar requirement has been extended to not just multifamily projects but to all commercial and industrial new construction in California,” McCafferty explained.
Originally published on May 19, 2023, by Kathryn Hamilton for NAIOP.
The Boston seaport has been continually reshaped since the 1800s, devolving from what was once a thriving area of commerce to acres of muddy parking lots and a few restaurants. Today, it is being reimagined again in a rapid and remarkable transformation that includes soaring office and lab towers, high-end residential, and all the retail services you could imagine.
Members of NAIOP’s National Forums toured two components of the seaport during their annual Symposium this week in Boston, hearing from the developers, investors and advisors shaping the site today.
Boston Global Investors is a leading partner and developer of Seaport Square, a 6.3 million square foot urban revitalization and the city’s largest master-planned community to date. Kevin Benedix, chief operating officer and chief financial officer, walked Forums members through the history of the project, its inspiration, and how it’s continued to evolve.
Originally published by Adam Roth for the Spring 2023 Issue of NAIOP Development Magazine.
A recent Q&A in the Wall Street Journal with Marie-Christine Lombard, CEO of international freight-forwarding firm Geodis SA, includes a comment that sums up the current state of the global logistics industry: “The entire supply chain is being rethought and recalibrated and re-costed.”
Lombard is correct. Risk is being assessed differently and the supply chain is changing, which means industrial real estate will follow.
For example, when transportation costs 10 times more than rent, transportation will dictate site selection. It is far and away the biggest determining factor that goes into where companies locate industrial real estate. Specifically, there is a concept called the “Rule of 1.5,” which is defined as whatever affects transportation will impact industrial real estate a year and a half later.
Originally published by Matthew Goelzer and Maribel Barba for the Spring 2023 Issue of NAIOP Development Magazine.
Imagine playing soccer or shooting hoops on the outskirts of Mexico City while atop a 524,549-square-foot Costco Wholesale project. Built on a landfill, this unique retail warehouse, parking structure and loading bay is almost completely hidden from public view.
In addition to the soccer field and basketball courts, the Costco also houses a children’s roller park and a green roof, which are designed to meld into the neighboring landscapes and serve the community. A pedestrian bridge and walking/running path connect the sports facilities to the adjacent Parque La Mexicana, integrating the new installation with the urban park’s sprawling recreational offerings.
It’s not news that large parcels of developable land can be difficult to come by in dense urban areas. Finding a location in burgeoning Santa Fe, once a sand quarry, then a construction landfill, and now an economic hub dotted with high-rises outside Mexico City, was no small challenge.
Originally published by Chris Lee for the Spring 2023 of NAIOP Development Magazine.
The commercial real estate industry is facing many challenges as it moves into 2023. Amid rising interest rates, the lingering impacts of COVID, high levels of inflation, a recessionary economy, shifting capital markets, technological advancements, the Great Resignation, quiet quitting and demographic transitions, one element remains clear and constant — talent management. The real estate industry can’t operate and deliver successful outcomes without exceptional talent and leadership. However, those two factors also come with rapidly rising compensation and retention challenges.
Several recent CEL & Associates post-COVID surveys found that rewarding and retaining talent has become the No. 3 or No. 4 priority for real estate CEOs and boards of directors. Exceptional talent and HIPOs (high-potential employees) are difficult to find and even more challenging to retain without a robust talent-management strategy, and competitive compensation and long-term incentive plans. Talent comprises 65% to 70% or more of most real estate firms’ operating budgets, yet only 27% of real estate organizations have a competitive, well-thought-out talent-management plan. Only 32% of real estate firms have a formal succession plan for CEO and other C-suite positions. Slightly more than 76% of real estate firms have “concerns” relative to retaining top talent.
While interviewing Tracy Montross, we discovered some amazing facts about her, and the impact this pivotal airport and airline has on the health of our entire region. For instance, did you know that at one point during the pandemic, our own Charlotte Douglas International Airport (CLT) was the busiest terminal in the world? It’s a testament to the airline that has helped put us on the world map in terms of attracting, maintaining, and growing business opportunities around the greater Piedmont region.
Charlotte, (or CLT which represents 5% of the entire GDP for the state of North Carolina) is fortunate to serve as America’s second-largest hub, connecting us to the world with an average of 560 daily flights, more than 170 destinations, and 23 countries, serving more than 42 million travelers in 2022. Its regional impact on our economy, huge employment figures, and the way it supports our ability to attract world businesses; this is truly a subject REBIC wants you to know about!
Originally published on April 20, 2023, by Gary Tasman for NAIOP.
If you’ve ever attended a ceremonial groundbreaking for a school, restaurant, corporate headquarters, or other new building, you understand the symbolism of that first turn of the dirt. The groundbreaking ceremony signifies the physical start of a construction project. In most cases, however, months or even years have already been spent preparing the land for future growth, as planners and developers work behind the scenes to make the property “shovel-ready.”
Attempting to market a property that is not shovel-ready can be a significant barrier to making a commercial property sale. In fact, it’s hindered some significant transactions where our company is based in Southwest Florida. But what does it mean to have a shovel-ready property, and why is it so important?
The term “shovel ready” became popular during the Great Recession as part of the American Recovery and Reinvestment Act of 2009. The legislation placed funding priority on projects that could begin construction rapidly, in hopes of jumpstarting the economy by providing investment and employment opportunities quickly. The phrase became an important buzzword, and an even more important strategy, in commercial real estate.
During last night's meeting, the Charlotte City Council held a hearing on four text amendments related to the soon-to-be-implemented Unified Development Ordinance (UDO). Since these were introduced several weeks ago, REBIC representatives met with Planning Staff and suggested revisions to the proposed amendments, some of which were accepted, and some were not. This is the first round of changes that will likely be made over the course of the next couple of years. Here are the details:
In a move that is definitely backward motion, that will create uncertainty, and potentially threaten the economic vitality of an important part of our region, the Board of Commissioners of the Town of Mooresville adopted a resolution establishing a working group to study the legal requirements of imposing a growth moratorium.
To view the meeting (total time under one hour) please use this link. We will be following this development closely. Click here to view the current Mooresville Comprehensive Plan. As a reminder, municipal elections occur later this year with filing commencing on July 7th and ending on July 21st. In closing, this kind of activity is the reason we ALL NEED to be educated and get involved. If you're reading this, your next move should be making sure your own cities and towns aren't moving in this direction. Help them understand. Use your knowledge!
Last Thursday the Charlotte City Council held a Budget Workshop as it works toward a May/June approval of the Fiscal Year 2024 Budget set to begin on July 1st. To view the full meeting, click this link. Additional inks to presentations provided can be found following here: