Tag Archives: outlook

Beat Goes On: E-Commerce, Strong Returns Fuel Bullish Outlook for United States Logistics Investment

Capital From Every Direction Flowing Into Non-Traditional US Circulation Centers as Land Costs, Prices Rise

IDI Logistics just recently offered a 2.2 million-SF portfolio in Ohio and Mississippi to Granite REIT for $122.8 million. Owners are starting to list industrial portfolios in a broad range of US markets.

The industrial realty market’s remarkable development run is continuing into 2018 as web commerce need triggers investors and developers to put more and more capital into logistics portfolios across a growing range of 2nd- and even third-tier U.S. markets.

The push by Amazon and other e-commerce sellers to invest in the “last mile” of their distribution networks to support next- and same-day delivery is driving a burst of advancement and investment activity into smaller warehouse and circulation residential or commercial properties, even as structure and land prices continue to appreciate in traditional seaside U.S. logistics centers.

Despite the boom in storage facility and logistics construction, the U.S. industrial job rate reduced in the 4th quarter of 2017 to 5.1%– lower than in any quarter leading into the Great Economic crisis, according to information presented at CoStar’s recent fourth-quarter 2017 State of the U.S. Industrial Market webcast. In overall, warehouse and distribution tenants soaked up approximately 70 million square in the United States in the last three months of the year, with one-third of that total occurring in the major distribution centers of Dallas, Atlanta, Chicago and Memphis.

While the pace of lease growth is beginning to relieve as new supply comes online, e-commerce need reveals no sign of abating. Amazon has actually signed significant leases just recently in the Inland Empire, CA; Denver, Dallas, Portland and Salem, OR; Philadelphia, Trenton, NJ and Phoenix.

The e-commerce giant’s activity is pressing brick-and-mortar retailers with online shops to compete with Amazon’s fast delivery, with Target, Walmart, JCPenney and Macy’s retooling their omni-channel offerings, either by expanding their circulation footprint or with third-party logistics providers.

“There is an increasing appetite for ‘right now’ shipping alternatives, indicating e-commerce sellers will need to buy more commercial areas to fulfill the demand,” noted Richard Kalvoda, senior executive vice president with Altus Group Ltd, which recently launched findings from its current Genuine Confidence Executive Study. Asked where they expected to see the best returns genuine estate financial investment in 2018, participants provided commercial the greatest allocation for the second year in a row.

Private-equity capital and investors from around the globe are crowding into the unconventionally sexy storage facility sector. Industrial was the only major commercial property type to publish annual sales development in 2017, with total volume edging up 2% from the prior year to $75 billion, even as activity has actually slowed down because reaching record-shattering levels in 2015 and 2016, according to CoStar data.

Many financiers have broadened their horizons after being priced out of main markets. Long gone are the days when San Jose and Phoenix were considered secondary markets.

“As third-party logistics companies and sellers have actually developed out their supply chains to reduce the hazard of disturbances and reach online consumers more quickly, need has increased for industrial buildings of all shapes and sizes,” said CoStar senior handling consultant Shaw Lupton, who co-presented the State of the U.S. Industrial Market report with Rene Circ, director of U.S. commercial research at CoStar Portfolio Method.

Such facilities include extremely functional logistics buildings where online orders are initially fulfilled, midsized sortation centers through which regional shipments pass and last-mile delivery centers positioned to serve local populations in the very same day.

“Financiers are subsequently discovering opportunities to purchase structures leased to credit renters in places that would not typically be thought about tier-one distribution markets,” Lupton added.

With need still chasing after supply in lots of markets, rates of warehouse and other industrial properties keep appreciating, regardless of the moderating sales growth, Circ stated.

Commercial repeat sales grew by an annual 12% in the 4th quarter, almost double the 6.3% growth of the multifamily sector and nearly 3 times the development of the workplace sector index, according to the value-weighted CoStar Commercial Repeat Sales Index (CCRSI) for the last three months of 2017.

Logistics and other industrial property was the only major residential or commercial property type to show development in annual sales volume, climbing up 2% in 2017 from the previous year to $75 billion. While below the record trading volume in 2015 and 2016, the large logistics portfolios that drive sales are have actually resumed trading in current quarters as Blackstone, financiers from China and other buyers have put into the market to scoop up the shrinking supply of for-sale residential or commercial properties.

“Few organizations are over-allocated to industrial,” Circ stated. “Until a few year back, most investors were under designated.”

In the largest offer of the fourth quarter, Blackstone, which returned to the industrial market last year, got a 38-property portfolio totaling 4.4 million square feet in the Southern California cities of Chino, City of Industry, La Mirada and Ontario. The huge private equity company, which purchased the portfolio from Principle Real Estate Investors for around $500 million, or $113.44/ SF, will be an even larger factor in the first quarter of 2017.

