Posted on May 31, 2018

The NAIOP Research Foundation has published the NAIOP Office Space Demand Forecast for Q2 2018.

Key Takeaways

• The U.S. office markets absorbed just 1.3 million square feet on a net basis in the first quarter of 2018, according to CBRE. 
• This performance represents a significant conundrum, as every economic indicator used to forecast absorption performed at or above the forecast level. 
• While the first quarter reading may be a one-time anomaly, it cannot be discounted that a structural shift in the office space market has or is occurring. 
• The forecast for net absorption of office space has been reduced to 8.4 million square feet per quarter for the remaining three quarters of 2018.

On a positive note, many developers, lenders, and even tenants are not over-expanding or being overactive, meaning that there is a low likelihood that there will be excess space that they will need to vacate in a downturn.

View the Q2 2018 Forecast

Posted on May 24, 2018

According to Cushman and Wakefield’s first quarter report on shopping centers, the retail sector will continue to struggle despite a strong economy. However, it’s not all bad news – while stores found in malls and power centers (e.g., electronics, department, sporting goods) will continue to decline, other sectors will expand, such as dollar stores, discount grocery, off-price apparel, beauty/cosmetics, fitness/health clubs, fast food, coffee and fast fashion, most of which operate in neighborhood and community centers. According to the report, these trends could benefit the owners of Class A malls. "Anchor closures at trophy or Class A malls present opportunities for landlords to attract new, more relevant tenants such as food halls, experiential concepts or other trendy new retailers at current rents," the report states. "Landlords will also see non-traditional mall tenants such as discounters, off-price or grocery chains move into some of these vacancies."

Posted on May 2, 2018

By Jennifer Lefurgy, PhD

According to a recent Global Coworking Survey, 1.7 million people will be using 19,000 coworking spaces around the world by the end of 2018, and 40 percent of those users will be women. Since the industry launched in the mid-2000s, coworking companies have marketed to predominantly young, single men and provided associated amenities such as pool tables, craft beer, and other lures that typically encourage male bonding. This strategy has begun to change as the number of women using coworking services is predicted to rise and as women continue to voice their need for safer workplaces. Several female-focused coworking companies such as Shecosystem, Paper Dolls, Bloom, Rise Collaborative Workspace and Hera Hub have opened multiple locations in North America and Europe. Women-centric workspaces offer what traditional coworking spaces do not: calm, spa-like interiors; child care; lending libraries featuring female authors and mentorship programs.

Click here to read more.

Posted on April 20, 2018

The Net Lease Research Report by National Real Estate Investor (NREI) finds the single-tenant net lease sector will remain "in solid shape for the foreseeable future, even in what many are viewing as the late stages of the current real estate cycle." The results were compiled from 490 responses from a February survey of NREI readers; about half of the respondents held the titles of owner, partner, president, chairman, CEO or CFO. Sixty-three percent of survey participants expect cap rates for net lease properties to increase over the next 12 months. Debt and capital equity are also expected to remain as available as they have in the previous two years. The industrial and medical office sectors are predicted to drive the strongest demand over the next year. Respondents commented that there are "diamonds in the rough in secondary/tertiary markets," and the influx of German stores Lidl and Aldi will create investment opportunities. Dollar stores, largely protected from the rise of e-commerce, have "become a popular bet for some net lease investors."

Posted on April 12, 2018

About The NAIOP CRE Sentiment Index

The NAIOP Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months. The forecast is not based on an analysis of historical data, but rather it represents a look into the future by real estate developers, investors and operators. These NAIOP members are asked to respond to questions based on their ongoing work, including projects in their pipelines. For more information, see Understanding the Index.

Download the report.

Posted on March 26, 2018

By Dr. Stephen S. Fuller

Development and construction of new commercial real estate in the United States – office, industrial, warehouse and retail – generates significant economic growth at the state and national levels. This annual study, “The Economic Impacts of Commercial Real Estate,” published by the NAIOP Research Foundation, measures the contribution to GDP, salaries and wages generated and jobs supported from the development and operations of commercial real estate.

Commercial real estate development and operation of existing buildings generated the following economic benefits:

• Supported 7.6 million American jobs in 2017 (a measure of both new and existing jobs).
• Contributed $935.1 billion to U.S. GDP.
• Generated $286.4 billion in salaries and wages.

Download (right-click and choose "Save Link As")

Posted on March 21, 2018

By Ioana Neamt

With all the talk of the modern workforce expecting autonomy and companies offering flextime and work-from-home arrangements, most U.S. companies still try to get employees to show up at the office. So naturally, there is ongoing interest in the discussion about the most efficient and pleasant work environment and what that might look like. Over the decades, we’ve seen several attempts by designers to rethink the office space, from Herman Miller cubicles, to the rather controversial open-plan layout and the currently highly-sought-after co-working trend. Companies have several motivations for trying out new layouts: cost-effectiveness, the need to expand quickly following a growth in the number of employees, the desire to have an office design that reflects the company culture, and so on. However, there is still one question left unanswered: what do employees have to say about their workspaces?

