Archive for the ‘Office’ Category

Office Demand Still Catching Up With Job, Business Growth

Friday, May 3rd, 2013

Although the average employment rate of nationwide office is growing at a little over 2%, demand for that space grew at half that rate during the first quarter. According to the CoStar Group, despite moving in fits and starts, the recovery has helped stabilize the office market and support relatively high property valuations, but at the same time, modest job growth seen to date has yet to translate into meaningful demand for office space, causing rents to remain at ‘discount’ levels.

In order for things to really turn around, and for office operators to be able to charge higher rents, a lot of the excess space left over from the downturn must be eaten up. This process could take some time. Many believe that the office vacancy recovery is less than halfway done, and as it stands, there is more upside in the office sector than other areas of commercial real estate.

To read the full article from the CoStar Group, featuring insight from Paradigm Tax Group, click here.

Posted in Economy, Leased, Office, Paradigm Info, Real Property, Western | No Comments »

Medical Offices Grow in Favor among Net Lease Investors

Wednesday, May 1st, 2013

Demographics, federal legislation and technological advances are all working in favor of medical office, generating growing attention from net lease investors. According to the National Real Estate Investor, the aging populace is expected to increasingly seek medical services, and the Affordable Care Act will expand insurance rolls, while improvements in medical services will also heighten demand, a situation that is not expected to go away any time soon.

Another attractive feature of medical office properties is the fact that tenants tend to be highly stable due to their high costs in establishing offices and moving equipment. These investments are usually only made because the tenants plan on staying there for long periods of time. In addition, medical tenants tend to have good credit and leases that provide for rent growth over their duration.

To read the full article from the National Real Estate Investor, click here.

Posted in Economy, Leased, Medical, Office, Real Property | No Comments »

Future of Commercial Real Estate Full of Uncertainty

Monday, April 8th, 2013

Due to the fact that the present day workforce doesn’t need to be near each other to get things accomplished anymore, there seems to be almost nowhere for office and retail demand to go but down. According to The Denver Post, collaboration and purchasing now largely happen in the digital world, where everything you need to know about an organization, person, or product can be found with a few clicks of the mouse.

The problem for commercial real estate moving forward is the fact that due to the easy access allowed by the digital world, rental space is becoming more and more undesirable. Because of the way most commercial real estate leases are structured, if you want office or retail space, you’re going to commit to paying for it for a very long time. For companies who wish to operate lean and remain cautious about the economy, physical space may be too unstable of a commitment to make.

To read the full article from The Denver Post, click here.

Posted in Economy, Office, Real Property, Retail | No Comments »

Demographic Trends Lead Investor Interest to Alternative Assets

Thursday, April 4th, 2013

Due to lack of confidence in the future performance of traditional commercial real estate property types, many investors are beginning to set aside capital for alternative assets. According to the National Real Estate Investor, such assets, including student housing, seniors housing and medical office buildings, among others, have broad demographic trends supporting their success, proved immune to the recession and offer higher yields than comparable properties in other sectors.

The current market demand for alternative assets is being driven by demographics. The 78 million baby boomers nearing retirement and 80 million echo boomers entering their college years are creating a significant need for more senior housing, medical office and student housing space. In addition to the high demand, many of these special purpose properties can be purchased at very attractive cap rates at the moment as they all seem to carry less liquidity due to their early stages of development and smaller pool of investors.

To read the full article from the National Real Estate Investor, click here.

Posted in Economy, Medical, Multi Family, Office, Real Property, Senior Living, Student Housing | No Comments »

Downtown Pittsburgh Class A Office Vacancy Below Five Percent

Friday, March 8th, 2013

The Class A office market in downtown Pittsburgh, Pennsylvania is now the tightest in the country with less than five percent vacancy. According to the Pittsburgh Skyline Review for Spring 2013 by Jones Lang LaSalle, the majority of demand is coming from the top 16 downtown skyline buildings in the city, driven largely by financial institutions, health care companies and law firms.

The office market in downtown Pittsburgh was further tightened due to a host of major renewals and new leases, with four of the five biggest lease agreements in 2012 being renewals. As space continues to become scarcer, rents are also beginning to see significant increases. The average asking rents for Class A office space in Downtown Pittsburgh was slightly under $27 per square foot at the end of 2012, marking the third straight year of rising rents.

To read the full article from the Pittsburgh Business Times, click here.

Posted in Eastern, Economy, Leased, Office, Real Property | No Comments »

Medical Office Landscape Constantly Garnering Interest

Tuesday, March 5th, 2013

Due to its traditionally lower vacancies and higher rents, the medical office market has generated investors’ interest over the past decade like never before. According to GlobeSt.com, medical and dental tenants tend to be stable, credit worthy, and move less frequently than office tenants due to patient referral patterns and long-term patient relationships which are carefully developed over time. In fact, the vacancy rate among medical office buildings nationwide is generally half that of regular office buildings at about 5-7%.

