At MountainSeed, we believe in staying a student, and that means being on top of the real estate and financial trends in our industry as they happen. However, in a world where working lunches sometimes take priority over casual headline perusing, we know scouring the web daily for the latest in real estate and banking isn’t necessarily a priority. That’s why today, we’re compiling the news you need now, so you have leading industry headlines right at your fingertips – no surfing required.
1 | RESIDENTIAL RENAISSANCE IN PHILLY
Upscale Apartment Project to Revitalize Philly’s CBD (Multi-Housing News):
Philadelphia’s Central Business District is getting two luxury residential properties in 2017. The residences sit on two former parking lots and feature 339 units within them. According to the project’s official website, rental rates range from $1,830 for a studio to $3,995 for a three-bedroom, two-bath apartment. Some of the units are expected to be move-in ready as early as Feb. 6, 2017. This area of the city is experiencing a residential renaissance that hasn’t been seen since the early 19th century.
2 | REIT REBOOT
REITs Ramp Up Year-End Buying Activity (CoStar Group):
Real estate investment trusts, with no shortage of buyers, sold billions of dollars of property in the first three quarters of 2016. Eager to put cash back to work, property acquisitions in December 2016 by REITs already top December 2015 by 30% with more deals still to be reported. Multifamily, followed by office properties have been the most traded thus far. The largest net buyers include the likes of Gramercy Property Trust, Paramount Group, and General Growth Properties.
Property acquisitions in Dec 2016 by #REITs already top Dec 2015 by 30%. @TheCoStarGroup > http://bit.ly/2lmbU75 @MountainSeed
3 | TEARING DOWN WALLS
Regulatory Launch (Scotsman Guide):
New rules affecting how credit unions operate in commercial mortgages have been launched by the National Credit Union Administration (NCUA). The new guidelines eliminate barriers that hinder growth like personal guarantees, loan-to-value requirements, and aggregate portfolio limits. Changes were expected to be implemented as early as January 2017. According to experts, total credit union business loans grew from $15.1 billion in 2006 to $54.5 billion as of March 2016. A decade from now, experts may well mark 2017 as a watershed year for commercial lending by the nation’s credit unions.
Experts might mark 2017 as a watershed yr for #CRE #lending at #creditunions @ScotsmanGuideED > http://bit.ly/2lmbU75 @MountainSeed
4 | VACANCY AND EMPLOYMENT NECK-AND-NECK
Reis: Office Demand Grows While Rent Growth Slows (Mortgage Banker’s Association and Reis):
Overall, office market demand grew in 2016, but rent growth decelerated some. Additionally, the national office vacancy rate declined to 15.7 percent in the fourth quarter from 15.9 percent in the third quarter and 16.2 percent at year-end 2015. As demand for office space exceeds availability and new construction, vacancy should be back on a path of decline and rent-growth will pick back up. Interestingly, these statistics are aligned with office employment statistics in twelve metro areas including but not limited to San Jose, Tucson, and Tampa.
5 | RENTAL ACCELERATION STEPS ON THE GAS
Apartment demand still runs high (Scotsman Guide & Reis):
While luxury rental landlords might be experiencing lulls in leasing up new buildings, analysts say the rental market is still strong. In most cities, renters are still experiencing raises in rent. In the third quarter, rents rose in 77 out of 82 markets, Reis said. In the previous quarter, rents rose in all 82 metros that the company tracks. The apartment construction boom might be slowing down, but rental acceleration will only continue in the coming years especially as millennials flood the rental home marketplace.
6 | STORE SHUTTERINGS VS. CONSUMER CONFIDENCE
Five Major Trends That Will Shape Retail Real Estate in 2017 (National Real Estate Investor):
While the fourth quarter proved to seemingly be another successful year in the retail world, the dawn of 2017 brought on many major retailers announcing the shuttering of store doors. Stores like Macy’s, Kohl’s, and Kmart all announced closings. If department store anchor stores close, we could see other retailers renegotiating leases or following suit. The good news? With a total net worth of about $92 trillion, American households are feeling wealthier and more confident which likely means increases in spending in 2017.
With a total net worth of about $92 trillion, American households are feeling wealthier @nreionline > http://bit.ly/2lmbU75 @MountainSeed
7 | GDP GROWTH LOOKS GOOD
U.S. GDP to grow above-trend 2 percent-2.5 percent in 2017: Pimco (Reuters & Pimco):
Projections estimate the U.S. GDP could grow in an above-trend 2 percent–2.5 percent channel in 2017, twice the annualized growth rate realized from the fourth quarter of 2015 through the second quarter of 2016, but below the 3.2 percent realized in the third quarter of 2016, Pacific Investment Management Co said. These projections are based on improved investments, higher energy prices and clarity on corporate tax reform. Pimco, which oversees more than $1.55 trillion in assets as of September 30, said with markets prone to overshooting and undershooting, “better opportunities to deploy liquidity should emerge in the course of 2017.”
8 | EASING UNDERWRITING & BOOSTING VOLUME
The OCC reported strategic, credit, operational, and compliance risks were top concerns in 2016. Strategic risk is high as banks continue to make business model changes and adopt innovative products and processes. Banks also continue to ease underwriting practices to boost loan volume and to respond to competition from bank and nonbank lenders. The level of risk is increasing due to increased risk layering, rising loan policy exceptions, increasing loan-to-value ratios, and weaker covenant protection.
9 | RESIDENTIAL REVISIONS
HUD Updates Noise Guidance to Allow More Balconies (Mortgage Banker’s Association):
HUD’s Office of Community Planning and Development recently revised policies regarding building facades and their exposure to noise. Since the market has shifted to an urban sensibility and the demand is continuing to grow, noise levels can increase, too. Basically, HUD [formerly] said it could not insure any property where the noise is over 75 decibels” making it so now HUD supported multifamily construction can now include more balconies, rooftop bbq pits and sundecks in urban areas.
10 | FREDDIE MAC TAKES TOP SEAT
Freddie Mac saw a record-setting $56.8 billion in loan purchase and bond guarantee volume in 2016 making them the country’s top multifamily lender for the second year in a row. According to the lender, Approximately $20.4 billion of Freddie Mac loan purchases in 2016 were not subject to the Federal Housing Finance Agency’s $36.5 billion loan purchase cap. These include certain loans for affordable housing, smaller multifamily properties, senior housing, manufactured housing communities and energy- and water-saving improvements. However, the company says they are focused on providing mortgage capital, especially for affordable rental housing in 2017.
As we dip further into 2017, the real estate future certainly looks bright. With increase opportunities and a stable market, we can continue to expect positive gains. If you’re ready to explore how bright your future can be, let’s talk. In the meantime, stay tuned for our next Top Trends installment.