Click here to read more.

Posted on March 20, 2018

Recruiting and retaining top performers has become essential in today's highly competitive marketplace. It's not too late to find out if your salary and bonus package is competitive with the 2017 NAIOP/CEL Commercial Real Estate Compensation and Benefits Report.  

Click here to read more.

Posted on March 14, 2018

By: Dr. Stephen S. Fuller

Development and construction of new commercial real estate in the United States – office, industrial, warehouse and retail – generates significant economic growth at the state and national levels. This annual study, “The Economic Impacts of Commercial Real Estate,” published by the NAIOP Research Foundation, measures the contribution to GDP, salaries and wages generated and jobs supported from the development and operations of commercial real estate.

Commercial real estate development and operation of existing buildings generated the following economic benefits:

• Supported 7.6 million American jobs in 2017 (a measure of both new and existing jobs).
• Contributed $935.1 billion to U.S. GDP.
• Generated $286.4 billion in salaries and wages.

Click here to read more.

Posted on March 9, 2018

By: Dr. Joshua Harris

Industrial Demand to Remain Strong as Market Becomes Undersupplied

Demand for U.S. industrial space is expected to remain robust and steady throughout 2018, with quarterly net absorption forecast to average 55.6 million square feet. This is higher than the 44.1 million square feet of actual net absorption, on average per quarter, recorded in 2017, but lower than the 60 million square feet of quarterly net absorption forecast six months ago. According to Dr. Hany Guirguis, Manhattan College, and Dr. Joshua Harris, New York University, the predicted increase over 2017 figures is due to the faster and broader macroeconomic growth and increased consumer spending expected in 2018.

The model, run on a quarterly basis, forecasts slightly lower industrial space demand in 2019, when inflation and interest rates are expected to rise, moderating growth. U.S. gross domestic product grew by 2.6 percent in the fourth quarter of 2017, according to the advance estimate released by the U.S. Bureau of Economic Analysis, and by 2.3 percent for all of 2017. (For comparison, U.S. GDP grew by just 1.5 percent in 2016.) Sustained growth, especially with low unemployment at 4.1 percent as of January 2018, will translate into increasing demand for industrial properties as industrial users see more justification for investment and expansion of facilities.

Click here to read more.

Posted on February 21, 2018

By: Richard B. Peiser, Ph.D. and Raymond G. Torto, Ph.D.

Office building owners have found that to remain competitive in today’s marketplace, they must enliven their buildings by offering more amenities and adding vibrancy to the common areas. Some have introduced a range of new amenities, including outdoor workspaces and food trucks, and they have also programmed areas with happy hours, featured speakers and other activities. The common element in these amenities is that they all “activate” the common space by creating opportunities for socialization among tenants and the opportunity to work in areas beyond the tenant’s suite.

The study examines the following:

• New and different types of amenities that owners are including in buildings, their locations within the building, what they cost and how they are funded.
• Programming or social gatherings in building common areas, the types of activities offered, their frequency, what they cost and how they are funded.
• Whether coworking space is becoming an amenity that owners must offer in their buildings so that tenants can have access to space for occasional overflow situations.

Click here to download.

Posted on January 17, 2018

Analysis by Reis, Inc. shows the U.S. office market in 2017 experienced a slowdown in tenant expansions while supply growth stayed at about the same level as in 2016. As reported in the Wall Street Journal, the survey of 79 metropolitan areas revealed that net absorption at the end of 2017 was at its lowest since 2012. In 2017, developers added 37.6 million square feet, only 1 million square feet more than in 2016, which may mitigate slower absorption rates. Vacancy increased during the fourth quarter of 2017 in 33 of the 79 markets, with New York having the lowest (8.7 percent) and Dayton, Ohio, the highest (27 percent). According to the report, growth in absorption has been falling in part because tenants have become more efficient in how they use their space, eliminating private offices and encouraging employees to work closer together. The report stated, “office-based industries are healthy, but tenants have persisted in curbing overall leasing patterns.”

View the current NAIOP Office Space Demand Forecast.

Posted on November 29, 2017

According to Dodge Data & Analytics’ 2018 Construction Outlook, construction starts will climb 3 percent to $765 billion in 2018. The growth of the construction industry will continue into 2018, but some product types, such as multifamily housing and hotels, will see less activity. Single-family housing, office building, warehouse, transportation terminal, school and health care facility construction will continue to grow during 2018.

