Shopping malls, which McKinsey has defined as “the heart and soul of communities, the foundation of retail economies and a social sanctuary for teenagers everywhere,” have been under severe pressure from the proliferation of e-commerce and other forces. Although shutdowns and consumer reluctance to shop in person reduced average mall foot traffic by 90% at the pandemic’s outset, COVID-19 isn’t wholly to blame for the decline; it merely accelerated trends already in place. In 2014, McKinsey asserted the traditional mall as being “at a critical inflection point,” with “a storm of global trends coming together at the same time to cause malls to change the role they play in people’s lives.” In the subsequent years, “the single biggest factor in the decline of foot traffic at shopping malls has been the rise of online shopping,” says business content platform MarketScale. A record 12,200 U.S. stores closed in 2020 and about 125 consumer goods and retail companies filed for bankruptcy that year, on top of almost 6,000 stores that closed in 2019. Though suburban foot traffic has nearly returned to 2019 levels, foot traffic at urban shopping centers and malls remains 16% below pre-pandemic levels. Traditional mall anchor tenants like Neiman Marcus and J.C. Penney declared bankruptcy recently and reduced their store presence, while gas prices, COVID-19 variant surges and supply chain issues further complicated the issue. But while the challenges are undeniable, don’t count the mall out as a preferred shopping venue just yet. Retail foot traffic rose 61% during Black Friday 2021 compared to the previous year, according to JLL, while average foot traffic was up 27% in January 2022 over January 2021. DigitalSignageToday reports that “industry experts believe the mall is ready for a comeback. It will look different, though, and leverage technology...

Commercial real estate still faces a hiring crisis. Though pipelines are ready to burst, employment levels are at a 50-year low. Talent recruitment poses a challenge throughout real estate management, but commercial firms face unique battles that linger from the Great Recession. Only fresh strategies can help lift these organizations out of the hiring deficit. Why is Hiring Still an Issue? Though the Great Recession ended about a decade ago, we are still feeling the aftershock. In the midst of the economic slump, commercial firms stopped hiring. As the nation reeled towards recovery, hiring resumed with the exception of entry level positions. “That lack of training has created a shortage of people who can step into mid-level positions right now,” explains Dianna Rudd, senior director of facility staffing and recruitment at IMPEC Group of California. Her organization offers workplace consulting and witnessed the hiring drama firsthand. As a result, the industry also dropped off the radar with prospects. Fast-forward and we are still struggling with a shortage of entry-level and mid-tier talent. For example, it took 10 views of a job posting before someone would apply back in 2006. In 2018, it took about 30 views. What Hasn’t (Really) Worked To bolster recruitment efforts, commercial organizations increased compensation by nearly 16 percent from 2013-2018. This rate is even higher for C-level executives, reports National Real Estate Investor Online. Rates are reported between 20 and 30 percent higher for executives. But offering more money hasn’t solved the problem.  Other industries have recovered while commercial real estate organizations struggle to generate interest. Though the current national unemployment rate fluctuates around a healthy 3.7 percent, commercial real estate faces a nearly negative unemployment rate. Competitive compensation packages are a viable way to promote engagement. The additional strategies...

Imagine an oasis of calm just outside of the bustling city, a place where the community is structured around wellness and a connection with nature. Now imagine that this place has as many fun shopping and entertainment options as a conventional neighborhood– without conventional waste issues. This place exists and it’s called Serenbe. Welcome to Serenbe The New York Times calls the development “a utopian experiment in new urbanism being molded out of Georgia red clay ” about 30 miles southwest of Atlanta. More than 700 residents call Serenbe home. The community is often called together for music festivals, goat yoga, movie nights, wine tastings, and local theater performances. As provincial as it sounds, Serenbe is not a haven for barefoot wanderers and struggling artists. Homes start at $1,400 per month for a 600 square-foot apartment and max out shy of $2,000,000 for a single family home. Those are high price tags for Chattahoochee Hill Country, an otherwise unassuming rural community. With that said, Serenbe is probably the coolest countryside hamlet in the southeast for its emphasis on wellness and sustainability. Conscious Convenience For several years, development focused mostly on residences, often countryside getaways for Atlanta’s elite. Commercial construction has established a presence in the community—still abiding by community virtues—but offering more experiences and conveniences for residents. Four complexes form the hub of shopping at Serenbe. Each has a unique focus such as art, education, agriculture and health. The Mado District is the latest addition with an emphasis on health. One Mado will be a $250 million, 30,000 square-foot mixed-used development that is an alternative to the quintessential strip mall. Tenants will likely include health and wellness specialists such as a chiropractor, massage therapist, acupuncturist, and other holistic practitioners. There are also parcels for...

