Commercial Real Estate News Wrap Up From Liberty SBF: August 15 2016

August 15, 2016

This year’s presidential election will certainly impact the real estate market, but not as much as expected according to Peter Linneman, chief economist of NAI Global. In an article for the Commercial Property Executive, Linneman states “I believe both candidates are believers in the markets, far more than Obama was. So I think either of the two candidates will be good for the economy.” However, he stated, the vote will not impact real estate as much as some other circumstances due to the commercial real estate market’s relative stability. Linneman only expects a short term knock on the economy’s positive growth, of only about a quarter to half of a percent of GDP growth.

CRE investors are experiencing déjà vu in searching for yields, facing a similar situation to what they saw in 2007. Similar to before the financial crisis, investors continue to focus on higher-yielding buying opportunities from distressed sellers, especially driven by a flight of foreign capital coming into the US. The combination of these investments combined with high valuations of financial assets and all time low interest rates has some investors worried about what’s to come. In response, investors seem to have shifted their investment property portfolios, investing less in office properties and more in multifamily.

The Austin apartment market is hitting record highs, with the average rent coming out to $1,227. Furthermore, the occupancy rate has averaged out to around 94 percent, and area apartment supply is  growing by 7.7 percent, with almost 17,000 new units already in development. Although rent prices have increased slower than they have in past years, tenants are still experiencing “sticker shock.” According to the Multifamily Executive, the average rent in Austin is higher than anyone making under $13 an hour can afford, an issue when you must have a gross monthly income at least three times the rate of rent in order to even qualify for a rental.

8+1 (That’s 9) Things You Need To Know

  1. Low vacancy rates mean high prices for commercial real estate in Long Beach, CA
  2. Social media and real estate: what works
  3. Trump’s economic policy team has deep real estate experience
  4. Self-storage hits record-setting stride
  5. The town center regains significance over the suburban mall
  6. Ask the right questions upfront: making borrower and lender expectations clear
  7. What is the next hot commercial real estate market?
  8. New CMBS retention regulations may not be so bad for the CRE lending market after all
  9. How senior-housing investment is changing