Record Retail Property Prices

Chanel SA is purchasing an 11,500-square-foot building at 400 North Rodeo Drive in Beverly Hills for $152 million, more than $13,000 per square foot — a record price for retail space in Los Angeles according to the Wall Street Journal.

“The deal is another sign of the strong interest among retailers and landlords in retail real estate in large urban areas with a dense population of affluent shoppers,” the article reports. According to Jim Costello, senior vice president at Real Capital Analytics, “that’s what people have been willing to pay for. … That’s where the millennials are. That’s where the consumers are.’”

The French luxury retailer also set a record for the highest price paid for any retail space in the U.S. when it paid more than $31,000 per square foot for space on Madison Avenue in New York. Three other sales in Manhattan have topped $14,000 per square foot, and prices for high-end retail space have topped prerecession peaks in many other cities.

From December 15, 2015 NAIOP Source – Click here to view article.


Negotiations Continue on Year-end Tax Deal

House and Senate tax writers and the Obama administration continue haggling over a tax deal that would renew more than 50 expired temporary tax provisions important to business groups and low-income advocates. The so-called “tax extenders” bill includes provisions important to NAIOP and the commercial real estate industry, including 15-year qualified leasehold improvement depreciation, Section 179 expensing, an energy-efficient commercial building deduction and New Markets Tax Credits, among others.

Republicans are trying to make some tax extenders, such as the Research and Experimentation Tax Credit, permanent, which would involve a much larger cost. In return, the White House and Democrats are insisting that other provisions, such as the Child Tax Credit and the Earned Income Tax Credit (EITC) also be made permanent. As a result, cost estimates for the tax extenders bill have grown nearly $800 billion over the next decade.

Last week, Ways and Means Committee Chairman Kevin Brady (R-TX) introduced a “fallback” tax extenders bill which would renew the tax provisions, most of which expired at the end of 2014, for two years (retroactive for 2015), in case negotiators cannot reach an agreement on the broader legislation that would make some provisions permanent. Republican leadership has stated their intent to add tax extenders legislation to a comprehensive “omnibus” appropriations bill that must be passed by the middle of the week in order to keep funding the government, a move opposed by House Democratic Minority Leader Nancy Pelosi. Originally scheduled to be passed by Friday, December 11, 2015, the House and Senate passed a five-day extension to provide time for negotiators to work out a deal on tax legislation.

From December 15, 2015 NAIOP Source – Click here to view article.

Infill Transit Yields Jobs, Revenues and Vibrancy

Infill transit yields more than just opportunity for developers – it brings new jobs, increased revenues, and renewed vibrancy around stations. Public-private partnerships are leading the way as communities and businesses rally to finance projects.

In Washington, D.C., property owners contributed $10 million in land and pledged another $25 million in ad-on property taxes to support the addition of the NoMa-Gallaudet University station on Metrorail’s Red Line. In a decade, the area saw the delivery of 8 million square feet of development and 15,000 permanent new jobs. Tax revenue for the District surpassed $330 million – and is expected to more than double by 2019.

This case study isn’t unique, as communities and businesses are banding together to support infill transit stations that connect them to workforces, commuters and tourists. Near Boston, the New Balance Development Group included a new commuter rail station as part of a large-scale mixed-use development. The station is financed and maintained by the company for the first 10 years.

Read other examples of infill transit development success in the fall issue of Development magazine. The article is written by Sam Black, contributing editor for Development magazine, and attorney and past chairman of the Washington, D.C., Smart Growth Alliance.

From December 15, 2015 NAIOP Source – Click here to view article.

Smart Buildings Yield Significant Savings

Your car pings your smartphone to let you know it’s due for an oil change. Your tablet recognizes that you just walked into LAX and tells you the wait at security is currently 25 minutes. An embedded chip on your shirt alerts you before you drop it into the washing machine that it is, in fact, dry clean only.

These hypothetical objects and their seamless connection to the endless expanse of cyberspace characterize the Internet of Things (IoT).

The list of potential applications for the Internet of Things is vast and almost indeterminable, but there is no question it will have a significant impact on many aspects of the commercial real estate industry. Buildings will no longer be static, but communicate with personal devices like smartphones or smartwatches. In Seoul, Korea, The Grand Ambassador Hotel has already made use of this technology by integrating Samsung’s Hospitality Management Solution into their guest rooms. Customers use the in-room smart TV to control the room temperature, close the drapes, communicate with housekeeping, and turn lights on and off. Cleaning staff are notified of guest requests via personal smartphones, and motion sensors cue the system to switch the room to energy-saving mode when guests depart.

