Commercial Real Estate
2012 will be a benchmark year for commercial real estate, speakers said Tuesday at the Ninth Annual Market Review presented by the Greater Richmond Association for Commercial Real Estate.
It will be the year the market turned the corner, said Jeffrey D. Doxey, president of Eagle Commercial Realty, who spoke about the retail sector.
The morning event at the Westin Hotel drew about 300 people in real estate and related fields.
We will look back at 2011 as the bottom, said Bill White, president of Joyner Fine Properties, who addressed residential real estate. We think we are on a road to recovery.
He said foreclosures will continue to vex the residential market for another 18 to 24 months, but stability has returned and home prices will begin to rise in 2013.
J. Scott Adams, president of the mid-South region for CBRE, said capital has returned to commercial real estate.
The fundamentals are improving across the board, he said. Richmond, VA is a great place to do business.
Urban Land Institute
research, Real Estate Trend 2012, agrees with Jeffrey Doxey's statement.
According to their research, "U.S. Real Estate Players must resign themselves to a slowing, grind it out recovery...."
To read their entire research article in pdf, please click on link below.
Emerging Trends in Real Estate 2012
Office sector
Jane duFrane, director of leasing for Highwoods Properties, said 2011 was the year of big deals for office space.
The biggest space taker was Mondial Assistance USA, now Allianz Global Assistance, which leased 288,560 square feet in Deep Run I in Henrico, the headquarters building for the former Circuit City Stores Inc.
The big deals helped reduce the vacancy rate in the office sector to 11.4 percent in 2011, duFrane said.
In 2011, we leased a lot of space, she said. But there weren't a lot of small deals.
Richmond's typical bread and butter is 2,000 square feet to 10,000 square feet. Where were those deals?
If a company is looking for smaller office space, there is ample 731 options, she said.
She noted that most new buildings were for medical offices and they were 100 percent pre-leased.
Developers are not risk-tolerant, she said. The markets are still tight. No one is willing to go out on a limb and offer spec office space.
Retail sector
Doxey with Eagle Commercial said retail sales are expected to rise 7.7 percent this year from 2011, the strongest increase since 1999.
Even so, analysts are predicting 3,000 to 5,000 store closings nationwide this year.
As many as 17,000 stores closed in the last three years, as the weak economy took its toll and consumers pulled back on spending.
For 2012, the crystal ball is a little foggy, Doxey said. The game changers for the year if gas prices hit $5 a gallon, we will see a lot of consumers on the sidelines.
This year could see a battle for survival between J.C. Penney and Sears, leaving the winner to compete with Kohl’s. We believe it will be J.C. Penney, he said.
Also, Staples is likely to emerge as the strongest among the three major office suppliers, he said.
He said Regency Square still has a lot of life, even though the troubled mall was taken back in December from Michigan-based Taubman Center Inc. by the lender.
Posted by Alex Ferreras, 2012 the Richmond Times-Dispatch (Richmond, Va.)
To read the complete article, go to Commercial Real Estate Ready to Turn the Corner