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.

Velocis Buys Trinity Place in Denver for $37M

Velocis, a Dallas-based private equity real estate fund manager, announced this week that it had purchased Trinity Place in Denver's CBD from an affiliate of Broe Real Estate Group. Velocis acquired the 195,753 square foot office building for $37 million, according to Denver County records, marking its second purchase in the Denver market. Mary Sullivan and John Jugl of Holliday Fenoglio Fowler marketed the property on behalf of Broe; under new ownership, Stream Realty will handle leasing for the building.

"Trinity Place caters to small-to mid-sized tenants, offering a boutique atmosphere in a traditional and distinctive building," said Mike Lewis, Velocis principal. "Additionally, the building's proximity to the city's popular attractions as well as a multitude of thriving downtown businesses neighboring the asset provides tenants a truly walkable lifestyle."

"The stabilization of Trinity Place prior to the sale resulted from an aggressive capital improvement plan, rapidly improving downtown market fundamentals and a niche focus on energy and professional services firms. Velocis is acquiring a quality asset with a stable roster of tenants and continued growth opportunities as leases roll to higher market rates," said Scott Gibler, managing director of Broe Real Estate.

Located at 1801 Broadway, Trinity Place is currently 89% leased to 40 tenants including Great Western Oil & Gas, Forrester Oil & Gas, Bank of Colorado and Trinity Grille, as well as other energy, professional services and legal service firms. Originally constructed in 1981, the property was previously acquired by Broe's affiliate in October 2006 from Equity Office Properties and renovated in 2012. Renovations included a major lobby update, complete with full-height windows and museum-quality artwork.

For more news and information visit Blumberg Capital Partners.

Blumberg in the News

Blumberg Grian was featured in a Leadership article this week titled "Agriculture Will Lead Nigeria’s Economy In 2015" in which Olukayode Oyeleye examines the current growth in the nation's economy, and Blumberg's contribution to it. An excerpt follows:

One of the things that hallmarked the 2014 was that several meetings were held, with the Honourable Minister, Dr. Akinwumi Adesina, personally presiding, to steer the direction and purposes, which ensured quick decision-making and FMARD commitments, to the benefit of the private sector. The A & I unit enhanced the credibility of the FMARD among private sector as a superior resource in agribusiness development.

Foreign companies saw through the rising profile and prospects of agricultural sector and came calling. One of them is Blumberg Grain; its total investment is estimated at about US $250 million. The project is on fast track implementation timeframe. The contribution of the unit to the first-ever piloting of an electronic warehouse receipt system with government assets, through a public private partnership was notable. The ministry has proved that so much could be done in the right direction to move the sector forward, with the private sector at the forefront. In Kebbi State, farmers experienced firsthand keys to extension of onion shelf life, including varieties, harvesting method, storage conditions (temperature and humidity control) and packaging.

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

Blumberg in the News

A new article from Clement Ejiofor published by NAIJ titled "Why GEJ Is Sure That Nigeria Is ready For Oil Crisis" relays comments made by Nigerian President Goodluck Jonathan on the economy, agricultural transformation agenda, and Blumberg Grain's investment in the country's continued growth. An excerpt follows:

A lot of investment projects are realising within the modernization.

For example, in 2012 Blumberg Grain, the Global food giant invested $250 million in a large-scale food storage facilities for Nigeria’s agricultural sector creating up to 1,000 jobs.

See what David Blumberg, CEO, Blumberg Grain – West Africa thinks of Nigerian agriculture :

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

Hemfosa Takes Full Ownership of Shared Portfolio

Hemfosa Fastigheter AB, a Stockholm-based real estate investor backed by pension funds, announced this week that it had acquired the remaining 50% of a commercial properties portfolio with a market value totaling sek 1.3 billion from Crown Nordic Management. Hemfosa, through Kronfastigheter, had taken an initial half interest in the joint venture in late 2013 through the joint venture Hemfosa Kronfastigheter Holding, which is owned equally by Hemfosa and Crown Nordic, with option on the remainder of the 140,000 square meter portfolio.

"We are delighted that Hemfosa, following one year of joint development and streamlining of the portfolio together with Crown Nordic Management, can now exercise the option to acquire the remainder of Kronfastigheter. The properties are an ideal fit for Hemfosa's growing property portfolio both geographically and strategically," says Jens Engwall, CEO of Hemfosa Fastigheter.

The properties are located centrally in growth districts of southern and central Sweden such as Sundsvall, Gävle, Enköping, Stockholm, Vallentuna, Sigtuna, Norrköping, Linköping, Motala and Uddevalla. The properties in Stockholm, Gävle and Uddevalla account for approximately 70% of the property value.

For more news and information visit Blumberg Capital Partners.

CNL Buys Former Fossil HQ in TX

Orlando-based CNL Commercial Real Estate, Inc. announced this week that it had acquired what was formerly the Fossil Watch Headquarters at 2280 N. Greenville Ave. in Richardson, Texas. CNL purchased the property through a joint venture investment with CenterSquare Investment Management; terms of the deal, representation or a sale price were not disclosed. KDC sold the property to the CNL-CenterSquare joint venture after it originally acquired the asset when Fossil relocated to a larger location in 2011.

"This will be a really cool adaptive reuse of an existing facility," said Jimmy Grisham, managing director of CNL Commercial Real Estate. "We are going to be one of the few large blocks of contiguous space in a rapidly growing market, and will have the competitive advantages of large floor plates, high parking ratios and more than 400 covered parking spaces."

"This investment aligns with CenterSquare's objective of partnering with best in class local operators that have the vision and market experience to develop asset-specific business plans that create significant value enhancement upon execution. We certainly believe we have the right team members in place across the board to achieve the desired results," added Jeffrey Reder, senior vice president for CenterSquare Investment Management.

Originally built in 1994 and expanded in 2001, the 190,000-square-foot, 2-story office building and adjoining 130,000-square-foot warehouse property is located in close proximity to State Farm Insurance's regional hub, as well as a Raytheon's business unit that's relocating to Richardson from Garland. According to a Dallas Business Journal report, CNL plans to immediately convert the existing warehouse building into a 400-space covered parking facility, which increases the office building's parking ratio from three per thousand square feet to more than seven per thousand square feet. This gives CNL the ability to lease the space to a tenant seeking a high parking ratio, such as a call center.

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.