Appropriately for the “acceleration” theme of its global conference this week, Realcomm recently hosted a webinar in which several experts, including Yardi’s Alex Stanton, commented on the rapid pace of change in commercial real estate and new data management technology entering the marketplace. Stanton, regional director of commercial sales, said the movement toward an integrated concept of information management is so profound that it’s altering the very concept of the lease. “Client,” for example, no longer means a single entity but instead a broader category of people to be managed with increasingly granular information. “Space” encompasses coworking, parking and amenities as well as traditional offices. “Tenants” are morphing into “guests” whose service expectations require the collection and management of an expanding body of information including such non-real estate sources as weather and traffic information. Companies are creating digital twins of everything from their buildings to their tenants and the environment surrounding them. The best prescription for managing change, he said, is aligning IT resources with a company’s strategic direction. “When there’s a nice marriage of business and IT, there’s stronger direction and execution on investments, efficiencies and other actions,” Stanton said. Other participants and their thoughts on managing change included: Sam Wong, head of analytics and data science for global real estate manager QuadReal Property Group. When building its data platform from scratch, QuadReal focused on gaining insight and action, not just reporting, and its attention to the information management and database portions of the solution stack equaled that devoted to business intelligence and analytics. “We also sought a platform that could grow in capability and size so we don’t just worry about what we need to do in the next year or so,” said Wong, who managed both the business and technical teams...

A panel of corporate security experts held a recent Realcomm-hosted webinar to discuss strategies for managing cyberattacks to buildings that are increasing in frequency, sophistication and impact. Don Goldstein, senior vice president of IT for CBRE, recounted how the “Not Petya” ransomware attack of June 2017 encrypted hundreds of thousands of computers around the world and shut down whole networks and systems for weeks.  With the damage still being added up, the initial $850 million economic cost estimate could rise. “Not Petya hit all verticals, from nuclear plants and pharmaceutical firms to steel makers, consumer lenders and law firms,” Goldstein said.  Cautioning against disaster fatigue, he added, “We need to get people to think about and prepare for this type of event.” Ryan Allbaugh, business initiatives consultant for Wells Fargo, said that because internet of things (IoT) connected devices don’t have traditional IT operating systems or antivirus and antimalware, cyberattacks are “no longer an IT problem, but an operational problem” for every part of the economy. As we see more IoT connections, everything is vulnerable, from remote lighting control to elevator and video surveillance controls, Allbaugh noted.  “The challenge with IoT is that these systems often lack centralized visibility, and doing something as simple as getting a physical inventory can be a challenge,” especially with widely dispersed properties.  He outlined the National Institute of Standards and Technology Cybersecurity Framework, which offers guidance on assessing and improving prevention, detection and response to cyberattacks. Lorie Wigle, general manager for Intel, noting that “one company can’t solve this on its own,” urged collaboration and information sharing among IoT participants.  “We need to have ongoing lifecycle security management services in place to continue to measure and detect compromises to components of end-to-end services,” she said. Given that there’s...

