Originally published on February 15, 2023, by Toby Burke for NAIOP E-Newsletter.

Cities and counties are increasingly adopting local ordinances that are intended to spur the electrification of our transportation system in order to reduce greenhouse gas (GHG) emissions from fossil fuels. A survey by The U.S. Conference of Mayors identified electric vehicles (EVs) “as the most promising technology for reducing energy use and carbon emissions in their cities.” Local efforts to support the use of EVs by both the public and private sectors will require the development and expansion of a reliable and sustainable EV charging system.

Efforts by mayors and local governments to transform the nation’s transportation system from fossil-fueled vehicles to electric ones has been boosted by the federal government and the private automobile industry. Both the Biden Administration and major U.S. carmakers – Ford, General Motors and Stellantis (Chrysler) – have set aspirational goals for EVs to account for 50% of all vehicle sales by 2030. These aspirational goals reflect growing consumer interest for electric vehicles that will further accelerate the demand for a sustainable EV charging network across the United States.

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Originally published on February 9, 2023, by NAIOP.

E-commerce facilities located near residential communities enable faster delivery and access to the workforce who will help companies expand. Explore how developers are working with communities to find creative solutions to their concerns and position these facilities for success.

Originally published on February 8, 2023, by Chris Strawn and Tom Jansen for NAIOP E-Newsletter.

Stormwater management considerations are a vital part of the site selection and development process – and can impact the long-term value of a property. In fact, the majority of land development projects over one acre require a stormwater management system so it’s important to understand the available options as well as their pros and cons.

Stormwater management is traditionally executed on the surface with a pond that controls how much water can be released typically at or below historic flow rates. One alternative is to create an underground detention system. It is most often used in developments where land availability, parcel limitations and land costs do not allow the development of surface stormwater Best Management Practices (BMPs).

It’s important to consider when and why it is appropriate to implement underground vs. above-ground solutions to maximize the long-term real estate value of properties.

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Originally published on February 6, 2023, by NAIOP.

The four phases of commercial real estate development yield significant contributions to the U.S. economy, creating jobs and building the places we work, shop, live and play. In 2022, combined economic contributions of new commercial building development and the operations of existing commercial buildings:

• Contributed $2.3 trillion to U.S. GDP
• Generated $831.8 billion in personal earnings
• Supported a total of 15.1 million jobs

Each dollar of construction spending generates $2.89 in economic, reflecting the cumulative effects of the initial construction expenditures as they cycle throughout the economy. Construction spending of $1.8 trillion yields $5.2 trillion to U.S. GDP.

State economies benefit from a healthy commercial real estate industry, which yields state revenue and adds inventory to attract new businesses and jobs.

Originally published on February 3, 2023, by Brielle Scott for NAIOP E-Newsletter.

Painting a picture of the current global economic climate is a complex venture, but Reva Goujon, director at Rhodium Group, leveraged her vast geopolitical expertise to do so at NAIOP’s Chapter Leadership and Legislative Retreat this week in Washington, D.C.

“First – catch your breath!” Goujon said at the start of her remarks, pointing out that 2022 created a cocktail of inflationary drivers, including:

• The land war in Europe, which caused a surge in food and energy prices.
• Tightening monetary policy (“How is the Fed going to land this plane?” she asked).
• A still-tight labor market (“There are nearly twice as many job openings as eligible workers,” Goujon noted).
• The U.S.’s “next-level” financial sanctions against Russia and tech controls against China.
• China ending its “zero-COVID” policy with a bang, among other factors.

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Originally published on February 2, 2023, by Brielle Scott for NAIOP E-Newsletter.

NAIOP, in conjunction with the Commercial Real Estate Diverse Supplier (CREDS) Consortium, has debuted the commercial real estate industry’s first collaborative supplier diversity initiative, helping to advance member companies’ environmental, social and governance (ESG) objectives. NAIOP chapter leaders from across North America had the opportunity to learn more about the program this week at the Chapter Leadership and Legislative Retreat in Washington, D.C.

