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Pricing Upturn Seen in Retail, Apartment Sectors
CCIM and RERC see break in declines, with 2010 the time to buy
CHICAGO, January 22, 2010—Commercial real estate is positioning itself to be an attractive investment on a risk-adjusted basis in 2010 and 2011, according to the CCIM Institute and the Real Estate Research Corporation (RERC). Property prices in the retail and apartment sectors showed moderate increases in fourth quarter 2009, breaking the string of significant price declines throughout the previous 12 months.
"The latter part of 2008 and all of 2009 were definitely the shock years, and we’re looking to 2010 as the recovery year,” said Richard Juge, CCIM, the 2010 president of the CCIM Institute. “We will see more activity, perhaps not in gross dollar levels, but in the volume of deals that close in 2010. This is the time to buy."
Additionally, CCIM and RERC say that weighted average capitalization rates for the office, industrial, retail, and apartment sectors increased by 20 to 30 basis points in the fourth quarter.
“This is also part of the market re-pricing of risk, as cap rates expand to provide a more attractive income component to the investment,” said Juge. “This is in contrast to the cap rate compression era several years ago.”
The groups’ RERC/CCIM Investment Trends Quarterly report also shows that 12-month trailing transaction volume increased slightly in the apartment and retail sectors, hinting that volume also may be starting to bottom out for these property types. However, transaction volume for the office and industrial sectors continued to decline, but at a much slower rate in the fourth quarter than in the previous three quarters.
“We keep searching for a bottom on prices, but it is an uneven landscape depending on the property type and investor willingness to mark-to-market their properties,” said Kenneth Riggs, CCIM, president and CEO of Real Estate Research Corporation. “But we are seeing a more consistent environment where there is the beginning of a ground swell to sell assets for either strategic reasons or the asset is being sold under a distressed sale scenario. It is all about taking your medicine to get an asset price that will trade in this environment.
“This is the first step toward recovery, and the market is ready to move on and prepare for the next phase, which is capital moving in to buy attractively-priced quality commercial real estate assets. We are glad to see the shift occurring, because for many it has been a decade from hell riddled with euphoric highs that closed out with below-the-basement prices,” said Riggs.
About the Survey
Published quarterly, the RERC/CCIM Investment Trends Quarterly report provides timely insight into transaction volume, pricing, and capitalization rates for the core income-producing properties. The RERC/CCIM Investment Trends Quarterly is produced by the Chicago-based Real Estate Research Corporation (RERC) in association with and for members of the Chicago-based CCIM Institute.
About CCIM Institute
Since 1969, the Chicago-based CCIM Institute has conferred the Certified Commercial Investment Member (CCIM) designation to commercial real estate and allied professionals through an extensive curriculum of 200 classroom hours and professional experiential requirements. Currently, there are more than 9,000 CCIMs in 1,000 markets in the U.S. and 31 additional countries. Another 7,000 practitioners are pursuing the designation, making the institute the governing body of one of the largest commercial real estate networks in the world. An affiliate of the National Association of Realtors®, the CCIM Institute’s recognized curriculum, powerful technology tools, and networking programs impact and influence the way CCIM members do business. Visit www.ccim.com, www.stdbonline.com, and www.ccimredex.com for more information.
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What is a CCIM?
A Certified Commercial Investment Member (CCIM) is a recognized expert in the disciplines of commercial and investment real estate. A CCIM is an invaluable resource to the commercial real estate owner, investor, and user, and is among an elite corps of more than 9,000 professionals who hold the CCIM designation across North America and more than 30 countries. Nearly 7,000 additional professionals are pursuing the CCIM designation. Since the CCIM program was created in 1969, more than 15,000 commercial real estate professionals have earned the designation. CCIM Institute has taught more than 225,000 students since 1969.
Recognized for its preeminence within the industry, the CCIM curriculum represents the core knowledge expected of commercial investment practitioners, regardless of the diversity of specializations within the industry. The CCIM curriculum consists of four core courses that incorporate the essential CCIM skill sets: financial analysis, market analysis, user decision analysis, and investment analysis for commercial investment real estate. Additional curriculum requirements may be completed through CCIM elective courses, transfer credit for graduate education or professional recognition, and qualifying non-CCIM education. Following the course work, candidates must submit a portfolio of closed transactions and/or consultations showing a depth of experience in the commercial investment field. After fulfilling these requirements, candidates must successfully complete a comprehensive examination to earn the CCIM designation. This designation process ensures that CCIMs are proficient not only in theory, but also in practice.
With such a wide range of subjects to be mastered and in a dynamic business such as real estate, the educational process doesn't end once the designation is earned; there is a strong commitment among CCIMs to continuing education.
Only 6 percent of the estimated 150,000 commercial real estate practitioners nationwide hold the CCIM designation, which reflects not only the caliber of the program, but also why it is one of the most coveted and respected designations in the industry. The CCIM membership network mirrors the increasingly changing nature of the industry and includes brokers, leasing professionals, investment counselors, asset managers, appraisers, corporate real estate executives, property managers, developers, institutional investors, commercial lenders, attorneys, bankers and other allied professionals. Through this business network, CCIM members successfully complete thousands of transactions annually, representing more than $200 billion in value.
Certified Commercial Investment Members are in more marketplaces in North America -- 1,000 cities -- than all major real estate companies combined. Regions and chapters provide designees and candidates the opportunities to promote business and educational goals through local and regional forums and meetings.