Longtime Yardi client Gary Shaw, president of Arizona-based commercial property manager Arcadia Management Group Inc., is a fan of doing business with a single connected solution. “Going with the single stack approach was a no-brainer,” he says, referring to Arcadia Management’s use of Yardi Voyager, Yardi Procure to Pay, Yardi Inspection and other products from the Yardi Commercial Suite. “It’s so much more efficient housing several business operations in one place rather than updating software in separate databases for finance, maintenance and other operations.” Although highly successful as a third-party management company, “we are constantly looking for ways to improve our business processes,” Shaw says, which is why Arcadia Management Group frequently volunteers as a beta tester for new Yardi products. Too Many Databases An unresolved dilemma recently gave Arcadia Management a chance to go first again. The company kept some documents, such as invoices processed through Yardi Procure to Pay in the Yardi cloud. Other content, such as vendor management activities uploaded from VENDORCafé and various lease and property documents, were kept in Microsoft SharePoint. “Maintaining security on multiple systems was hard on our users. I didn’t want to continue running multiple databases. That produces duplicate effort as well as inconsistent security permissions,” Shaw says. “I wanted our document management functionality to become completely integrated with our business the way our other Yardi products were. “When Yardi approached me with a new solution that linked Voyager with SharePoint, it patched a huge hole in our document management system.” Centralized Content Management That solution is Yardi Document Management for SharePoint, which integrates Yardi Voyager business data with the Microsoft SharePoint platform to create a single, centralized content management solution. Arcadia Management Group became the first beta user in May 2017. “Going between Voyager and...

Alex Stanton, Yardi industry principal for Commercial, joined other technology experts in exploring the fast-paced evolution of technology, automation and innovation in a recent Realcomm-sponsored webinar. The six-member panel described the current real estate technology paradigm that considers tenants, guests, employees and shoppers as interrelated elements of a user experience.  As a result, property owners and managers aim to deliver a high-value experience by using new property management software systems that can capture and apply data inclusive of all occupant touchpoints, from reservations to parking to the building environment. Stanton elaborated on this theme, noting the convergence of historically separated property management technologies for property and facilities maintenance, energy management, procurement and self-service experiences.  Amid rising expectations of among space and asset users, he said, “facility, property and business management systems are coming together,” allowing inventory management, preventative maintenance and exceptions management from a core suite.  Additional technology innovations include “interfaces that enable experiences, such as service requests, photo-enabled technology for notifications, concierge services and payments, with immediate download of supporting photographs,” he said, adding, “Yardi sees tremendous opportunity in artificial intelligence, the internet of things and visualization.” Addressing another part of creating an optimal building experience, Stanton referenced Yardi’s creation of an energy suite that encompasses everything from energy optimization, sourcing, utility expense management and compliance. Other speakers addressed other drivers of real estate technology innovation.  Rick Gehringer from real estate developer Caruso related how a common technology platform can provide “a true experience management system” for guests by capturing all touchpoints and every user engagement across a property.  Examples of how technology can make the guest experience enjoyable, efficient and high-quality include a common reservation system, a rewards system that captures receipt images and an automated parking system. John Gilbert of commercial...

A group of real estate technology experts—including Alex Stanton, Yardi industry principal for commercial—took stock of cloud computing’s growing role in real estate in a recent Realcomm-sponsored webinar, “The Latest Trends in the CRE Cloud.” With about 80% of companies running some portion of their workloads in public or private clouds, the panel explored the new opportunities this dynamic environment presents real estate companies as well as potential pitfalls. Emphasis on security Stanton focused on the challenge of safeguarding the massive amount of information involved in cloud-based commercial asset management. “Sources of real estate data are ever-expanding, and more public and private information is available as the Internet of Things takes hold,” he said.  Commercial real estate is now edging into the “Big Data” phase with transactional data being married with content including photos/videos, satellite imagery, weather data and building performance systems. While the collection points for this information can optimize business and site efficiency, they also present more potential points of entry for security threats. As a result, he said, “the bar is continuously being set higher for security.”  Yardi and other solution providers create vulnerability management protocols and multiple levels of data center and application security.  Real estate companies, meanwhile, must educate their employees on protecting the information they access with business applications on remote devices and other means. “We continue to see the acceleration of technology adoption in the commercial real estate space. It will be an exciting journey, but from a data governance standpoint we need to constantly adapt and identify the solutions that will connect them in an ever-evolving environment,” Stanton said. IT’s new perspective Another panelist was Bob Rybak, chief information officer for Morguard, whose portfolio includes 44 million square feet of commercial space and adopted 100% cloud...