Blackstone in January consented to purchase Canada-based Pure Industrial Real Estate Trust, which owns and operates industrial homes across North America, in an all-cash offer valued at about $2 billion. In another large end of the year offer, IDI Logistics offered a 2.2 million-square-foot portfolio in Ohio and Mississippi to Granite REIT for $122.8 million.

“Some big portfolios have actually currently struck the marketplace and others will entering the market this year, so I would not be surprised if 2018 is as strong as last year for the industrial section, in the middle of minor decreases in the other home types,” Lupton stated. “We see really strong interest from our institutional financial investment customers – both the conventional financiers with a performance history, along with customers that would like more direct exposure to industrial. Along with extremely strong leas and earnings development, it continues to drive prices up,” Lupton said.

There are a couple of yellow flags because of the heavy construction in particular markets. Speculative jobs account for a greater proportion of current shipments and projects under building in 2015 and while renting velocity has been excellent, the waters will be checked in 2018 when record levels of new inventory go into the marketplace.

That said, core logistics residential or commercial property capitalization rates were at a lowest level of 4.4% at end of 2017, compared with 4.7% at the peak of the last cycle, Circ said. Nevertheless, the spread between industrial cap rates and the United States Treasury rate is nearly 200 basis points, compared with just 70 bps Ten Years earlier.

“There’s certainly plenty of cushion in the spreads, which is why we believe industrial rates can continue to rise, even in this rather frightening part of the cycle,” Circ said.

Vacation Retail Outlook: Standard Bargain-Hunting, Rising Mobile App Use Expected to assist Increase Sales Both Online and in Shops

Omnichanneling Begins to Pay Dividends as Merchants Blend Strategies for Reaching Shoppers in Shops and Online

Credit: Simon Home Group

With an additional shopping weekend on the calendar and customer confidence standing at a 17-year high, nearly all retail analysts are preparing for extremely strong 2017 vacation shopping results for both online and brick-and-mortar sellers.

Forecasts vary from a 3.8% boost in vacation retail sales from 2016 by the International Council of Shopping Centers (ICSC) to a 6% rise forecasted by PricewaterhouseCoopers, according to CoStar’s survey of vacation costs outlooks by CRE brokerages, accounting firms and market groups.

The National Retail Federation anticipates 164 million Americans to strike shopping centers and shopping mall or store online over the Thanksgiving vacation weekend and Cyber Monday. NRF tasks 70% of those buyers plan to go to stores on Black Friday, typically the leading sales day of the year for physical sellers.

In spite of the strong showing expected in stores, Deloitte reports that shoppers anticipate to invest 52% of their vacation budget plan this weekend online and 46% in physical shops. Nearly three-quarters, 72%, of participants to Deloitte’s study strategy to shop online on Cyber Monday and Deloitte is predicting vacation online sales to soar another 18% to 21% to a record $107 billion, up from in 2015’s 14.3% boost.

” Consumers are preparing to increase spending, and while online is expected to pull more from shoppers’ budgets, there is still a healthy outlook for traffic in the stores, especially on Black Friday,” stated Rod Sides, vice chairman of Deloitte LLP and U.S. retail, wholesale and distribution leader. “Store retailers will have shoppers’ attention with the overall enjoyment of the day and tradition of shopping with loved ones.”

Regardless of where they shop, many customers will count on cellular phone and other digital tools. Almost 40% of Deloitte survey respondents anticipate to buy something online while in a store after finding much better rates or rate matching, and 36% say they’ll be affected by offers from a mobile phone while in-store over the Thanksgiving weekend.

An estimated 56% of those responding to this year’s National Retail Federation (NRF) and Prosper Insights & & Analytics survey had currently begun their holiday shopping by Nov. 7, the week after Halloween, which has now become the official start of the holiday shopping season as sellers attempt to entice shopping dollars earlier and earlier before Christmas.

Consumers remain in their finest position in years to spend more money in coming weeks. A strong and constant economy, nearly full work and the rise in consumer self-confidence need to help drive a 6% increase in retail spending this holiday, with Generation X buyers for the very first time exceeding Baby Boomers as the greatest spenders, inning accordance with JLL’s holiday shopping outlook.

Shoppers Won’t Desert Shops, But Will Bring Their Cellular Phone

Nearly 40% of customers surveyed by JLL said they prepare to patronize more than six physical stores this holiday season, with nearly two-thirds reporting they will shop at “warehouse stores” such as Target or Walmart and about 44% doing a minimum of some of their shopping online. Department and clothing or accessories shops will garner simply under half of sales, followed by 35% for electronic, toys or video game shops, and 31% for bath/beauty or cosmetic stores, inning accordance with JLL.