Conferred by the CCIM Institute, the CCIM designation was established in 1969.
Becky Courson, partner of COURSON & HOPKINS, LLC, earned the CCIM designation in 1989.
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Pending Home Sales Stabilize, Remain Above Year-Ago LevelsFebruary 2, 2010
WASHINGTON—December’s pending home sales activity was the fifth highest monthly tally in two years—up 1% from a year ago and 10.9% from December 2009 levels, according to data collected by the National Association of Realtors®.
That’s a change from November, when the monthly index fell by 16.4% due to a surge in activity in the fall as homebuyers tried to close their transactions to take advantage of federal tax credits.
NAR Chief Economist Lawrence Yun said it’s important to recognize how the tax credit is skewing the Pending Home Sales Index (PHSI) data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”
Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Regional pending home sales
The PHSI in the Northeast rose 2.3% in December and is 14.9% higher than December 2008. In the Midwest, the index increased 5.2% and is 8.7% above a year ago. Pending home sales in theSouth rose 2.2% and are 5.5% higher than December 2008. In the West, the index fell 3.8% but is 18.6% above a year ago.
Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. “While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun said. Last year there were 5.16 million existing-home sales.
He added that one of the greatest benefits of rising sales will be firming home prices. “For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilize.”
Source: NAR
Publish date: February 2, 2010
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Why pay someone big bucks to do something you can just as easily do yourself? That’s the thinking that has gotten more Americans than ever swinging their own hammers. In a recent Time magazine poll, nearly a quarter of people said they were taking on more home-improvement projects themselves—understandably so, when you consider that it usually means a 50% to 75% discount, since all you pay for is materials.
But sometimes doing it yourself costs more than it saves, like when you decide to replace the toilet, end up flooding the basement, and have to pay a pro to fix your mistakes. Or, worse, if you become one of the more than 100,000 people injured each year doing home-improvement jobs. Here are some guidelines for deciding when DIY can save you money and when it could cost you.
Stick to routine maintenance for savings and safety
Seasonal home maintenance is ideal work for the DIY weekend warrior, since you can plan tasks in advance and get to them when your schedule allows. Because these are repeat projects, your savings will add up to big bucks over the years. Just by mowing your own lawn, for example, you can save $55 to $65 a week for a half-acre lawn during the growing season. The bigger the lot, the bigger the savings: with two acres, you’ll pocket around $150 per week.
When It Pays: Look for maintenance jobs that are relatively easy and need to be done regularly, so you can hone your skills over time. In addition to mowing, other good ones are snow removal, pruning shrubs, washing windows, sealing the deck, painting fences, fertilizing the lawn, and replacing air conditioner filters.
When It Doesn’t: Unless you have skill and experience on your side, stay off of any ladder taller than six feet; according to the U.S. Consumer Product Safety Commission, more than 164,000 people end up in emergency rooms every year because of ladder injuries. The same goes for operating power saws or attempting any major electrical work—it’s simply too risky if you don’t have the experience.
Act as your own GC on small jobs
If you’re more comfortable operating an iPhone than a circular saw, you may be able to act as your own general contractor on a home-improvement project and hire the carpenters, plumbers, and other tradesmen yourself. You’ll save 10% to 20% of the job cost, which is the contractor’s typical fee.
When it Pays: If it’s a small job that requires only two or three different tradesmen, and you have good existing relationships with top-quality professionals in those fields, consider DIY contracting.
When It Doesn’t: Unless you have an established network of contacts who will show up as promised, the time to spend on oversight, enough construction experience to spot potential problems, and the skill to negotiate disputes between the various subcontractors, trying to manage your own project can quickly send the schedule and budget off the rails.
Pitch in with sweat equity on big jobs
Contributing your own labor on a big job being handled by a professional crew can cut hundreds or even thousands of dollars off the contractor’s bill. Tear the cabinets and appliances out of your old kitchen before the contractor gets started, say, and you might knock $800 off the cost of your remodel, says Dean Bennett, a design/build contractor in Castle Rock, Colorado.
When it Pays: Grunt work—jobs that are labor intensive but require relatively little skill—makes the best homeowner contribution. Offer to do minor interior demolition like removing cabinets and pulling up old flooring, daily jobsite cleanup, product assembly, and simple landscaping like planting foundation shrubs and grass seed around your new addition.
When It Doesn’t: If you get in the crew’s way, you may slow them down far more than you help. Make your contributions when the workers aren’t around, such as in the morning before they arrive, or on nights and weekends after they’ve left.
Put on some of the finishing touches
Unlike the early phases of a construction job, which require skilled labor to frame walls, install plumbing pipes, and run wiring, many of the finishing touches on a project are comparatively simple and DIY-friendly. If you do the painting yourself for a new basement rec room, for instance, you can easily save $1,800, Bennett says.
When it Pays: If you have the skill—or a patient temperament and an experienced friend to teach you—finish work like setting tile, laying flooring, painting walls, and installing trim are all good DIY jobs.
When It Doesn’t: The downside to attempting your own finish work is that the results are very visible. Hammer dents in woodwork, for example, or sander ruts in your hardwood floors may cause you aggravation every time you see them. So unless you have a sure eye and a steady hand, it may not pay to embark on these tasks.
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs. |
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