Cluttons First Dubai Office Market Bulletin

Cluttons LLP, the Central London, UK-based real estate firm, has introduced its inaugural Dubai Office Market Bulletin for Spring 2016, which "seeks to unpick the complexities of Dubai's fragmented office market, while providing a detailed overview of the city's office landscape." The bulletin draws from the performance of 22 submarkets across the city in the first quarter of the year, which revealed that 13 markets showed no change in starting rents in 2015, while seven markets had notable increases, and two markets with lower limit rents decrease over the 12 months of 2015.

"Despite sustained demand, occupiers remain cost conscious and budget driven in the face of a softening global economic backdrop, with the key word for many being 'prudence'," said Faisal Durrani, Cluttons' head of research. "Landlords, by contrast appear to be slow to react to the cooling market, with many reluctant to move on asking prices and others demonstrating a lack of flexibility for lease terms at renewal. The emerging gulf between market reality and landlords' expectations is a concern, particularly for a market that is now starting to show signs of maturity."

According to the bulletin, with the establishment of two new free-zones in the form of Dubai Design District (D3) and Dubai World Trade District in 2015, Central Dubai has become the focus of many occupiers and developers, particularly as it has long suffered from a demand-supply imbalance in the face of rising requirement levels. D3's lower and upper limit free-zone rents have registered a 67% and 28% rise respectively since its launch, pushing them to between AED 150 psf and AED 165 psf.

To read the full report, click here. For more news and information visit Blumberg Partners.

CBRE Sees Moderate Investment & Rental Growth for 2016 Global CRE Market

CBRE Group released its 2016 Global Real Estate Market Outlook this month, which anticipates that moderate economic growth with low interest rates are likely to continue in 2016, and expects a year of "volatile markets but steady economic growth." Highlights from sectors include:

Economy
Expect 2016 to be a year of volatile markets but steady economic growth. Consumers in the U.S., EU and many parts of Asia Pacific are spending gains from rising incomes, low interest rates and low oil prices, which should support GDP growth.

Capital Markets
Global commercial real estate investment markets are expected to remain active in 2016, but the pace of growth is anticipated to slow after six years of recovery and price appreciation.

Office
Most U.S. and European office markets are expected to tighten further in 2016 as demand for space is expected to outpace limited new development. However, Asia Pacific office markets will be more mixed.

Industrial
Robust demand from e-commerce and third-party logistics companies for warehouse and distribution space—including for smaller in-fill locations within major metros—will continue to reshape the industrial market.

"The current environment of variable but generally improving growth in the developed world, alongside low interest rates and low inflation, is very supportive of consumers and commercial real estate markets," said Richard Barkham, CBRE's global chief economist. "There are some risks for sure, including weakening sentiment due to volatile stock markets, rising interest rates in the U.S. and the U.K., financial stress in emerging markets and the slowdown of the Chinese economy. However, because consumers in the U.S., Europe and even China are in good shape, we think the global economy is strong enough to withstand these challenges and that the real estate and economic reality will be better than expected in most places in 2016."

To access the full CBRE report, click here. For more news and information visit Blumberg Partners.

CoStar: 2015 Best US Office Year Since 2007

CoStar Group has released its State of the U.S. Office Market 2015 Review and Forecast, which reflects that U.S. office net absorption topped 100 million square feet for the first time since the Great Recession. With the office vacancy rate down from 11.3% in 2014 to 10.8% at the end of 2015, CoStar cites broadening demand and constrained levels of construction contributed to tightening space availability in virtually every metro area.

"The market is overwhelmingly strong at this point in the cycle. With the momentum in the market, I’m sure the next quarter will also be strong," said Hans Nordby, managing director of CoStar Portfolio Strategy, who presented the findings along with CoStar Director of Office Research Walter Page and Vice President and Research Director Dean Violagis.

Highlights from the report include:

— Vacancies declined in 64% of the nation’s office submarkets and 56% of metro office markets during the fourth quarter of 2015. CoStar analysts expect office vacancy to continue trending lower to approximately 10% in 2017.

— Annual net absorption of office space increased to 101 million square feet in 2015, compared with 93 million square feet in 2014, while developers delivered 64 million space feet, a 41% increase over the previous year. The amount of new space under construction, which has trended downward in the last couple of quarters, stood at 126 million square feet at year end, a modest 7% increase from a year ago, and near the historical yearly average since 2000.