” Customers who prepare to do the majority of their shopping online will still venture out to physical stores, either to pick-up purchases bought online, or buy high-end products they want to touch and test,” stated JLL Director of Retail Research Study James Cook.

On the other hand, merchants are significantly utilizing mobile technology to create sales and collect consumer data, according to CBRE’s 2017 U.S. Retail Holiday Trends Guide.

As brick-and-mortar brands make mobile an integral part of their omni-channeling method, retail sales made through a phone or tablet are expected to increase 38% for full-year 2017, accounting for 34.5% of all e-commerce purchases, with the bulk going to brick-and-mortar brands.

Enhancements in retailer mobile apps like in-store scanning, with immediate access to in-depth product details and reviews, “wish lists” and offers tailored for shoppers, are expected to be popular with consumers this season and throughout 2018, as more retailers and shopping mall landlords embrace mobile and social networks advertising.

” We prepare for that this season will display methods of reaching clients through numerous selling channels as well as catering to their need for new principles and worth pricing,” said Melina Cordero, head of retail research study in the Americas for CBRE.

” We’re still in the early phases of this really considerable disturbance,” stated Cushman Senior citizen Handling Director and eCommerce Advisory Group head Ben Conwell. “The connection between the shop and online experience is huge and reveals no indication of decreasing.”

Pop Up Principle Infecting Retail Logisitics

CBRE likewise kept in mind an interetsting pattern of a “pop-up warehouse” model going into the marketplace. Early on-demand storage facility companies, such as Seattle-based Flexe, are attempting to match excess storage facility area with merchants needing extra storage area on a temporary basis. A retailer with big seasonal stock peaks can utilize the brand-new service to reserve distribution area on a short-term basis.

Users who use on-demand flexible storage facility area to augment a seasonal inventory surge with a single yearly peak can improve storage facility utilization by practically 100% and cut general seasonal storage facility and stock costs in half, according to a recent study by Flexe.

” We see these patterns as natural actions for sellers making every effort to best their omnichannel operations for offering across all channels and to improve customers’ experiences in each,” added Brandon Famous, CBRE senior handling director of retail advisory and transaction services.

Shop Closures to Peak in 2018

Disallowing a Christmas wonder, nevertheless, the increased retail spending is not likely to reverse the fortunes of numerous distressed merchants at risk of personal bankruptcy and mass store closures, inning accordance with Garrick Brown, vice president and head of Americas research for Cushman & & Wakefield.

He anticipates 2017 to end with an aggregate overall of 9,000 shop closures in the United States, and likely more in 2018.

Late Tuesday, New York City based clothing chain J. Crew Group Inc. revealed it will close 39 more stores by the end of January for an overall of 50 stores in fiscal-year 2017 as same-store sales decreased 12% in the most current quarter.

“We acknowledge that in order to own top-line development we need to develop our company design from a conventional brick-and-mortar specialty seller to a digital-first omnichannel organisation,” J. Crew President, COO and CFO Mike Nicholson informed financiers.

“We are devoted to driving outsized growth with our strong e-commerce capabilities, complemented with a more appropriately sized realty footprint,” Nicholson included.

NAIOP Study: One-Year Market Outlook Bolstered by Self-confidence in Employment, Occupancy Rates

Potential customers for the CRE market continuing at a more robust rate are higher than exactly what was anticipated 6 months back, inning accordance with the most recent NAIOP Sentiment Index performed earlier this spring.

While the results, which reversed a consistent two-year down trend in market sentiment, were tape-recorded before the current stock depression this month, at the time study respondents thought that overall market conditions 12 months from now (in March 2018) would continue to be favorable for the commercial property industry, and they expected conditions would be better than they are today, according to NAIOP.

NAIOP stated its belief index is 0.9% greater than the previous survey it performed in September 2016, although it has actually decreased 5.4% on an absolute basis given that the very first survey was carried out in February 2015.

The two largest favorable changes in the study that assisted improve the outlook into positive area were much greater confidence in work and in occupancy rates.

Survey ratings for adding workers (a 5% boost) and tenancy rates for new tasks (a 5.3% boost) were both a significant trend reversal for these 2 categories from the prior three studies.

The NAIOP survey also recognizes where respondents reveal issue: the costs of construction materials and labor and first-year cap rates.

Expectations for both products and labor costs was up to bigger negatives (reductions of about 3%) and optimism for first-year cap rates fell by 4.5%.