The U.S. commercial real estate market took something of a respite in 2016, during a year characterized by political volatility. Compared to the previous year, when the market fired on all cylinders, office players were more cautious in 2016, with leasing and sales activity cooling down to more sustainable levels, per most industry reports. Office tenants were reluctant to make any major moves pending the conclusion of the presidential election, thus lease renewals and consolidations took the stage in the past year. Though office sales activity also decreased 7% year-over-year, according to Colliers, the national transaction volume was still the fourth-highest yearly total in the past 15 years, reaching $140.5 billion. We enlisted the help of Yardi Matrix sales data to round up a list of the 50 largest office deals of 2016. The results of our analysis aren’t all that surprising: the New York City office investment market remains the most attractive destination for both local and offshore buyers, though other markets also landed a good deal of capital in the past year. The U.S. office market is poised to become even more attractive in the future, especially to foreign investors, if Brexit goes through. Check out the list of the top 50 largest office deals of 2016 on the CommercialCafe blog. NYC Home to Largest Single-Asset Sale of the Year The priciest office transaction in New York City and the second-largest overall office deal of the year was the $1.93 billion sale of the AXA Equitable Center at 787 Seventh Avenue in Manhattan. One of the biggest investments in pension fund CalPERS’ history, the sale closed Jan. 27, 2016, at $1,179 per square foot. The 51-story, 1.6 million-square-foot tower is LEED certified and includes 49,000 square feet of retail space, a parking garage and access to the underground concourse of Rockefeller Center. CalPERS bought the...

A revolutionary new technology can put solar cells on almost any surface, transforming traditional solar energy installations and turning buildings into power generators. Rising up from suburban sprawl like the mythical Oz, the downtown business district of any major metropolis repeats a familiar scene: high-rise office buildings, covered in windows, reaching for the sky. Skyscrapers may typify city skylines, but all that reflective glass also represents an incredible opportunity. Imagine harnessing all that surface area by converting those reflective surfaces into powerful solar arrays. That’s the idea behind Santa Barbara-based startup Next Energy Technologies groundbreaking solar technology. Surface Generation Currently, buildings account for anywhere between 40-50% of total global energy use and over half of all CO2 emissions. In addition, electricity represents one of the largest variable operating expenses building owners face, accounting for as much as 20-25% operational budgets. Many facilities successfully reduce consumption by incorporating renewable energy onsite and energy efficiency strategies like LED lighting and energy management systems. But what if the buildings themselves could generate power? The concept is deceptively simple: use transparent solar cell ink to print photovoltaic cells directly between standard dual-pane windows. The genius lies in the execution. For Next Energy founders Daniel Emmett and Corey Hoven, it’s all about making solar efficient, customizable and inexpensive. Windows Transformed “The most important difference with our technology is the transparency,” Hoven explains. “While all other solar cells are opaque and absorb all visible light, the windows that use our system look like conventional windows. They can allow the visible spectrum to get through, which makes our solar cells highly efficient without changing the appearance or functionality of the window.” Tinted windows can help manage indoor temperatures and lessen heating and cooling costs, but adding a solar component ups the...

