FED MOVE MAY BENEFIT COMMERCIAL REAL ESTATE

FED MOVE MAY BENEFIT COMMERCIAL REAL ESTATE

Fed Makes Long-Awaited Move; End of an Era, Signal of Confidence

  • The U.S. economy passed a major psychological threshold as the Federal Reserve closed the door on the extraordinary measures put in place to combat the financial crisis. With the quarter-point increase of its overnight lending rate, the Fed signaled that the economy has finally returned to normal operating levels. Though some sectors still face headwinds, broader economic measures including employment, retail sales and even home prices have largely returned to healthy performance standards. The Fed’s policy-setting committee reiterated that it will maintain a gradual pace of rate increases, aligning actions with key indicators such as labor market conditions, inflation, and international developments.
  • While short-term lending will be influenced by the Fed’s move, long-term interest rates will face little upward pressure in the immediate future. During 2016, the cost of long-term debt could see upward pressure, but this will be influenced as much by domestic and international confidence as by the central bank’s actions.
  • The move by the Federal Reserve will likely benefit commercial real estate investors, more because of the message it conveys than the influence of the rate change itself. By raising the rate for the first time since 2006, the Fed
    has finally expressed its confidence in economic growth, potentially opening the door to increased consumption and business investment. These positive trends would benefit all commercial real estate sectors as household formations escalate and increased discretionary income supports the demand for housing, retail goods, and business services.
  • The tempo and sustainability of economic growth that swayed the central bank represent a decidedly positive development for the office sector and industrial properties will also benefit from this trend. Additional hiring will generate new office space demand and put downward pressure on vacancy. Also, incremental demand may also emerge in interest-rate-sensitive financial services businesses, contributing to a projected decrease in the U.S. vacancy rate next year. In the industrial sector, a more robust pace of economic growth stemming from higher consumption will stimulate additional space demand from retailers. However, the rate increase will likely also strengthen the dollar, restraining U.S. companies with significant export business.
  • A solid pace of household creation accompanies an economic expansion and will generate new demand for apartments in the near term. U.S. apartment vacancy will fall this year to 4.2 percent and will rise nominally in 2016 as elevated completions narrowly outpace net absorption. Also, the Fed’s benchmark rate most directly affects consumer borrowing for items that include residential mortgages. Any additional tightening in monetary policy that suppresses the purchase of single-family homes and maintains a low rate of homeownership will provide a supplemental lift for the multifamily sector.

 

Source:  http://blog.marcusmillichap.com/2015/12/15/u-s-consumers-get-in-the-holiday-spirit-retail-sales-rise-fueled-by-gains-in-discretionary-categories/

ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER

ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER

alarm-clock-public-domain-460x306By Michael Snyder

Economic activity is slowing down all over the planet, and a whole host of signs are indicating that we are essentially exactly where we were just prior to the great stock market crash of 2008.  Yesterday, I explained that the economies of Japan, Brazil, Canada and Russia are all in recession.  Today, I am mainly going to focus on the United States.  We are seeing so many things happen right now that we have not seen since 2008 and 2009.  In so many ways, it is almost as if we are watching an eerie replay of what happened the last time around, and yet most of the “experts” still appear to be oblivious to what is going on.  If you were to make up a checklist of all of the things that you would expect to see just before a major stock market crash, virtually all of them are happening right now.  The following are 11 critical indicators that are absolutely screaming that the global economic crisis is getting deeper… Continue reading “ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER”

Gary Aminoff To Give Talk on Real Estate Syndication

Gary Aminoff will be the luncheon speaker at the Southland Regional Association of Realtors (San Fernando Valley and Santa Clarita Valley) on the topic of Real Estate Syndication / Group Investment during their Commercial Day event on Wednesday, January 22, 2014.  The event will take place at the offices of SRAR, 7232 Balboa Blvd, Van Nuys, CA from 9:00am to 1:30 pm.   The event will be from 9:00am to 1:30pm with several speakers.  Mr. Aminoff will speak starting at about 12:30pm.  See below for information on this talk:

AminoffSyndicationTalkFlyer_20140122

NNN Investment Group Affiliates With KW Commercial

KW Commercial, a division of Keller Williams Realty, Inc., today announced that it will partner with the National NNN Investment Group to offer triple net lease real estate investments to the company’s 73,000 realtors and brokers in the United States and Canada.

KW Commericial

Triple net, also known as NNN (net, net, net), real estate refers to commercial leases where the tenant pays the property taxes, insurance, and maintenance (the three ‘Nets’). Typically, these types of NNN investments are most attractive to long-time apartment property owners and passive investors seeking “hands-off” real estate to provide themselves a long-term and stable income. Many owners sell their current management-intensive properties and purchase an NNN investment as part of a “1031 tax-deferred exchange.”

“Based on current demand, we know that the National NNN Investment Group will significantly contribute to the success of agents throughout Keller Williams Realty,” said Buddy Norman, president of KW Commercial. “Our ultimate objective is to ensure that KW Commercial clients acquire the best quality triple net properties with the fewest surprises and National NNN Investment Group has the experience and track record to make this happen. Keller Williams’ agents can now offer their clients comprehensive end-to-end real estate solutions.”

Managing Director Andrew Barnes, a ten-year veteran of the triple net brokerage business, oversees a constantly changing inventory of available NNN properties at National NNN Investment Group. The group works directly with commercial developers who build retail and industrial properties for the largest US companies. A sampling of tenants includes Walgreens, CVS, Wal-Mart, Publix, Lowes, Sam’s Club, Best Buy, AutoZone, Advance Auto, O’Reilly Auto Parts, KFC, Jack-in-the Box, and Taco Bell.

In today’s changing market, the National NNN Investment Group continues to lead in its area of expertise. Closings this month include the sale of a property NNN leased to Walgreens in Jackson, Mississippi for $3,775,000. A prime location due to a hard corner site and surrounding population density, the property featured excellent assumable financing with a strong tenant credit on a 25-year lease.

“A triple net investment offers an exit from management-intensive real estate into properties that provide long term, passive income” stated Barnes, “This is particularly important to our clients nearing the end of their investment life cycle. For instance, they may have started out with a residential duplex twenty years ago, gradually traded-up along the way, and can now be proud owners of a commercial property leased for 25 years to Walgreens. In many ways, an NNN investment offers features similar to a corporate bond, with the continuing benefits of real estate ownership.”

Prior to joining KW Commercial and the National NNN Investment Group, Barnes was Senior Vice President with the triple net development, investment and brokerage firm Sansome Pacific Properties and prior to that, was Managing Partner and Co-Founder of the San Francisco-based real estate investment firm, Kyodai Holdings. He has been involved in over $575 million in real estate transactions and brings both buy- and sell-side expertise to his brokerage transactions.

Barnes holds an M.B.A from Waseda University in Tokyo and a B.A. from Penn State University. He is fluent in Japanese. He has completed graduate work at the United Nations in New York and undergraduate economics work at Universitat zu Koln in Germany. Additional studies at U.C. Berkeley have included advanced Real Estate Finance and Investment. He is a member of the International Council of Shopping Centers (ICSC), lives in San Francisco with his wife and is an active member of his community.