The Sentiment Index is developed to forecast basic conditions in the industrial realty market over the next 12 months. The forecast is not based upon an analysis of historic information, however rather a look into the future by commercial property designers, owners and financiers asked to respond to the same set of concerns each time.

The information is assembled and evaluated by Tom Hamilton, Ph.D., MAI, CRE, and Gerald Fogelson Distinguished Chair in Property at Roosevelt University in Chicago.Direct Remarks

from the Study Individuals NAIOP provided some of the more important remarks from participants but without attribution.” I am comfortable with a strong market over the next 12 months; nevertheless I believe we will be dealing with a lot more tough economy 12-24 months from now. The marketplace exuberance about [President] Trump will fade, interest rates [will] begin to rise, the implications of overbuilding multifamily product will kick in, and the cyclical economy will begin a down turn.”” As long as the equity and capital markets stay as strong as they are, I think any slump we experience in the markets will have the ability to be balanced out and controlled. “” I see an extraordinary degree of uncertainty about [the] cost of
loan( interest and cap rates), market fundamentals (supply and need), unforeseeable economic changes in the age of [President] Trump, and tax reform if it gets traction( loss of historical, brand-new markets, and low-income housing tax credits; carried interest; brand-new taxes to balance out brand-new costs; and so on). Take advantage of promised deregulation may be neutralized by dysfunctional government handled by unaccountable appointees. We may have a series of re-starts in Washington. “

<aMoody's sees brighter outlook for U.S. video gaming industry

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Moody’s Investors Service is feeling much better about the financial future of gaming than it did around the same time in 2014.

The credit rating firm stated today that it has actually updated the outlook for the united state gaming market to stable from unfavorable. Moody’s assigned the industry a negative outlook last June partially because of declining gaming revenue, but a new agency report now expects that income will increase for the next 12 to 18 months.

Moody’s Senior Vice President Keith Foley stated in a statement that the company believes pc gaming profits will certainly increase by as much as 2 percent monthly as compared to the year before. He said that must result in boosts of 3 percent to 4 percent in the market’s incomes prior to interest, taxes, depreciation and amortization.

Most of the 18 states tracked by Moody’s saw gaming profits grow in both April and May of this year, and the market is now feeling favorable effects of “numerous years of aggressive cost cutting,” the company said. The 18 states saw a cumulative 4 percent boost in April and a 4.1 percent boost in Might compared with one year previously.

In truth, just two states– New Jersey and Connecticut– did not enhance in May, Moody’s said. And profits grew even without considering brand-new gambling establishments in Maryland, Ohio and Louisiana, which Moody’s interpreted as an indicator that “the quantity of revenue cannibalized from existing gambling establishments might be reducing.”

Still, Foley stated in the statement that Moody’s believes American customers will keep their spending restricted to “items that are more vital than gaming” due to uninspired disposable earnings growth. That will certainly remain to put pressure on the market.

American Pc gaming Association President Geoff Freeman commended the report for showing that, despite “intense competitors,” gambling establishments can grow and be excellent members of the neighborhood.

“However, it’s incumbent upon state officials to review their gaming policies to ensure they promote development and reinvestment that will stimulate greater growth, develop more jobs and provide extra tax revenues that support vital civil services,” Freeman said in a statement.

He urged public authorities to sign up with the gaming association’s anti-illegal gaming effort, which launched in April.

Outlook Occasion to Highlight Economic Conditions in Southern Nevada, U.S.

What

Stephen P. A. Brown, director of the Center for Business and Economic Research (CBER) in the UNLV Lee Business School, will certainly provide the center’s financial outlook for the nation. Ryan Kennelly, economic expert at CBER, will certainly give the center’s economic outlook for Nevada and Southern Nevada. Topics will certainly include video gaming, tourist, work, housing and building.

Continuous Tra, associate director of CBER, will certainly offer the center’s long-term economic outlook for Southern Nevada. Robert E. Lang, director of Brookings Mountain West, will discuss chances and challenges for Southern Nevada’s long-term growth.

When

8 a.m. to 10:30 a.m., Thursday, June 25
Registration starts at 7:30 a.m.

Where

The Venetian/Palazzo Congress Center
3355 Las Vegas Blvd. South, Las Vegas, NV 89109

Details

Up until June 17, the registration charge is $80 per person and $75 for two or more individuals from the exact same company. After June 17, the charge maximizes to $100 per person. Registration charge includes english breakfast and a CD of the discussions.

Registration is readily available on the CBER website. For added details, contact Peggy Jackman at -LRB-702-RRB- 895-3191 or [email protected]!.?.!. Media Media rate to go to and need to sign up for a credential by getting in touch with Karyn S. Hollingsworth at -LRB-702-RRB- 895-3904 or [email protected]!.?.!.