Will interest rates increase twice this year?

embedYes, investors, interest rates will go up this year.

Here’s the question we really want answered: Will two rate hikes happen before Christmas?

Historically, multiple successive rate hikes have followed a period of prolonged low interest rates. This was the case at the conclusion of the low-rate periods of the early 1990s and mid 2000’s. Read more

Massive tech disruption aims at commercial real estate

virtual_reality_photoThere can be no more excuses for falling behind the curve in adopting technology in commercial real estate. Ready or not, a major disruption is unfolding in our industry.

It’s no secret CRE professionals have been lukewarm to new technologies. Meanwhile, the rest of the world is accelerating adoption quickly, which is why CRE is now playing catch-up. Read more

Why are newer multi-family loans defeasing ahead of schedule?

14425526680_d34d3b66e6An interesting trend is developing in the multi-family CMBS space: Newer vintage loans are defeasing much earlier in their terms than older 2005- to 2007-vintage loans.

Why? Defeasance economics are turning in their favor. Let me explain. Read more

3 Reasons to Give the Office a Second Chance

commercial2Last week, we looked at some numbers showing the difficult prospects in front of office properties approaching the Wall of Maturities.

Enough gloom and doom.  There are plenty of reasons to look at the office sector with optimism. While some assets will surely reach maturity in need of additional capital, the majority find themselves in improving conditions. Read more

Don’t Discount Retail: 4 Reasons Bricks-and-Mortar Remains Strong

escalator-711793_640It’s easy to write-off the future of retail properties based on a few headlines spelling out the demise of some major U.S. retailers. The closing of big-box stores such as Sears or the bankruptcies of major brands such as Radio Shack get plenty of attention.

The truth, however, shows bricks-and-mortar retail shopping centers, mixed-use developments and stand-alone out parcels in many cases to be in fine condition. Lenders and investors are eager to finance and own these properties as consumers return to shopping, fueled by job and wage growth. Read more

Peering over the Wall of Maturities

3wBPUcDrR9KaduD3PvkY_DSC_0915The Wall of Maturities has arrived. Are you ready to scale it?

Hundreds of billions of dollars in commercial real estate loans will mature over the next three years as thousands of 10-year CMBS products from 2005-2007 reach full-term. Approximately $300 billion in defeasance-eligible and prepayment-eligible loans are set to mature.
Read more

Resurgence of the Medical Office Market

6878969523_ecc5841bd5The healthcare industry is in a transition period due to advancements in technology, physician and healthcare system acquisitions, and consolidations and alliances.

Between 2009 and 2012, the annual number of hospital mergers and acquisitions more than doubled (from 50 to 107) with a large number of for-profit systems acquiring non-profit organizations. From a real estate perspective, these acquisitions and alliances are causing significant overlap in functions and services, as well as reduced staffing and office space needs where dominant healthcare systems reside.
Read more

Redefining the Traditional Office Space

Redefining Office Space PictureAccording to a recent article by Richard Carr of National Real Estate Investor, there is “growing preference for open spaces over traditional offices, efficiency over expansion, secondary markets over class-A buildings in primary cities and, in some markets, a new trend of preferring low-rise buildings or lower floors in high-rise buildings to higher-priced floors at the top.”
Read more

Apartment Investors; Millennials Turn to Suburbs

According to a recent Bloomberg article, “after years of clamoring to buy the most centrally located rental buildings in major urban centers, U.S. apartment investors are rediscovering the suburbs.”
Nationwide, purchases of apartment buildings outside the urban core climbed 8.2% last year to a value of $82.5 billion.
Read more

CRE Market Conditions Stable – Defeasance on the Rise

round-glass-building-1123032-mLast week, the Federal Reserve released its report on regional economic conditions, which summarized district information from each of the Federal Reserve Banks. Based on the information contained in the report, it was clear that bank branch directors agree that the commercial real estate market is stable or improving in most districts.

The report, which is formally called the “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” evaluates the regions in which Federal Reserve Banks are located. For example, the “Boston” report describes all of New England and “Chicago” pertains to most of the Midwest.
Read more