— 2015's 4.4% annual rent growth topped the previous year’s growth of 3.8%, with rents surging at a particularly strong rate in CBDs such as San Francisco at 19.4% and Raleigh, NC at 13.9%. Even in the urban core of Atlanta and Detroit, rents in the urban core rose at 11.2% and 10.5%, respectively.

For more news and information visit Blumberg Partners.

CCRSI Price Indices Reflect Strong Year in the CRE Market

CoStar Group has released its year-end Commercial Repeat-Sale Indices (CCRSI), which showed double-digit price growth at the end of 2015 in all regional and property types across the U.S. commercial real estate markets. The CCRSI provides the market's first look at December 2015 commercial real estate pricing, noting that "improving CRE fundamentals, surging investor demand and liquid capital markets propelled the CCRSI composite indices upward in 2015. Demand for core property assets was especially strong." An excerpt from the summary follows:

December transaction activity remained true to its seasonal pattern observed over the last several years, spiking in the final month of the year as investors raced to close transactions prior to year-end. The December composite pair volume of nearly $18 billion was the highest monthly total on record, helping lift total 2015 volume to $128.3 billion, a 26.2% increase from the previous peak reached in 2014.

While pricing in core U.S. markets set records in 2015, investors moving out on the risk spectrum in search of higher yields resulted in equally strong sales activity in non-core markets and property types, as reflected in the equal-weighted U.S. Composite index. Heavily influenced by lower-value properties typical of those in secondary and tertiary markets, the equal-weighted U.S. Composite Index rose 12.6% in 2015 and is now within 3.4% of its previous high water mark.

To review the CCRSI and accompanying graphs, click here. For more news and information visit Blumberg Partners.

Beige Book Looks "Expanded, Upbeat" for 2016 CRE

The Federal Reserve has released the latest Beige Book, summarizing how the economies in the Fed's 12 districts are performing, which finds that the reporting districts are "generally upbeat." With respect to real estate, the data indicated that activity was generally improved over the last Beige Book, with stronger activity cited for multifamily construction and commercial real estate. Overall, most districts reported that loan demand grew, credit quality improved, or loan delinquencies fell, with credit standards changing little. An excerpt from the summary follows:

Most reporting Districts characterized nonresidential real estate activity as modest to moderate; Boston and New York indicated little change. Rental rates rose in more than half of the reporting Districts, and vacancy rates were mixed. Most Districts reported modest or moderate growth in commercial construction, and the Dallas District noted high levels of industrial construction in Dallas-Fort Worth. Contacts in the Atlanta District expect construction activity to increase slightly, while contacts in the Philadelphia, St. Louis, Minneapolis, and Richmond Districts expect overall commercial real estate activity to continue to strengthen at least modestly.

To read the full January 13, 2016 Federal Reserve Summary of Commentary on Current Economic Conditions by Federal Reserve District, click here. For more news and information visit Blumberg Partners.

Avison Young Releases 2016 CRE Forecast

Avison Young has released its 2016 Canada, U.S. and U.K. Forecast, suggesting that stakeholders "will need to keep a global perspective, stay abreast of changes in the broader environment and, increasingly, devise innovative solutions to complex problems." The company's annual report looks at commercial real estate markets in 55 metropolitan regions in Canada, the U.S. and U.K., analyzing activity from 2015 and prospects for the year ahead. For the U.S. office markets, Avison Young saw overall vacancy declined 60 bps year-over-year to 12.4%, in 2015, with all but six markets recording lower rates when compared with year-end 2014. At year-end 2015, the amount of office space under construction in the U.S. had increased to almost 86 msf (52% preleased), up from 68 msf one year earlier; however, according to Avison Young, there is no real threat of oversupply in the near term.

Avison has forecast "modest improvement" in the U.S. office vacancy rate in the coming year, noting that absorption may be tempered by tenants shifting to smaller and more efficient footprints. "From an occupier perspective, we have seen a slight decrease in capital deployment, primarily related to economic uncertainty, and the occupier tendency toward risk aversion, shorter leases and optimization of space usage may continue in 2016,"said Earl Webb, President, U.S. Operations for Avison Young.

To read the full Avison Young forecast, click here. For more news and information visit Blumberg Partners.

