Originally published on March 22, 2023, by Yonah Sturmwind and Kathy Kozak for NAIOP E-Newsletter.

“Where there’s a will, there’s a way.” This adage has never been more relevant for developers looking to finance new building projects. With Federal Reserve Chair Jerome Powell indicating that the Fed will continue to raise interest rates, traditional capital providers with strained balance sheets are pulling back on lending. And given the current economic outlook, many senior warehouse line lenders may also look to pull back on financing, opening the door for a more direct asset-by-asset approach. As a result, borrowers need to seek out alternative lenders that creatively finance their projects – enter nontraditional lenders and loan-on-loan financing partners.

How loan-on-loan financing works

Loan-on-loan (also known as “note-on-note”) financing is a common form of capital stack formation for bridge and construction lenders and offers a perfect example of a nontraditional lending approach that can provide financing for borrowers in a challenging environment. In a loan-on-loan arrangement, a senior lender (such as a bank, life insurance company or specialty lender) makes a loan to a building developer. That lender then secures senior financing for that loan from another capital provider at a lower rate, thereby increasing their margin and allowing them to offer more competitive terms to the developer. The loan-on-loan is collateralized by the loan to the developer and occupies the last loss position in the capital stack.

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Community Area Planning will build upon the engagement efforts from both the Charlotte Future 2040 Comprehensive Plan & Policy Map. Attend a Workshop to learn about the process and to share your input regarding future development and growth in your area. 

Meetings will be held beginning next week (March 28th) on Tuesdays at 11:00 am, Thursdays at 4:00 pm, and Saturdays at 9:00 am.

Click here to see the full list and sign
up for one or more workshop events! 

Originally published on March 15, 2023, by Aquiles Suarez for NAIOP.

President Joe Biden submitted his proposed fiscal year 2024 federal budget to Congress on March 9. While the term “March Madness” is usually associated with the NCAA’s college basketball tournament, you could be forgiven if you thought it might also apply to this budget proposal. That’s because it contains numerous tax increases that repeatedly failed to clear the House of Representatives and Senate when these chambers were controlled by Democrats. With the House now in the hands of a Republican majority, chances are low that a majority of these recycled provisions will make it into legislation.

But the president’s budget submission makes sense if you acknowledge that its primary purpose is as a political messaging document, meant to provide a contrast between his administration and Republicans in advance of the 2024 presidential election. It was somewhat predictable, therefore, that tax proposals which were part of the Biden “Build Back Better” agenda would resurface in the 2024 budget version. Anticipating this would be the case, earlier this year NAIOP members attending our Chapter Leadership and Legislative Retreat in Washington, D.C., met with their elected representatives on Capitol Hill, with tax policy a top NAIOP legislative priority discussed at their meetings. 

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Originally published on March 14, 2023, by Marie Ruff for NAIOP.

Experts dug into the data behind labor and workforce trends in California’s Inland Empire and the surrounding regions, one of the most competitive labor markets for distribution and manufacturing workers in the western U.S., during a session at NAIOP’s I.CON West in Long Beach, California. Speakers noted that alternative markets like Phoenix and Las Vegas/Reno could provide valuable options outside of the Inland Empire, especially when considering total cost modeling.

The Inland Empire comes out on top according to many metrics in Hickey & Associates’ 2023 analysis, from its labor supply to location. “But if you look at the labor cost, the real estate costs, and the transportation costs, things start to change,” said session moderator Kevin Dollhopf, MBA, MA, MCR, IAMC Fellow, principal, Hickey & Associates. While the Inland Empire is great from a real estate market and returns perspective, occupiers are having heartburn from what’s going on, he added. 

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Originally published on March 10, 2023, by Kathryn Hamilton, CAE for NAIOP.

As industrial spaces move deeper into urban areas, the need to build up instead of out will increase. Vertical industrial – whether used for fulfillment, maker spaces, labs or light manufacturing – requires a new approach, different requirements and a whole lot of explaining.  

Russell Hazzard, AIA, president of MG2, led a panel of experienced vertical industrial developers and architects at this week’s I.CON West in Long Beach, California, that explored the advantages and challenges that accompany these types of projects.  

It’s important to consider three main elements of multistory industrial that differ from traditional single-story industrial before getting started, said Ken Sun, senior vice president, regional head of development – West region, Prologis. First is the target customer and their use, whether traditional warehouse, third-party logistics company, fleet management or another purpose. 

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Originally published on March 10, 2023 by Marie Ruff for NAIOP.

The industrial real estate market has been on fire, but this still-hot sector is expected to cool, according to the latest Industrial Space Demand Forecast from the NAIOP Research Foundation. A powerhouse panel of financial experts addressed the capital markets outlook for industrial real estate in a session at NAIOP’s I.CON West in Long Beach, California. 

Session moderator Jim Linn, executive managing director, Newmark, led the discussion. The panel included Valerie Achtemeier, vice chairman of capital markets, CBRE; Gregg Boehm, managing director, market officer, industrial, Ares Real Estate Group; and Max Gagliardi, CFA, senior managing director, capital markets, Dalfen Industrial. 

Where are you seeing opportunities? 

That’s a wrap on the 2023 NAIOP NC Conference! Hosted by NAIOP Charlotte, NAIOP Raleigh Durham, and NAIOP Piedmont Triad, 400+ CRE professionals representing 195+ companies from 40+ cities & 12+ states met in Pinehurst on March 2 to hear the latest macro-economic trends, why companies continue to invest and develop in the state, how to help build the next generation of CRE talent and find out what’s happening in different market segments.