“We talk a lot about ESG as an element that guides corporate policies and investing strategies,” said Duane J. Desiderio, senior vice president and counsel for The Real Estate Roundtable, who spoke at the session. He said most companies are familiar with the ”e” in ESG – company policies related to environmental regulations, energy usage, pollution, greenhouse gas emissions, etc.

But when it comes to the “s” or social aspect of ESG, “That’s where we heard from our members we needed to get involved,” Desiderio said. “What are the metrics for social impact in a company?”

Originally published on January 31, 2023, by Trey Barrineau for NAIOP E-Newsletter.

Like many industries, commercial real estate has often struggled to make progress on diversity, equity and inclusion (DEI). An interactive session during NAIOP’s Chapter Leadership and Legislative Retreat (CL&LR) in Washington, D.C., in late January explored the “what, why and how” of DEI and how firms in the industry can better implement it.

Rhonda Payne, CAE, the founder and CEO of Flock Theory, opened by discussing personal identity, which Psychology Today defines as “the memories, experiences, relationships and values that create one’s sense of self.” According to Payne, some aspects of each person’s identity are fixed. These include things you were born into, as well as the era in which you exist. Furthermore, there are the choices we make (such as which college to attend or what career to focus on) and the opportunities that are presented to us.

“All these things make up an individual’s identity,” Payne said. “All these contribute to the diversity within a space or team.”

Originally published on January 31, 2023, by NAIOP E-Newsletter.

NAIOP is your forward-thinking partner committed to working alongside our members to build your knowledge, advance your career and protect your business.

Watch our 2022 accomplishments and preview what's ahead for the association throughout this year, including the release of new programs, opportunities to connect across the chapter network, and resources that will move our members' businesses forward.

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Originally published on January 26, 2023 by Kathryn Hamilton for NAIOP E-Newsletter. 

The impact of new commercial real estate development in the U.S. continues to grow, according to the annual Economic Impacts of Commercial Real Estate research study conducted by the NAIOP Research Foundation.

The combined economic contributions of new commercial building development and the operations of existing commercial buildings in 2022 resulted in direct expenditures of $826.9 billion and the following impacts on the U.S. economy: 

• Contributed $2.3 trillion to U.S. gross domestic product (GDP).
• Generated $831.8 billion in personal earnings.
• Supported 15.1 million jobs.

Among other highlights:

• Significant (143.4%) increase in non-warehouse (manufacturing) industrial building construction in 2022, making it the largest segment of new CRE construction in 2022.
• The four property types covered in the report saw increased construction spending (hard costs) last year (see table).

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Originally published on January 20, 2023 by Brielle Scott for E-Newsletter.

Wellness in the workplace – it’s a buzzy phrase we hear often in reference to office buildings, but when it comes to the industrial and manufacturing facilities that are ubiquitous to us, what kind of wellness features would we find inside?

Long days, physical labor and often isolated locations can take its toll on the workers at these locations. According to the U.S. Bureau of Labor Statistics, there was a 60% turnover rate in the industrial sector in 2020, and it stands to reason that the additional burdens placed on these essential workers (not to mention the staggering increase in e-commerce demand) during the COVID-19 pandemic may have exacerbated the issue.

As any corporate accountant can tell you, employee turnover can have a major impact on a company’s bottom line. And large-scale owners of industrial assets are under the same market pressures as office, multifamily or hotel owners when it comes to ESG reporting and performance.

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Originally published on January 19, 2023 for NAIOP E-Newsletter.

ESG is emerging as a hot topic for businesses and commercial real estate development in particular. To stay ahead, developers can embrace standards to set their projects up for success. Learn how smart building technologies, tax and state incentive programs, and setting measurable goals as companies establish their ESG practices can support this evolving initiative.

NAIOP Insight by: Rielle Green, LEED AP O+M, WELL AP, Fitwel Ambassador Director of ESG, Acadia Realty Trust.

This NAIOP Insight was filmed at CRE.Converge 2022.

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Originally published on December 27, 2022 for NAIOP E-Newsletter by Ed Finkel.

As the calendar turns to 2023, what’s ahead for the commercial real estate field? We talked to several NAIOP Distinguished Fellows and Research Foundation Governors to get their forecasts for the next 12 months.