Several landmark projects break ground in the U.S. just as headlines herald the slowdown of real estate investments by the Chinese. According to a Bloomberg report, American real estate transactions with China are slowing down for the first time since 2011. The loss of momentum is a result of constraints issued by the Chinese government to minimize capital flight. While new investments dwindle, the nation’s skylines are beginning to see the fruit of the past surge: Hong Lei, consul general of China in Chicago, reports that Chinese firms have invested nearly $13 billion in real estate throughout the Midwest in the past 15 years. A recent project, which broke ground the summer, will be one of the nation’s largest investments. With a cost of $950 million, Vista Towers of Chicago (rendering, left) will be the largest real estate investment by a Chinese company in the US. The project is a joint venture between America’s Magellan Development Group and China-based conglomerate Wanda Group. The international presence of Wanda Group spans 300 million square feet of real estate, including retail, commercial, and hospitality. Vista will be the first notable project in The Windy City. Jeanne Gang, a respected Chicago-based architect and MacArthur fellow, designed Vista Towers. Standing 93-stories tall, it will be the third tallest building in Chicago. The luxury site will include a hotel and 406 condominiums. Condo rates will range from $1 million to $18 million. Across the country, Los Angeles records that China is responsible for seven out of 18 land deals made since 2014. Oceanwide Plaza (rendering, left) will be one of the largest Chinese investments in Los Angeles. With an estimated cost around $1 billion, the nearly 5-acre site will hold three towers including a hotel, 150,000-170,000 square feet of retail,...

As brick-and-mortar and e-commerce companies continue to fight for consumers’ attention and dollars, today’s customer has a plethora of shopping options at his disposal. Though online sales are expected to reach $414 billion by 2018, according to Retail TouchPoints, the majority of all retail sales still occur in physical stores, pushing companies to try to offer their clients the best of both worlds. Consequently, a lot of companies now use a variety of tools and technologies to attract customers and get them to visit their stores or websites again. Omni-channel retailing Amazon is making a foray into the bookshop business, with plans to open a number of brick-and-mortar bookstores across the country, in order to reach a much wider audience for its products. Expansions such as these emphasize the importance retailers now place on omni-channel retailing, where companies offer customers a variety of ways to shop, whether it’s online shopping through a desktop or mobile device, or the traditional retail store. Often times, a customer will visit a showroom or physical store, then they will order the product online instead, so it’s crucial for retailers to offer both options. Same-day delivery Shipping time is another important factor that customers take into consideration when placing an order. The faster the shipping time, the more satisfied the customer and the more likely they’ll shop again. Amazon is already ahead of the curve with same-day and two-day delivery service, with Sainsbury planning to also launch a grocery same-day delivery service to compete with faster rivals. Fast shipping time is crucial for customers who wish to save time and have their groceries delivered to their doorstep. Chatbots In an effort to come up with new and groundbreaking marketing strategies to attract customers, numerous companies have adopted chatterbots—a new...

While past Olympic Games have left graveyards of unused stadiums in their wake, Brazil hopes its facilities will live on even after the athletes have left the building. Though some aspect of the Rio 2016 Olympics may not be living up to expectations, Rio mayor Eduardo Paes expects many of the locations specifically constructed for the games will outshine past Olympic venues, especially when it comes to longevity. From handball courts to stadiums, the city’s entire Olympic infrastructure exists in flux – designed to transition from its primary function to something entirely new once the games are over. With a heavy emphasis on “nomadic architecture,” several of the Rio’s Olympic settings will be repurposed after they’ve serviced their primary function. The pools, arenas and fields will eventually become schools, parks, community swimming pools and much more. No More White Elephants One of the curses of hosting the Olympics is leftover infrastructure. Few cities are capable of supplying sites for every event, and so pools appear out of empty fields and stadiums rise up along the skyline. Beijing’s Bird’s Nest lives on as a tourist attraction – and occasional soccer spot – but its glory days will never be revisited. In Athens, the Olympic Park lies abandoned, covered in rust and slowing fading in a cloud of neglect. Meanwhile, Sochi’s once bustling Olympic Village now lies empty, inhabited only by stray dogs and unfinished construction. In acknowledgement of the burden placed on host cities to supply appropriate sporting arenas, the International Olympic began to encourage bidders to spend some time planning for life after the games. London, one of the first examples of this legacy mode philosophy, took the suggestion to heart by including several structures that were easily dismantled and repurposed. Many other cities,...