The recent trend of tenants seeking space outside of the congested hospital vicinity to more free-standing medical office locations has led to many investors and developers increasingly identifying existing, underutilized office or retail properties for conversion to medical office buildings at a lower cost and quicker turnaround to market. The demand for such space is as strong as that of on-campus space, and everything is pointing to low vacancies and high rents in both areas for the future.

To read the full article from GlobeSt.com, click here.

Posted in Economy, Health Care, Medical, Office, Real Property | No Comments »

Corporate Cuts Lead to Smaller Office Spaces

Monday, March 4th, 2013

One major casualty of the financial crisis has been huge, opulent corporate offices, which are now giving way to smaller spaces and cheaper rents. According to a researcher from Jones Lang LaSalle Inc., the average office space per person in the United States has gone from about 250 square feet to 150 square feet since 2008, with that number being predicted to get as low as 125 square feet by 2017.

Though real estate spending has ticked up among corporations since 2010, it is not due to sheer volume of space. The increase is rather a product of these companies spending money to use space more efficiently in order to help with productivity. Nowadays it is more common for office layouts to stress open spaces that accommodate more employees and encourage collaboration.

Posted in Economy, Office, Real Property | No Comments »

San Jose High-Rise Incentives Extended after Early Success

Thursday, February 28th, 2013

The deadline for San Jose, California high-rise developers to obtain a certificate of occupancy in order to qualify for an incentive program that will cut fees has been extended to August 31, 2016. According to the Silicon Valley Business Journal, in addition to cutting construction taxes for qualified San Jose high-rise projects in half, the incentives reduce park fees, eliminate requirements for fire-control systems and guarantee that application review will take less than 120 days.

The original purpose of the incentives was to spur high-rise development. The results to date have been so positive that the deadline was extended almost three full years. One specific project has reaped direct benefits of reducing their construction taxes from $1.56 million to $735,000 with the incentives. Several other examples are being realized across the city, and these cases are expected to generate more interest in development.

To read the full article from the Silicon Valley Business Journal, click here.

Posted in Construction, Economy, Multi Family, Office, Real Property, Western | No Comments »

All Commercial Real Estate Sectors Now Slowly Recovering

Monday, February 25th, 2013

Gradual economic improvement and job creation are allowing all sectors of commercial real estate to slowly recover after being hit hard by the recession. According to the National Association of Realtors’ Commercial Real Estate Outlook, the bright spot in the industry continues to be multi-family as pricing for the ten markets in the prime multi-family index have regained pre-recession peak levels due to the high investor interest in the sector.

Outside of multi-family, office, industrial and retail all project a decline in vacancy rates from now until this time next year. Additionally, all are also expecting increases in rents over the same time-frame. The economy as a whole still will remain the deciding factor in whether or not this progression continues. The overall economy is expected to grow 2.5% in 2013, and with modest job creation and assuming there is no fiscal cliff; the demand for commercial space should gradually rise.

To read the full article from AGBeat, click here.

Posted in Economy, Industrial, Multi Family, Office, Real Property, Retail | No Comments »

Upcoming Activity by Several Taxing Jurisdictions in the Southeast

Thursday, February 14th, 2013

A variety of taxing jurisdictions in Georgia, Tennessee and North Carolina have recently announced upcoming activity relevant to values in their respective counties.

The Georgia counties of Fulton, DeKalb and Cobb have indicated recently that they will be increasing assessments on Class A multi-family assets for 2013. Fulton has further indicated that they will be going after Class B multi-family as well. Additionally, Gwinnett County will be targeting increases for large office buildings, high-rise hotels, restaurants, shopping centers with a grocery store anchor, mini-warehouses and some larger warehouses, and any commercial property that recently sold.

In Tennessee, Shelby County has released their capitalization rates for the 2013 revaluation. They will be providing this information to large commercial owners in the next two weeks with notices set to be issued by mid-March. Paradigm has been advised that they will go after increases in Class A apartments, some grocery anchored retail, and selected industrial space over 450,000 square feet. Rutherford County will be targeting office, select retail, and some multifamily, but their revaluation will not occur until 2014. Finally, Davidson County has mentioned a desire to go after office and multi-family, but it will be bracketed by submarket. They may go after additional assets, but they have not yet completed their reviews.

In North Carolina, the listing deadline for Forsyth County has been extended to February 15^th. During their recent reappraisal information sessions, the county laid out the schedule of standards and values to be utilized during this year’s reappraisal. The notices are due to be issued next week and the appeal forms will be included with the notice. Additionally, the county is expected to raise the tax rate by 6.3 cents per $100 due to a projected 8.6% drop in revenues from this year’s reappraisal. This drop is anticipated due to an expected reduction in values for several property types.

For more information on any of these developments, contact Cameron Moore of Paradigm’s Atlanta office at (678) 954-6002 or cmoore@paradigmtax.com.

Posted in Apartments, Eastern, Economy, Hospitality, Hotels, Industrial, Multi Family, Office, Paradigm Info, Real Property, Retail, Strip Centers | No Comments »

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