Investor Interest in Single-family Housing 

Single-family rental housing is top-of-mind for Distinguished Fellow Suzanne Lanyi Charles, who chairs the Paul Rubacha Department of Real Estate at Cornell University. A sector that grew quickly after the 2008 housing crisis, single-family rentals have become a well-established asset class with publicly traded and private companies that have as many as 80,000 units, she notes.

The rapidly rising interest rates of the past year have led smaller investors to pull back, Charles says, but that creates an opportunity for the large to become larger. “I’d expect to see the largest institutional investors, those that have access to cheap capital, to use this period of high-interest rates and declining home values, to grow even larger,” she says.

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Originally published on December 19, 2022 by Eliza Theiss for NAIOP E-Newsletter.

Although many in the industry had assumed that the office market would stabilize in 2022 –  and perhaps even begin to recover pandemic losses – this stabilization did not occur. Rather, wider economic changes; repeated interest rate increases by the Federal Reserve; the further establishment of work-from-home and remote office arrangements; and increasing numbers of office footprint reductions by businesses caused vacancy rates to continue to rise throughout the year. At the same time, rent growth remained patchy.

Listing Rates Show Significant Growth, But Only in Select Markets

Large segments of the office-using sector have adopted remote and hybrid work (at least in part) since the start of the pandemic. Accordingly, the demand for offices has decreased in most markets. In addition, many businesses have also reduced the size of their offices, while others have firm intentions to do the same in the near future. As a result, the national vacancy rate – which reached 16.3% in November – was 150 basis points (bps) higher than it was in October 2021, according to the most recent CommercialEdge report.

In fact, during the last 12 months, vacancy rates increased in 86 of the 120 areas monitored by CommercialEdge, including 22 of the 25 most significant markets. Specifically, the leading U.S. office markets with the largest vacancy rate increases were San Francisco (+390 bps) and Portland, Oregon (+400 bps).

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Originally published on December 9, 2022, by Mike Cavanaugh and Scott Waddell for BDCNetwork.com

While new construction allows for incredible levels of customization, there’s no denying that new buildings can have adverse impacts on the climate, budgets, schedules, and even the cultural and historic fabrics of communities. While any responsible architect will design buildings to minimize these impacts, there is no avoiding them entirely.

One proven strategy to limit these impacts is breathing new life into existing buildings, especially those with long-life durability, aesthetic character, and long-lasting exterior cores of steel and concrete. Known as adaptive reuse, this strategy takes an existing, unused building (think your nearby empty mall, a vacant corporate office, or a long-unused factory) and transforms it into a needed space that will bring value and vibrancy to its community.

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Originally published by Mark Heschmeyer on December 12, 2022, for CoStar News.

Any increase in a key measure of office demand in 2023 isn’t likely to occur, according to the latest projections from the commercial real estate association, NAIOP.

The difference between tenant move-ins and move-outs of leased space could continue to slow into 2024 as net absorption is hampered by economic uncertainty, the trade group said.

The national office market absorbed 6.6 million square feet during the second and third quarters of 2022, but the vacancy rate continued its climb to 17.1%, the highest level since the third quarter of 1993, according to the NAIOP's "Office Space Demand Forecast" for the fourth quarter of 2022 published by the NAIOP Research Foundation.

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Originally published in NAIOP Research Foundation's Fourth Quarter 2022 Report. 

Absorption Will Continue to Slow into 2023 Amid Economic Uncertainty

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q4 2022.

Key Takeaways:

• Office market vacancy rates rose to 17.1% in the third quarter of 2022 as the completion of new space outstripped net absorption. This marks the highest vacancy rate since the third quarter of 1993.
• Class A buildings continue to outperform the rest of the sector as tenants migrate to spaces that offer more flexible layouts and modern amenities.
• Leading economic indicators and an inverted yield curve point to the growing risks of a recession in 2023. Occupiers are growing more cautious, opting to sublease space, and choosing smaller footprints when leases come up for renewal.
• Given these trends, net office space absorption in 2023 is forecast to slow to only 8.1 million square feet for the full year, following an absorption of 7.1 million square feet in the fourth quarter of 2022.
• Absorption is forecast to rebound in the first three quarters of 2024 to a total of 13.3 million square feet.
  