Savills Studley Buys Real Facilities

Real Facilities, a Toronto-based full-service commercial real estate firm, has been acquired by international real estate advisor Savills Studley as part of the company's continued expansion in North America. While terms of the deal were not disclosed, in a press release Savills indicated that Stan Krawitz, who founded Real Facilities in 2000, will oversee the operations for Savills Studley as Executive Vice President, Founder and Head of Canada. The newly acquired office will continue to provide tenant representation, transaction management, capital markets, project management and design services to companies across multiple industries, including office, industrial and retail.

"It was important that Savills Studley create a strategic presence in Toronto, the fourth-largest commercial real estate market in North America," Michael Colacino, President of Savills Studley, said of the deal. "We are very excited by the opportunities this acquisition presents for our clients as many multinational firms have targeted the Greater Toronto Area for growth. Stan and the Real Facilities team share our steadfast commitment to the tenant representation model and providing best-in-class service to clients."

Stan Krawitz added: "Savills Studley and Real Facilities have collaborated on numerous large transactions for clients on both sides of the border for more than five years. In many ways, this is just the formalization of the great partnership we've enjoyed. Joining Savills Studley provides us with a true global platform for our clients. Many Canadian companies are expanding to the U.S, as well as seeking locations in Europe and Asia. The transition has been seamless."

For more news and information visit Blumberg Partners.

Latest CoStar Reports Shows Ideal Conditions for CRE Growth

CoStar has released its Commercial Repeat Sale Indices (CCRSI) for the month, looking at figures for commercial real estate pricing, which reflects continued price growth in Q3. Steady employment growth, low interest rates, and the global uncertainty that has pushed capital into 'safe-haven' investments helped drive continued investment and price growth, with real estate investors continuing to push activity. According to the CCRSI, composite pair sales volume of nearly $91 billion in the first three quarters of 2015 grew 32.8% compared with the first three quarters of 2014, and put 2015 on track to become the strongest year on record for transaction volume.

Some excerpted hilights follow:

STEADY GAINS SEEN IN OFFICE SECTOR.
The core gateway markets continued to do well during the third quarter of 2015. In addition, former housing-bust markets such as Atlanta and Miami, which have so far lagged in the recovery, also saw some of the most pronounced improvements in market fundamentals and price growth in the last year. The national U.S. Office Index increased 2.7% in the third quarter of 2015 and 10.3% in the 12-month period ended September 2015. The Prime Office Metros Index advanced by an even stronger 12% in the 12 months ended September 2015, propelling it to within 1.2% of its prior peak level.

INDUSTRIAL MARKET PRICE GROWTH HIGHER OUTSIDE PRIME METROS.
The industrial sector's solid fundamentals performance has supported price growth of 2.6% in the third quarter of 2015 and 10.9% in the 12 months ended September 2015. The Industrial Index is now within 6.3% of last cycle's peak. The Prime Industrial Metros Index has generally mirrored that of the broader market. Although its 7.7% increase in the 12 months ended September 2015 was lower than the national Industrial Index, and the Prime Industrial Metros Index remained 15% below last cycle's peak. This suggests more room for price appreciation as rents continue to rise, but space markets are expected to become increasingly competitive as construction levels increase.

To read the full report, click here. For more news and information visit Blumberg Partners.

Fed's Beige Book and Commercial Real Estate

The U.S. Federal Reserve's latest Beige Book, more formally called the Summary of Commentary on Current Economic Conditions, was released today with figures pointing to continued modest expansion in economic activity during the reporting period from mid-August through early October. Citing "generally weaker" manufacturing activity, "subdued" wage expansion and a "slowed" pace of growth in some regions, the Fed's report highlights a handful of concerns while offering a modestly optimistic economic assessment overall.

According to the report, commercial real estate markets have shown signs of strengthening in all twelve federal reserve districts. Most noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger, with Boston and St. Louis noting brisk construction in the health sector, including senior care facilities, and Cleveland also indicating strong demand for senior living structures. New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.

To read the full report, click here. For more news and information visit Blumberg Partners.

CRE Prices Crest Pre-Recession Peak

The latest Moody's/RCA Commercial Property Price Indices (CPPI) report was released this week, revealing that in August the CPPI rose 1.6%, topping its pre-crisis peak on a Consumer Price Index (CPI) adjusted basis. According to the report, which captures the national all-property composite index over the past three months, the CPPI now stands 14.5% above its pre-crisis peak on a nominal basis and 1.5% above it on a real, CPI adjusted basis. Central business district (CBD) office was the best-performing segment, while core commercial property prices are approximately 8% higher than their prior peak,

"Central business district office was by far the best-performing segment of the CPPI in the past three months, with prices rising 6.3%," says Moody's Director of Commercial Real Estate Research, Tad Philipp. "Suburban office was the next-best-performing segment, with prices up 3%."