Two Europe-based grocery chain companies have recently completed their $28 billion merger—a marriage that will have a big impact on the U.S. retail market. Royal Ahold, based in Zaandam, the Netherlands, operates Stop & Shop, Giant, and Martin’s stores in the U.S., while Brussels-based Delhaize operates in the U.S. under the Food Lion and Hannaford brands, the Richmond Times-Dispatch reports. The two companies have joined forces to become the fourth-largest supermarket operator in the country, following in the footsteps of Walmart, Kroger and Albertsons. The new company will operate under the Ahold Delhaize name and will be headquartered in the Netherlands. Plans for the merger first surfaced in June 2015. In order for the deal to move forward, the Federal Trade Commission has required that 81 overlapping stores be divested by the two companies to competitors. As a result, Florida-based Publix is set to acquire 10 Richmond-area Martin’s stores; Weis Markets will take over 38 stores in Delaware, Maryland and Virginia; Big Y Foods will grab seven stores in Massachusetts; New Albertsons will grab one Maryland store; Saubel’s Market will acquire one Pennsylvania store; Tops Markets will buy six stores in Massachusetts and New York; and Supervalu will land 18 stores in Maryland, Pennsylvania, Virginia and West Virginia. The FTC imposed the condition in order to avoid the merger from eliminating direct supermarket competition, which could harm consumers. It is not yet clear whether Martin’s will become Food Lion or vice versa following the merger. However, experts predict that the two brands will continue to operate under the same name. Martin’s is reportedly the number one grocery store in terms of sales in the Richmond area, while Food Lion is one of the region’s largest employers. According to Food Trade News, both Martin’s and...

Advances in technology are giving the retail property sector a helping hand to define compelling offerings through the use of big data. Developing financially successful retail centres is challenging. In fact, it’s widely regarded that real estate companies, invested in retail assets, are among the leading pioneers of strategic real estate management. Successful strategies are born out of understanding the best approach to engage shoppers with the right tenant mix to suit regional trends as demographics change and are impacted by regional economic, cultural and political circumstances. Adapting a retail offering and providing new ways of engaging retailers and consumers while delivering services that enhance relationships, drive down costs and deliver value for owners are undoubtedly key. However, at the very heart of any successful strategy is one, mission-critical element – data. With the retail sector generating more data in a single month than many other vertical real estate markets, the use of simple tools and spreadsheets is redundant as firms struggle to gain valuable insights into retail operations and trends. Business technology is undoubtedly a major driver. Helping provide a solid, error-free foundation to house data is one thing, but the power comes from delivering a seamless, real-time framework that enables employees to analyse the data in such a way to deliver sound retail strategies. In an industry that is so invested in defining compelling offerings through the use of data, has the technology sector risen to the challenge? The most successful retail real estate companies are now embracing the latest technology to support their strategies and the leading software providers are raising the bar. Cloud-based offerings now enable companies to host their data in a single secure database, providing a risk-free environment that delivers real-time access to strategy-shaping analysis to desktops and...

Being always connected has become a necessity, especially in the fast-paced business world. Reliable internet connectivity is now indispensable for the commercial real estate industry, as it helps landlords and brokers maintain a constantly open line of communication with both current and potential clients. Most businesses today are using a variety of web-based tools, apps and platforms to market their services or products and increase productivity, and such tools require fast and reliable internet connectivity at all times. This is exactly what WiredScore is attempting to achieve. The Wired certification program rates and recognizes commercial office buildings that feature best-in-class internet connectivity, similar in concept to LEED certification for energy efficiency and environmental sustainability. Launched back in 2013 by Mayor Bloomberg and the New York City Economic Development Corp., the program examines the number and quality of internet service providers, bandwidth capabilities and connection reliability and awards buildings a coveted Wired Certification. So far, WiredScore has awarded the certification to more than 650 buildings around the world, totaling a quarter of a billion square feet of office space. Some of the world’s most recognizable buildings have sought and achieved the certification, including the Empire State Building in New York, the Chicago Board of Trade Building, Miami’s Southeast Financial Center, One California Plaza in L.A. and the Leadenhall Building in London. We spoke to Arie Barendrecht, co-founder & CEO of WiredScore, about the importance of the program in today’s business environment. Why has fast and reliable connectivity become so important to office property owners? Barendrecht: What’s important to tenants is important to property owners. In a survey that WiredScore performed on approximately 450 businesses in NYC, high-quality connectivity was identified as the third most important attribute of an office space (after price and location), and...