Sung-Hyuk Son, the hotel’s marketing manager, asserts the ability to tailor each guest’s experience keeps them ahead of the competition and reduces their overhead: “We’ve seen an immediate impact. In a 6-month period, the hotel can save 30% on energy costs.” Indeed, a study by the Oak Ridge National Laboratory found that advanced sensors and controls in buildings have the potential to reduce that by 20 to 30 percent.

Marketing properties has also changed as people make use of new online tools like Zillow and Redfin to search for real estate. Next on the horizon are beacons, small Bluetooth-enabled devices that can be mounted anywhere and transmit data about the environment (a property’s features, listing price, square footage) to nearby mobile devices (say, potential investors or buyers). Buildings already equipped with smart technologies may also be more appealing.

IoT will also impact the way properties are managed, as buildings are able to measure how tenants utilize the building and translate that into better tenant experience, sustainability and building flow. Managers will be able to resolve issues more quickly and increase staff efficiency. Innovative security features like facial recognition, intrusion alerts, and real-time incident updates also provide a safer environment for tenants.

As technology and the Internet of Things continue their evolution, savvy CRE leaders must find ways to adopt these tools to stay competitive in the industry.

From December 15, 2015 NAIOP Source – Click here to view article.

Europe’s Largest Robotic Parking Garage Opens in Denmark

A robotic parking system installed beneath a cultural complex in Aarhus, Denmark, can accommodate more than 1,000 cars and park or retrieve up to 235 vehicles per hour, according to The system, which was developed by Germany-based Lödige Industries, can transport a car to or from a parking space in the three-level facility in one minute.

“Drivers park their cars in one of 20 ground-level booths and receive a ticket. Once the car has been vacated, it is lowered below ground and lifted onto one of 24 robots that transfer it to a parking space,” the article reports. Instead of a moving pallet, the system uses an ultraflat robot, which positions itself under the car and lifts it up at the wheels, taking it from the elevator to a transfer vehicle, which then takes it to a parking space.

The garage is set beneath Dokk1, a cultural complex that contains Scandinavia’s largest library as well as a light rail train station, cafe, classrooms, media facilities and more.

From December 8, 2015 NAIOP Source – Click here to view article.

A New Era of Health Care Expansion

Ahead of an expected boom in new patients, U.S. hospital campuses are adding apartments, retail space and hotels as well as new patient care facilities with more amenities. According to CoStar News, “Nearly $100 billion in construction of new and expanded hospital medical office projects, both on and off the hospital campus, is under way across the U.S.”

“With reduced reimbursements for hospital stays from the Center for Medicare/Medicaid (CMS)… health-care systems are focused on building more profitable outpatient facilities near medical center campuses in convenient locations for patients,” according to Jeffrey Cooper of Savills Studley’s health care capital markets group, the article reports. Some aging hospitals are being razed and replaced by state-of-the-art medical facilities in mixed-use environments that also include office, hotel, retail and residential uses.

From December 8, 2015 NAIOP Source – Click here to view article.

B Corps on the Rise as Commercial Real Estate Firms

Certified B Corporations, called B Corps for short, are for-profit business dedicated to social and environmental issues – and they are rising in commercial real estate, says an article in Development magazine.

Since 2007, more than 1,250 companies representing 121 industries in 41 countries have earned B Corp status. At least 25 companies are in the commercial real estate industry, including developers, contractors and design/build firms.

B Corps succeed with the recruitment and retention of a talented workface that’s attracted to a culture of social and environmental responsibility – chiefly millennials, who merge their strong social beliefs with outlooks on corporate authenticity, transparency and responsibility.

While businesses like Etsy, Patagonia and Ben & Jerry’s are among the most recognized B Corps, certification is open to all for-profit companies. B Lab, the nonprofit organization behind the B Corp certification, provides detailed information on how to join the B Corp community.

Read more in the fall issue of Development magazine. The article was written by Amanda Tran, a freelance real estate writer and researcher.

From December 8, 2015 NAIOP Source – Click here to view article.