  

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Originally published in NAIOP Development Magazine Fall 2022 Issue by Mansoor Ghori.

This rapidly growing alternative funding method can help developers meet a wide range of goals.

New financing vehicles can take time to achieve market acceptance, but with more than $3 billion in transactions since its inception more than 10 years ago, Commercial Property-Assessed Clean Energy (C-PACE) funding is now a go-to green finance alternative for many owners, investors, and developers.

Now available in 37 states and the District of Columbia, the special advantages of C-PACE’s long-term, low-cost, fixed-rate, non-recourse financing are making it a favored option over more expensive mezzanine debt or preferred equity. However, many CRE professionals are still unfamiliar with it. What is C-PACE? What makes it attractive to commercial real estate owners and developers? How have trends including the environmental, social, and governance (ESG) movement further fueled its adoption?

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Originally  published on November 15, 2022, by NAIOP.

NAIOP’s valuable 60-page e-book, “Rules of Thumb for Distribution/Warehouse Facilities Design, Second Edition,” allows you to gain a step up in today’s competitive marketplace. The e-book includes detailed instructions and diagrams on everything from site planning to floor slabs. Members save 50% off the list price!

Rules of Thumb for Distribution/Warehouse Facilities Design, second edition, has been extensively updated with new must-know information and detailed illustrations. Author and former principal with HPA, Inc., Byron Pinckert, has drawn on his firm’s decades of industry experience to explain best-practice methods for planning and designing warehouse facilities. This 60-page e-book addresses topics including site planning for truck and rail delivery, material handling equipment and racking systems layouts, as well as field-tested approaches to complex features such as floor slabs and roofs. Rules of Thumb for Distribution/Warehouse Facilities Design will help developers achieve peak operational efficiency for their tenants and build-to-suit clients.

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Originally published in October 2022, by Clifford A. Lipscomb, Ph.D., MRICS for NAIOP.

Industries are rapidly evolving as business processes grow more interconnected and automated. Data and analytics play an important role in information technologies and their interaction with the physical world, including emerging fields such as artificial intelligence, the Internet of Things (IoT), and virtual and augmented reality. Although commercial real estate (CRE) has been slower than other industries to adopt data analytics, some firms have identified several ways that data analytics can support land and building development and contribute to better project outcomes.

To gain a sense of how CRE firms are using advanced data analytics, the NAIOP Research Foundation commissioned this report to examine applications in site selection, design, and valuation for commercial buildings. The author conducted a secondary research and interviewed brokers, data providers, investors, developers and professionals at CRE technology firms.

Firms continue to rely primarily on traditional forms of market research when making investment and development decisions. Nonetheless, several commercial real estate technology companies have developed specialized software that draws from data analytics to support applications ranging from highest and best-use analysis to real-time building rendering. These emerging applications suggest that data analytics has the potential to add substantial value to new development projects through improved siting decisions and building design.

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Students receive credit towards earning their certificate through core classes presented by the NAIOP Center for Education. So whether you want to enhance the value of your current career track or to increase your credibility in transitioning to a new career goal or area of interest, consider the professional benefits and competitive edge you'll gain by earning your NAIOP Certificate of Advanced Study.

Commercial real estate professionals wanting to advance their careers by earning their certificate can focus their efforts on either the development or finance tracks by pursuing a Certificate of Advanced Study in Commercial Real Estate Development or a Certificate of Advanced Study in Real Estate Finance.

Benefits

Professionals who are involved in all aspects of commercial real estate development benefit from the certificate. You benefit if you are a:

• Developer/Owner
• Investor
• Lender
• Broker
• Industry Consultant/Advisor Planner
• Architect
• Real Estate Attorney
• Civil Engineer/Construction Manager
• Environmental/Sustainability Professional
• Land Use Professional

Employers benefit as well from having motivated professionals on their team who they value for an ongoing commitment to learning. Both certificate programs follow a planned curriculum with a wide range of certificate course offerings to choose from.