LONDON – Industrial property has emerged as one of the strongest performing asset classes this year, apparently brushing off the threat of Brexit as consumers shop – or rather, click – until they drop. The rise of e-commerce means tenant demand is robust, with record rents being achieved in tightly-constrained urban areas where logistics space is competing with residential. However, occupiers are having to invest heavily in technology. In a continuing series of think tanks, Yardi brought together a panel of experts to discuss these issues in the European real estate market. Panelists: Claer Barrett, Financial Times – Chair Alan Holland, Business Unit Director, Greater London – Segro Richard Croft, Chief Executive – M7 Real Estate Mark Bowden, Partner – Caisson Investment Management Michael Williams, Investment Manager – M&G Real Estate Kevin Mofid, Research Director – Savills CB: The good news is that we’re seeing healthy yields and rental growth on industrial space, particularly in the Greater London area – but is this mainly because so much of it has vanished in the past decade? AH: The pressure on land for industrial and urban logistics is immense, particularly in areas of population concentration where developers like Segro are competing with house builders. According to the GLA, around 700 ha of industrial land has been lost in Greater London as places like Nine Elms, Old Oak Common and the Olympic Park ha ve become residential areas. That’s the equivalent of seven times the size of Regent’s Park – it’s gone and it won’t be replaced. KM: Since 2009, Savills research shows the supply of existing warehousing stock has decreased by 70 per cent. But at the same time, take-up has risen from a long-running average of 18m sq ft per year to 22m sq ft in the...

Commercial real estate has seen a remarkable run-up in values in recent years, driven by steady job growth and robust fundamentals. The strong performance coincides with the economic recovery in the U.S., but even so, the outsized increases are well more than would normally be expected given moderate GDP growth in the 2% range during that time. Overall, property values in the U.S. are up 17.7% from the last peak in December 2007 and 66.1% above the trough in January 2010, according to the Moody’s/Real Capital Analytics Commercial Property Price Index (CPPI). Major markets and apartments are doing even better. RCA’s core six markets (New York, Boston, Washington DC, Los Angeles, Chicago and San Francisco) are 39.2% above the last peak and 126% above the last trough, according to the CPPI. Meanwhile, apartments are 60.7% above the 2007 peak and 111.3% above the 2010 trough. So what is driving the rate of increase? Simply put, there is a lot more capital looking to buy commercial properties than owners that want to sell. Commercial real estate is increasingly popular with a wide range of institutional investors, for a number of reasons. As noted, the sector has performed extremely well, which always drives capital, but it is more than that. Commercial real estate produces a regular dividend that is very attractive. The average yield for core real estate is roughly 5.5% and for public REITs it is about 4%. Compared to other fixed-income products (say sovereign debt) that is extremely attractive, not to mention that the debt is secured by properties. Another attraction for foreign investors is to hold assets in American dollars. Whether Americans are satisfied with the level of growth in the economy, compared to other parts of the world the U.S. is seen...