View Conference Photos 

Congratulations to the 2023 Project of the Year Award Winners!

Take a closer look at each project

• New Development Project of the Year: FENTON in Cary, NC (submitted by The Wilbert Group)
• Industrial Project of the Year: SECOND HARVEST FOOD BANK in Winston-Salem, NC (submitted by Landmark Builders, Inc.)
• Redevelopment Project of the Year: RALEIGH IRON WORKS in Raleigh, NC (submitted by CBRE and Brasfield & Gorrie, LLC)

Thank you to our event sponsors for your support!

Presenting: CBRE
Lunch: LS3P ASSOCIATES LTD. | First & Early Partners | V3 Companies
Taste of Pinehurst Reception: McAdams | McMillan Pazdan Smith Architecture
Supporting: Cline Design Associates | Kimley-Horn
Lanyard: Bolton & Menk, Inc.
Wi-Fi: Kilpatrick Townsend & Stockton LLP | Stewart Title
Room Key Card: Choate Construction Company
Sessions: Blanco Tackabery | Brasfield & Gorrie, LLC | Elliott Davis | JDAVIS | MCI - Mechanical Contractors, LLC | Metromont | Richardson Properties, LLC | Windsor Commercial
Meeting Break: Alston & Bird

Originally published by Marie Ruff for NAIOP E-Newsletter.

The next phase of advanced manufacturing innovation is ready for launch in the Long Beach region of California. Attendees of NAIOP’s I.CON West were able to go behind the scenes on a project tour of cutting-edge advanced manufacturing facilities in Douglas Park, an industrial, retail and hotel center that spans more than 260 acres adjacent to the Long Beach Airport.

Morf3D: Advancing Aerospace with Additive Manufacturing

The first stop on the tour: Morf3D, a company that primarily serves clients in the aerospace, space and defense industries. These industries require highly specialized equipment that meets stringent specifications including being durable, lightweight and thermal-resistant, which Morf3D achieves using metal additive engineering and manufacturing.

The 90,000-square-foot Douglas Park building was a spec building that Morf3D has been adapting to suit the varying needs of their clients, from security clearance requirements to power needs. Some tenants require temperature control within four degrees to keep the equipment running smoothly and prevent any quality concerns with the products; others require the temperature to not vary more than two degrees.

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Originally published on March 9, 2023, by NAIOP.

NAIOP is again partnering with CEL & Associates, Inc. to compile the 2023 NAIOP/CEL Commercial Real Estate Compensation and Benefits Survey. A nationally known real estate advisor, CEL has conducted this survey – the largest in the industry – for 34 consecutive years.

Complete the survey by May 9. 

Go to the survey

This valuable survey is the national standard allowing commercial real estate businesses to stay current on salaries, bonuses and benefits for CRE professionals from executives to entry-level positions. Each company that participates in the survey will receive a complimentary electronic copy of the full comprehensive survey report – a $3,000 value!

Originally published on March 6, 2023, by Eliza Theiss for NAIOP E-Newsletter.

Three years after the COVID-19 pandemic upended the office sector, it remains in flux. While many businesses have fully committed to hybrid and remote work arrangements, others are becoming more adamant about getting employees back into the office. And, according to the CommercialEdge U.S. office market analysis, there will be even greater uncertainty and upheaval as the industry transitions to a new status quo.

In 2023, higher interest rates are anticipated to negatively affect both the new supply pipeline and transactional activity; while some buildings will be constructed in desirable sites, many other projects will be postponed or abandoned entirely. Moreover, in addition to fewer office transactions, higher rates will also result in reduced property prices for those that do trade.

At the same time, tenants’ flight to quality is also expected to continue in 2023. Businesses that want workers in the office more frequently are looking for high-quality amenitized space to tempt workers to come in, which can mean embracing smaller footprints in prime locations.

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Originally published on February 27, 2023, by Janet Pogue McLaurin AIA, FIIDA, NCIDQ , LEED AP for NAIOP E-Newsletter.

Office workers around the globe scrambled to suddenly work from home in March 2020 at the beginning of the COVID-19 pandemic. As the global pandemic raged from weeks to months to years, we adapted to virtual meetings and new ways of working. It fundamentally changed how we work and our expectations of the office. Over a period of time, Gensler surveyed 2,000 U.S. workers as they were returning to the office to understand the new role of the office, what’s working and not, and what’s missing in the work experience.

The Role of the Office has Shifted

Throughout the pandemic, we conducted 11 workplace research surveys — six alone in the U.S. — to capture how the pandemic has shaped the workplace experience. During this time, the top-ranked reason cited by employees to return to the office was “working in-person with my team/colleagues” — consistent across countries, generations, and industries. In our latest research, “to focus on my work” emerged as the top-ranked reason workers say they are coming into the office. Work activities based in the physical space, such as access to technology, scheduled meetings, and access to specific spaces, materials, and resources, also rise to the top.

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Originally published on February 16, 2023, by NAIOP.

From pricing to building codes to zoning and beyond, developers embarking on an adaptive reuse project must consider key factors that can make or break its success.

Steve Smith, principal with Cooper Carry, explores the importance of location, authenticity of a building, and the important return on investment that make adaptive reuse projects successful.

This NAIOP Insight was filmed at CRE.Converge 2022.

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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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