Jim Costello, RCA's senior vice president, said prices have been pushed up because the capitalization rates have been falling. The cap rate is a commonly used formula for valuing a commercial-property investment. It's calculated by dividing a property's net operating income by its current market value. If the cap rate falls while the expected income from the property remains roughly the same, the asset values tend to rise. "Most of the strong price appreciation we've seen to date has been a function of cap-rate compression, something like 70% of the price increases, in fact," Costello said.

Moody's/RCA researchers note that the only property sectors where prices have not exceeded their pre-recession peak are retail (still down 7%) and suburban office (down 9%). Moody's research subscribers can access the latest report here. For more news and information visit Blumberg Partners.

Rosemont Realty and HK's Gemini Investments Join Forces

Gemini Investments Limited, a Hong Kong listed company, has acquired a majority stake in Rosemont Realty of Santa Fe, the biggest owner of office properties in Albuquerque, to form a new venture, Gemini Rosemont Realty. The new company combines Gemini Investment's institutional capital with Rosemont's existing portfolio in the U.S., which includes 135 buildings, representing approximately 15.9 million square feet of commercial real estate in 22 states.

"We'd like to add 1 million square feet of space to our portfolio in the Dallas region, but it depends on the opportunities in the market," Michael Mahony, CEO of the newly formed Gemini Rosemont, told the Dallas Business Journal. "We see great opportunities to continue acquiring high-quality real estate in the U.S. market while also harvesting value for our investors, both existing and new. The possibilities for this venture are tremendous."

Gemini Rosemont will launch a multi-year acquisition program utilizing the joint venture's access to capital in the U.S. and throughout the world. The company's investment strategy will build on Rosemont's success targeting Class A properties in gateway, primary, and select secondary U.S. markets.

"Rosemont, with its comprehensive real estate platform and superior performance history, was precisely the investment opportunity Gemini Investments was looking for in order to invest in the U.S. real estate market," said Li Ming, chairman of Sino-Ocean Land Holdings Limited and Gemini Investments. "We look forward to a strong and successful partnership."

For more news and information visit Blumberg Partners.

Q2 National Office Sector Report from Savills Studley

Savills Studley Research has released its National Office Sector Report for the second quarter of the year, which found that the national overall office availability rate ticked down to 16.4% after three consecutive quarters at 16.5%. While availability inches lower, Savills Studley found that the US national overall rental rate rose for the 15th consecutive quarter, rising by 1.2% from the prior quarter.

"Availability has barely budged so far in 2015 as new construction expands in more markets and leasing slows. Deal volume in the first half of 2015 has fallen by more than 15% compared to the first half of 2014 in most major markets, with very sharp decreases in Boston, Manhattan, Atlanta and Dallas." said Keith DeCoster, Savills Studley Research.

An excerpt from the report follows:

Slow Start to 2015
Weaker demand in markets such as Houston and Washington, DC is to be expected considering the pullback in the oil and gas industry and constrained government spending. More surprising is the decreased demand in markets that registered strong leasing in 2014, such as Atlanta, Boston, Chicago and Dallas/Fort Worth. Some drop-off in the fastest-growing markets like Dallas/ Fort Worth was inevitable – there are only so many 500,000-sf tenants looking for space, after all. Despite very strong demand from the biopharmaceutical sector in Cambridge, tenants in the Boston region leased only 21.8 msf in the last four quarters, down by 17.6% from a year ago. As of midyear 2015, deal volume in Downtown Chicago and Manhattan was down by 24.0% and 31.7%, respectively, compared to the first six months of 2014. In contrast to these markets, leasing in Denver, Phoenix, Los Angeles and San Francisco and Silicon Valley shows little sign of cooling.

