Retail Temperature Check: Latin America

Colombia

We took a look at shopping center development in Latin America over the last two years and the findings were a mixed bag. Much of the data in our most recent Latin America Retail Shopping Center Development MarketBeat reflect recent overall economic activity in Latin America. But some surprises came out of C&W’s fist ever retail report from the region as well.

Focusing on six primary countries—Brazil, Mexico, Colombia, Argentina, Peru, and Chile—our report shows that shopping center inventory grew significantly in 2012 and 2013, and now stands at its highest level ever.
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E-Commerce Boom Triggers Fundamental Changes In The Industrial Sector

Distribution Center

Online retail sales for 2013 were estimated at $263.3 billion, an increase of 16.9% from 2012 and are anticipated to reach $370 billion by 2017. E-tailing is the wave of the future. Sales from online purchases make up a higher percentage of the total sales for traditional retailers than ever before. E-tailing will continue to outpace the growth of physical retail stores and it appears that the future of retail is not more store or shopping centers but more warehouses and trucks.

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Strong Returns Expected To Continue In 2014

Strong Returns

From a risk-adjusted standpoint, the regional retail mall sector ranked first on RERC’s RAR (Risk-Adjusted Return) metric at 1.3, followed closely by the Industrial Warehouse and Power Center asset classes which both tied at 1.1. Power Centers showed the largest year-over-year change, moving from an RAR Metric rating of 0.9 in 2012. Rounding out the bottom end of the metric were the Industrial R&D, Office – CBD and Hotel sectors, ranking 0.8, 0.7 and 0.6, respectively.
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Atlanta Markets Hot Out Of 2014 Gates

Atlanta

It’s no secret by this point that Atlanta is a commercial real estate market that’s back on a hot streak after taking a big hit during the recent Recession. All the fundamentals have been moving in the right direction for months now, and we entered 2014 with plenty of wind at our backs.

Dig into the details of what’s happening in various sectors, and the picture of just how thorough the rebound is starts becoming clear.

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Talent Shortage Driving Occupier Decisions

Chicago

There is currently a war for talent that is keeping executives up at night. In today’s fast-moving, technology driven economy, companies gain competitive advantage through their ability to innovate and create new products and services. Without the right workforce to accomplish this, businesses will quickly lose market share and find themselves unable to compete. A widening talent gap exists in today’s economy. Every year, the number of employees in the workforce shrinks. There is simply not enough skilled labor to match the needs of today’s highly competitive global corporations.
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U.S. Weekly Economic Update: Good Signs From Labor Markets

Employment

We have long maintained that one of the keys to the strength of the U.S. economy in 2014 will be whether and when firms shift from worrying about costs to worrying about losing sales. When companies are more willing to take risk, they are more aggressive in hiring and when that happens, the pace of economic growth accelerates sharply. That is what we have been anticipating for 2014; unfortunately the severe winter has postponed the shift to stronger growth.
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Foreign Investment in San Francisco’s Office Market

SF Skyline

I recently spoke on a panel for CREW San Francisco discussing the “New Cash Economy: Foreign Direct Investment in Bay Area Real Estate.” I began with a broad overview of the global investment landscape looking at the increase in investment activity over the last several years with a focus on capital flows today versus the prior peak of 2007. Interesting to note that across all regions investment volumes are up to 90% of previous peak levels with activity in APAC more than double since 2007. Cross border activity has been a main driver of this increase, driven by economic, demographic and global shifts causing global investors to look for stability and income. Specifically, there has been a tremendous amount of wealth creation in the last decade, especially in emerging economies such as China, India and Brazil as these countries have transformed from rural agricultural economies into industrial ones. In 2009, $43.3 billion of non-financial capital was invested outside of China and by 2013 that figure had doubled to more than $90.2 billion. By 2020, it is projected that China’s investment capital will amount to $16.4 trillion. If only 5% of that money goes offshore, that equals $822 billion – a sizable amount of capital to invest.

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Houston: More Than Energy

Southeast Texas, specifically the Houston-Baytown-Sugar Land 10-county region, has been one of the most consistently productive and growing metropolitan areas in the country for several years. Since the end of 2011, year-over year (YOY) job growth has remained above 3.0% (often exceeding 4.0%), and ended 2013 with an annual increase of 82,000 jobs. This accounted for nearly one-third of all the new jobs created in Texas in 2013, and led the state in job creation ahead of the Dallas-Fort Worth-Arlington and Austin-Round Rock-San Marcos metropolitan areas.

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U.S. Employment Update: February’s Employment Thaw

Today’s employment report was positive in a number of ways. It indicates that the slower growth experienced in December and January was likely an anomaly caused by the unusually severe weather and not indicative of a slowdown in the general economy. For the real estate sector, this report is particularly encouraging and strongly supportive of our view that the economy is on track for the best year of growth in this recovery.

The U.S. economy added 175,000 payroll jobs in February, the largest increase since November and above the consensus expectation of approximately 150,000. In the last 12 months, the economy has added 2.2 million jobs. The level of employment was revised slightly upward for both December (+9,000) and January (+16,000). Read the rest of this entry »

GSA Leasing in 2014: More Velocity, Less Space

Along with the passage of a Federal budget at year-end 2013 came cautious optimism for increased GSA leasing in 2014. Typically representing about a third of new leases in the District, GSA leasing soared to nearly half of all square footage leased in 2009 and 2010 as the impacts of the Federal Stimulus Package took hold. After two government shutdowns, numerous budget impasses between Congress and the Administration, and sequestration, GSA leasing dropped dramatically in 2013, representing just 6% of new deals – a root cause of the record-low leasing activity in the District.

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