“Overall, the year 2018 is likely to show some construction project types register gains while other project types settle back, with the end result being a 3% increase for total construction starts. By major sector, gains are predicted for residential building, up 4%; and nonresidential building, up 2%; while nonbuilding construction stabilizes after two years of decline,” stated Robert Murray, chief economist for Dodge Data & Analytics. He predicts single-family housing construction starts will receive a modest boost from post-hurricane rebuilding efforts in Texas and Florida.

Posted on November 28, 2017

Release Date: Fall 2017

Download the Fall 2017 NAIOP Sentiment Index Report. 

About the NAIOP Sentiment Index

The NAIOP Sentiment Index is designed to predict general conditions in the commercial real estate industry over the next 12 months. The forecast is not based on an analysis of historical data, but rather it represents the outlook of commercial real estate developers, owners, and investors. These NAIOP members are asked to respond to questions based on their ongoing work, including projects in their pipelines. For more information, see Understanding the Index.

Click here to read more.

Posted on November 16, 2017

To create destinations that captivate shoppers beyond mere retail purchases, owners have dramatically transformed malls by investing more than $8 billion in renovations over the last three years. JLL’s new report, A New Mall Rises, explores 90 super regional and regional malls that are currently undergoing or have gone through a significant renovation during that time period.

“Malls must respond to changing shopper preferences with laser focus and evolve their purpose through redevelopments to be relevant,” said John Lambert, director of retail development for JLL. “Many of the 90 properties we looked at are elevating their role beyond purely shopping and becoming destinations for dining out and entertainment, community activities and even lodging and residential.”

 The capital improvement upgrades fell into five main categories:

• Forty-one percent of malls added food and beverage options, and of those, 55 percent also added entertainment offerings.
• Forty-three percent of malls are adding non-retail uses including multifamily, office, hotels, call centers, schools, distribution centers and/or medical facilities.
• Twenty percent of malls are dedicating space to the community including open green spaces and kid-friendly play areas.
• Ninety-four percent of malls are getting a makeover through common area improvements, rebranding and/or making tenant upgrades.
• Twenty-two percent of malls are de-malling the space or demolishing it for the highest and best use in the community.

Posted on November 15, 2017

The U.S. commercial real estate industry ecosystem is changing at a rapid rate due to new forms of technology (e.g., artificial intelligence, smart cities, mobility improvements, sensors) and demographic changes in the workforce, according to Deloitte’s Commercial Real Estate Outlook 2018. The report urges the real estate industry to embrace these changes even though they might represent uncertainty.

The key, according to the report, is to close the gap between technological changes and business productivity over the next 12-18 months by prioritizing the following themes:

• Accelerate business: Unlock the value for REITs by examining their corporate governance and communication strategies, optimizing property portfolios and reassessing public status.
• Avail alternative capital options: Traditional commercial real estate companies can engage with fintech startups for sharable solutions, diversified funding sources and investment purposes.
• Augment productivity: Companies should embrace robotics and cognitive automation to improve productivity in data collection, management and analysis.
• Advance talent and culture: The commercial real estate industry is facing a talent shortage and must be agile, innovative and collaborative to attract new employees.

Posted on November 13, 2017

Miss CRE's premier event? We've got you covered with the conference session recordings, recaps and news coverage you need on the CRE.Converge resources page.

Click here to read more.

Posted on October 24, 2017

Recruiting and retaining top talent has become essential in today's highly competitive marketplace.

Is your 2018 salary and bonus package competitive? Find out with the 2017 NAIOP/CEL Commercial Real Estate Compensation and Benefits Reports.

These valuable reports enable commercial real estate businesses to stay current on salaries, bonuses and benefits for CRE professionals from executive to entry-level positions. The reports include submissions from 400 companies; salary, bonus, incentives, and benefits for 200 positions; and data from 120,000 distinct jobs in the office/industrial, retail and residential property sectors.

View the Report

Posted on October 11, 2017

According to a report by the National League of Cities, U.S. cities’ revenue growth will shrink for the second consecutive year in 2017. The findings in “City Fiscal Conditions 2017,” based on a survey of finance officers from 261 cities, “signal a trend that was last seen in 2006 before the Great Recession.”

Key discoveries include:

• “General Fund revenues are slowing. General Fund revenues grew by 2.61% in 2016, and revenues are projected to stagnate with just 0.9% growth in 2017.”
• “Property tax revenue growth is budgeted much lower than in 2016. Finance officers have budgeted for 1.6% growth in property tax revenues in 2017, compared to 4.3% in 2016.”
• “Finance officers project a decline in sales and income tax revenues for 2017. Both sales and income tax revenues grew in 2016 (by 3.7% and 2.4%, respectively), but finance officers project a decline in 2017 (by 0.2% and 2.7%, respectively).”
• “Confidence of municipal finance officers has waned. Although the majority of finance officers (69%) are confident in the fiscal position of their cities, widespread optimism hit its peak in 2015.”