Multiple Factors Impacting Leasing
Slower leasing so far in 2015 in many markets (a decline of more than 15% in two-thirds of major markets) can be attributed to several factors. For one, the breakneck pace of job creation in high-growth markets such as Atlanta and Dallas/Forth Worth has decelerated just a bit – from 4.0%-5.0% to 3.0%-4.0% (still well above the national average). Also, the surge in 2006 and 2007 leasing created a cyclical peak in 2016 and 2017 rollovers, which was boosted by companies signing early renewals. The very largest of the tenants in this cohort have satisfied their space needs. Additionally, during 2013 and 2014 many of the very best bargains were spoken for. In Lower Manhattan, for example, the sub-$45 Class A space that was still out there a few quarters ago has been snared. As traditional tenants in more markets a bit of a standoff is emerging particularly between landlords and traditional space users unwilling to ante up. Biotech companies in Cambridge may be willing to pay 70 or even $80 but banks and law firms are not. It remains to be seen whether this slowdown in leasing is just a lull, or if the concern expressed by some analysts – that the recovery is getting long in the tooth – is becoming a reality. Of note, Boston, Chicago, Los Angeles and Manhattan (in contrast to San Francisco and Silicon Valley) still depend on traditional space users for most of their leasing. Banks and law firms remain firmly rooted in the reality that their profit margins and revenues are still below pre-recession norms. Consequently, resistance to rental rate escalation in Boston’s Back Bay, Downtown Chicago and Midtown Manhattan still prevails.

To read the full report, click here. For more news and information visit Blumberg Partners.

CRE Takes Note of Warehouse Boom

A new article from the Wall Street Journal titled Raising the Roof Making All the Difference in Warehouses examines the growth in the industrial market as e-commerce continues to boom, and the needs of these net-based businesses. An excerpt follows:

Real-estate firm Prologis Inc.'s latest project, a one-million-square-foot warehouse in Tracy, CA, will boast a 40-foot-high ceiling, 25% taller than the typical 32 feet. The project isn't pre-leased, making this the first speculative building of such dimension that the company has built.

Prologis executives said it is going bigger to tap into the e-commerce boom, which is changing the way industrial properties such as warehouses and fulfillment centers are built. E-commerce retailers need more space than do wholesalers that ship goods in bulk to stores, because they transport a vastly wider variety of products in much smaller batches.

"If your stapler breaks, you go online and you order a single stapler. If you're delivering to OfficeMax, you don't go into a warehouse and pull one stapler off the rack, you pull out a whole pallet of them," says Scott Lamson, president of Prologis' northwest region.

As a result, e-commerce companies need workers to pick out and pack each product by hand. They often build multiple mezzanine levels and racking systems known as "pick modules," which are typically about nine feet high. Ceiling heights of 40 feet, rather than the industry-standard 32 feet, allow a distributor to build three levels above the ground floor instead of two, and still leave room for light fixtures and fans.

For more news and information visit Blumberg Partners.

CBRE's Investor Intentions Survey 2015

CBRE has released the results from the CBRE North America 2015 Investor Intentions Survey which reflects a confident market with half of the survey respondents indicating that they expect their purchasing activity to increase in 2015, and of those one-third said they plan to raise investment volumes by 20% or more. Investors identified increased competition and the challenge of finding appropriately priced assets as the greatest—and only—obstacle to investment in 2015.

"The strength of the economy creating real estate demand, improved property fundamentals and measured supply gains make North America extremely attractive, with investors maintaining a hungry appetite for real estate assets. As was the case in 2014, a majority of investors intend to increase their property acquisitions in 2015. A natural consequence of this appetite for real estate assets is the competitive investment environment," said Chris Ludeman, Global President, CBRE Capital Markets.

Investors remain interested primarily in industrial, office and multifamily product, with industrial leading the charge. Industrial is the preferred property type for investors in 2015, with one-third of survey respondents selecting either of the two industrial categories as their preferred sector.

To read the full survey findings, click here. For more news and information visit Blumberg Partners.

Q1 in U.S. Office Market

CoStar data shows that several of the 54 largest U.S. office markets posted negative net absorption in the first quarter, which is the one area that CRE analysts will be tracking carefully in coming months. According to the group, the first three months of 2015 provided another 'feel good' quarter for the U.S. office market as office rent growth and elevated leasing and development activity continued to reflect strong fundamentals as brisk business activity and growing confidence in the broader economy encouraged business to lease space and investors to acquire office buildings. An excerpt from their reporting follows:

"While we still expect healthy overall growth in both 2015 and 2016, we view the office market as returning to a balance between supply and demand and also between tenant and landlord strength," said Walter Page, CoStar Group, Inc. Director of U.S. Research, Office.