It’s the perfect combination: a boost in local jobs, diminishing office supply, and rising rents. The three have positioned the Atlanta office market for a record-breaking year. With a conservative lens, JLL lists the Atlanta office space vacancy rating at 17.5 percent and average rents of $22.54 per square foot. Transwestern confidently states a 15.9 percent vacancy rate and average rates closer to $25. In both scenarios, this quarter marks one of the highest asking rents in nearly 30 years. There is still room to grow. Conditions suggest that asking rents could approach $30 per square foot: PM Realty Group estimates that Atlanta broke its 2000 occupancy gain record. The market totaled almost 3.7 million square feet of office space absorption for 2015. The resulting 14.2 percent vacancy rate for Class A properties broke a 15-year low, according to Transwestern. Atlanta’s Class A direct occupancy rates broke a 14-year record, increasing by 300 basis points to 86.7% over the prior 12 months. Class B office space accounted for 29.7% of the total net absorption for 2015. Just three years ago, Class B office product saw negative absorption in Atlanta. Demand for quality office space in Atlanta continues to grow. BisNow reports that Metro Atlanta is expected to add 60,000 jobs per year for the next few years. Nearly 25 percent will be “premium” jobs that require office space—yet only 885,000 square feet of office space is under construction for the year. If 885,000 square feet doesn’t sound like a game-changing amount of space to you, you’re not alone. It’s barely a drop in the preverbal bucket. With the exception of residential, many investors still see real estate as a risky investment. Funding for new construction remains scarce, which means that existing Class A properties...

Evidence of climate change is all around us – for example, the amount of Americans with asthma has more than doubled in the past three decades, and rates are alarmingly high among lower-income people, who are more likely to live near a power plant. It’s no wonder that people are getting sicker when, as a country, we emit more than 5.5 billion tons of carbon dioxide (CO2) a year. As of August 2015, the Obama administration released a proposal to tackle this tremendous issue in the form of the Clean Power Plan (CPP).  The plan sets the country’s first-ever national standards limiting carbon pollution from power plants, which were previously unregulated. The CPP aims to reduce carbon dioxide emissions by 32 percent by 2030 by establishing standards, but allowing individual states the flexibility to choose how this should be accomplished. With such a daunting goal, it can be confusing to know where to start when considering alternative energy for your properties. We caught up with Jennifer Burke, an energy consultant at Yardi subsidiary MCEnergy, to find out what this new plan means for the commercial real estate industry. How will the CPP affect commercial real estate? JB: The CPP is intended to reduce carbon emissions by 32 percent for U.S. power plants – below 2005 levels.  Coal fired power plants are the greatest emitters of carbon.  Therefore, the CPP will have the greatest impact to electricity pricing in geographic areas where coal is more dominant in the generation of electricity.  The PJM ISO, the largest Independent System Operator (ISO) in the U.S., which encompasses 13 states in the mid-Atlantic region, has a relatively high concentration of coal fired power plants and will be impacted the most.  As more coal plants are retired, there may...

Research by DTZ, one of the top three global commercial real estate services companies in the nation, has quantified the perceived benefits of sustainable office spaces. The studies are helping owners channel their efforts towards features that are most valuable to tenants. In 2014, studies by Nils Kok, Ph.D., executive director of the Global Real Estate Sustainability Benchmark (GRESB), helped to establish the financial benefits of sustainable construction. Kok’s findings revealed that sustainable office buildings trade at a 13 percent premium over conventional buildings, receive rental rates that are at least 3 percent higher, and increase internal rates of return by as much as 6 percent in less than 15 years. New research by DTZ examines the correlation between tenant surveys and the buildings that tenants occupy. More specifically, the team evaluated responses to Kingsley Associates’ tenant surveys with 61 buildings in Washington, D.C. Allison Porter, vice president of sustainability certifications at DTZ, reports that sustainable features positively influence tenants perception of their workplace. “The results seem to show that tenants who are in sustainable buildings are more satisfied,” Porter says. “We already know that tenant satisfaction leads to tenant retention, which decreases vacancy and rollover costs.” Tenant satisfaction is preceded by two major factors: knowing that the building is green and experiencing the benefits of its sustainable features. Even the greenest building with the best environmental and tenant wellness upgrades will fall flat with tenants if it is not certified by a third party. The DTZ report revealed that buildings with posted Energy Star certifications scored higher than buildings without the certification by an average of 30 points. LEED EB certified buildings received ranking increases averaging 10 points higher than non-certified buildings. Office buildings must also have the sustainable features that tenants appreciate....