CoStar analysts expected a slow down in net absorption during the first quarter after the strong 33 million square feet of net absorption in fourth-quarter 2014. However, the lower-than-expected level of absorption for first-quarter 2015 is somewhat concerning, especially because the slowdown appeared to impact other property types, Page said.

Net absorption fell below the net rate of new office building completions for the first time in five years during the first quarter. The narrow spread between newly delivered supply and occupancy demand resulted in a flattened vacancy rate of roughly 11.3% in the quarter in CoStar Portfolio Strategy's national index of the 54 largest U.S. metros.

For more news and information visit Blumberg Partners.

First Potomac Drops Richmond Portfolio

First Potomac Realty Trust, a DC-based self-managed real estate investment trust that focuses on owning, operating, developing and redeveloping office and business park properties, announced this week that it had closed on the sale of it's Richmond, VA portfolio for $60.3 million. James Cassidy with DTZ represented First Potomac Realty Trust in the sale of the portfolio; terms of the sale or the buyer's identity were not disclosed. The sale is a continuation of First Potomac's capital recycling plan, which is focused on disposing of non-core properties and reinvesting in high quality, multi-story office buildings in the Washington, D.C. region. Since announcing the strategic and capital plan in January 2013, First Potomac has successfully disposed of 33 properties for aggregate gross proceeds of $433 million.

"With the sale of the Richmond portfolio we are continuing to execute on our strategic plan of disposing of non-core assets and redeploying capital," said Douglas Donatelli, Chief Executive Officer of First Potomac Realty Trust. "Our focus continues to be on growing the existing portfolio with well-located multi-story office buildings in the Washington, D.C. region."

The Richmond portfolio includes six business park properties — Chesterfield Business Center, Airpark Business Center and Pine Glen in Chesterfield County, Virginia and Park Central, Virginia Technology Center and Hanover Business Center in Henrico/Hanover Counties, Virginia — comprised of 19 single-story office, office/flex and industrial buildings totaling 827,925 square feet.

For more news and information visit Blumberg Capital Partners.

CBRE Tapped for Plaza of the Americas

Plaza of the Americas in Dallas has been placed on the market for sale as the class A office complex in the Arts District is being marketed by CBRE Capital Markets. Houston-based M-M Properties and Dallas-based Invesco Real Estate are seeking to sell the property, four years after acquiring it for close to $100 million; the current asking price for the property has not been disclosed.

"Having another trophy tower on the market will draw more attention to the Downtown market, bring more investment dollars and ultimately positively impact the sale of Plaza of the Americas," John Alvarado of CBRE told Bisnow. M-M Properties has enhanced the rent roll as well as updated the project since its acquisition a few years ago.

Built in 1980, Plaza of the Americas is a 1,233,266 square-foot Class A office/mixed-use complex in Dallas, Texas. The property is comprised of twin 25-story office towers connected by a 13-story atrium containing two levels of retail and abutting the 407-room Marriott City Center Hotel. The property is located on the expanding light rail system at the Pearl Station and enjoys superior access to all freeways and major thoroughfares that serve the Dallas CBD. The property is currently 74% leased with major tenants including JPMorgan Chase Bank, AIG, Capital One, Thompson Coe, and the United States Government.

For more news and information visit Blumberg Capital Partners.

IRR 2015 CRE Outlook

Integra Realty Resources (IRR), the largest independent market research and commercial real estate valuation and counseling firm in North America, has released its Viewpoint 2015 report, which reveals projections for commercial real estate in 2015 across all property types. In total, IRR expects real estate values to appreciate across all markets, with improved property fundamentals continuing to drive positive yields and attract additional capital to the sector.

"With our independent position in the marketplace, in IRR Viewpoint we have been able to create an incisive and unbiased report that the industry relies on year after year as a primary resource for research and analysis of the commercial real estate industry in the United States," said John Albrecht, CEO of Integra Realty Resources. "This past year we also completed the largest technology investment that IRR has ever made, giving us even more advanced capabilities to research local and national markets and provide our clients with the benefits of our industry-leading expertise on commercial real estate assets."

Key findings of IRR Viewpoint 2015 for the office market include:

• The office property sector continued its relatively steady recovery in 2014, though the sector lags behind other property sectors in the latest national recovery cycle. More local office markets -- both Central Business District (CBD) and Suburban -- are now mired in the recessionary phase and many more are just beginning a recovery.
• After decades of suburban corporate campus building, a key national trend is the return to new CBD construction, as today's younger workforce wants tech-driven office spaces in populous areas. While developers and investors seemingly prefer the CBD office property sector, property fundamentals for the Suburban office sector strengthened just as much as those in the CBD sector nationally in 2014.
• Recent changes in stabilization expectations reversed the trend from the previous few years and now indicate that the Suburban office sector nationally is more likely to stabilize before the CBD sector, albeit at materially lower rental rates and marginally lower occupancy rates.
• 2014 was another robust year for transaction volumes, with most cities experiencing strong volume increases over five-year historical averages. Activity was notably strong in Cincinnati, Boston, Jacksonville, San Francisco, and Philadelphia; transaction volumes were down only in a handful of cities, including Pittsburgh, Seattle, Cleveland, Hartford, and Richmond.

A free download of the report is available here. For more news and information visit Blumberg Capital Partners.

Technology's Impact on CRE

The Baltimore Business Journal published an article today titled "5 ways technology is overhauling commercial real estate" in which author Alex Kopicki, co-founder and CEO of Kinglet, examines the major intersection between traditional commercial real estate and the fluid technology industry that will affect the way brokers and clients do business. Kopicki's Top 5 list follows, with excerpted commentary:

Mobile takeover
There were 1.75 billion smartphone users in 2014, according to market research firm eMarketer. Not only is that a lot of devices and users, but that's also a lot of time spent on these devices. So what does this mean for commercial real estate professionals? Quite simply, if your company doesn't have a mobile strategy, you better get one — quick.

A new way to work
The number of co-working facilities across the globe has nearly doubled every year for the past five years. Small Business Labs projects that more than 12,000 global co-working spaces will exist by 2018 with over 1 million members. The convenience of short-term rentals, the attraction to community, the hip-to-be-small attitude and new business formation are all positive trends that will lead to the continued growth of co-working facilities.

Big data
While data can't predict the future just yet, big data can tell us the probability of future decisions, which can lead to actionable decision-making. If you are a commercial leasing agent, a landlord or a service provider, what touch points are you recording about your clients? And what can they tell you about your effectiveness?

Crowdfunding
Today accredited and non-accredited investors, through a multitude of platforms, have the ability to invest in early-stage companies. What this means for commercial real estate is that everyone's customer base broadens as fractional "ownership" increases. It also results in more capital outlets and providers for a more competitive landscape. Let the games begin.

The Internet of Things
This is a simple concept; it's all about connecting everyday devices such as your home thermostat to the Internet. Why would you do this? The better question is: Why would you not do this? More connectivity leads to more control and customization, leading to more convenience. For example, if I'm a leasing agent who can unlock a space for a showing with my phone, I'm going to be able to access spaces for customers after hours or even show spaces on a whim— no keys required. The Internet of Things is digitizing more data and connecting environments in commercial real estate that were previously fragmented.

For more news and information visit Blumberg Capital Partners.

Preferred Office Locations

NAIOP, the trade association for developers, owners and investors in industrial, office and related commercial real estate, hosted a webinar with Emil Malizia titled Preferred Office Locations: Comparing Location Preferences and Performance of Office Space in CBDs, Suburban Vibrant Centers and Suburban Areas, which shines a light on location preference when picking an office location. The study, which combines expert opinion and accurate property-level data, provides reliable information about emerging location preferences across major U.S. office markets and the comparative performance of office space in CBDs, suburban vibrant centers — defined as amenity-rich, mixed-use, "live, work, play" locations — and typical single-use suburban areas.

The study sought to address five questions:

1. Do office tenants prefer CBDs to suburban areas?

2. Do office tenants prefer suburban vibrant centers to typical single-use suburban environments?

3. Are office properties in CBDs performing better than those in typical single-use suburban office areas?

4. Are office properties in suburban vibrant centers outperforming those in typical single-use suburban office areas?

5. Are suburban vibrant centers preferred to or performing better than CBDs in their market areas?

Overall, office tenants showed no strong preference for either downtown or suburban locations. The study did, however, reveal a clear preference for suburban vibrant centers over typical single-use suburban office environments, and demonstrated that office properties in suburban vibrant centers are outperforming those in typical single-use suburban office areas on almost all metrics.

To download and watch the webinar, click here. For more news and information visit Blumberg Capital Partners.