Tuesday, November 30, 2010

The Time is Now to Make Long Range Commitments

With a change in Congress taking place in the next few weeks, the “Bush” tax cuts expected to be reconfirmed and the President starting to move to the middle as he plans for re-election, business decision makers will be more optimistic.  This is an ideal opportunity for brokers to motivate tenants to make long range commitments before rents start to escalate.
As hirings start to accelerate more space will now be needed for new employees.  This environment is a breath of fresh air for brokers who have the optimism and energy to develop new business and create new opportunities for the coming year.
Because of the weak economy over the past three years there has been a change in the way employers do business and more of a focus on an economy of space.  Gone are the days of large private offices.  They have now been replaced by smaller offices and executives can meet with their guests in one of the several conference rooms that are set up for everyone’s use.  Reception rooms are also smaller and economy of size is the watch word.  With this in mind, companies will think about relocating to new space in order to recreate their company’s operation consistent with the new standards of efficiency and cost savings.
-Gil Robinov
Gil Robinov is an Executive Managing Director at NAI Global New York City. New York is home to more than 185 member governments of the United Nations. Robinov is recognized as the industry leader in this marketplace and has represented over 25% of these organizations.

Beautiful Home in Cimarron Country Club For Sale

Wednesday, November 10, 2010

Groundbreaking Held for Firemen's Park Renovation Project

Click here to view the Site Plan which includes an addition of a new lake for fishing, kayaking and canoeing.
The City of McAllen and the City of McAllen Parks and Recreation Department hosted a groundbreaking ceremony for the Firemen’s Park renovation project, at 201 N. 1st, on Tuesday October 5.
Firemen’s Park was founded by the McAllen Volunteer Fire Department on May 15, 1953. In 2009, Texas Parks and Wildlife awarded a $1.6 million grant to improve the historic park. The project will provide the first fishing and camping venue in McAllen with the addition of 10.8 acres of neighborhood park lands and a four acre pond.
“Thanks to the Texas Parks and Wildlife grant, Firemen’s Park will become one of South Texas’ premier family parks where McAllen families will be able to enjoy fishing and camping inside our city limits,” said McAllen Mayor Richard F. Cortez.
The project also includes renovations to the rental pavilion, sand volleyball court, playscape, kitchen area, parking area and restrooms.
“The development of Firemen’s Park will bring a unique experience to the citizens of McAllen. The park will have a lake for canoeing, kayaking and fishing,” said City of McAllen Parks and Recreation Director Sally Gavlik. “In addition, there will be an area that can accommodate overnight camping for such groups as Boy Scouts. Firemen’s Park brings the outdoors to an urban community.”
The Firemen’s Park renovation project is expected to be completed by late summer or early fall of 2011.
One of the objectives of the project seeks to renovate and expand Firemen’s Park into a neighborhood park to serve a larger sector of the population. The park is currently a 3-acre “special use” facility, open by reservation only. Although the facility is rented 150 times a year, it does not serve many of the growing neighborhood recreational needs in McAllen.
The second part of the project will dedicate 6.4 acres of publicly-owned non-park land that was previously used as a water treatment plant reservoir for park use. The 6.4 acre of non-park land dedication involves the adaptive re-use of a dry water reservoir at the decommissioned Water Plant into a water-based recreational facility. This will be the first fishing and water-based (non-swimming pool) recreational facility in the City. It will be open for public water-oriented activities such as fishing, boating (canoes, kayaks and small sailboats), walking, birding and nature observation.
The reservoir will be deepened for better fish habitat, the east bank will be moved further to the east to enlarge the physical size of the pond and trails will be added to link the facility to the 2nd Street Hike and Bike Trail. New restrooms, fishing piers, a fishing bridge, and shaded picnic facilities will be built. An automatic irrigation system will use water from the reservoir to irrigate the park.
Plant species, including grasses native to the Lower Rio Grande Valley that attract birds and butterflies, will be used in this project. Species that are on the state’s Controlled Plant list will NOT be used.
The third segment of the project includes the purchase of 2.46 acres of new park land never before used for public recreation and dedicates it for park purposes. This tract of land adjacent to the park, formerly used by Right Away Foods (Military Meals-ready-to-eat) will be purchased and incorporated into the park.
The fourth segment of this project includes the southern portion of the property surrounding the water filter building and part of the building itself. Fencing, site work, pathways, driveways, parking and landscaping will make up the majority of the work. The one above-ground water storage tank will be renovated for adaptive reuse into a multi-purpose facility.
Work on the water filter building will be limited to securing the doors and windows and the adaptive reuse of the “head-house” and surrounding area on the north side into a restroom/concession building and patio to support the canoeing and fishing activities. Utilities, including water and sewer will be included in this segment of the project.
The proposed project site is located in the central eastern part of the City at the north-east corner of 2nd Street (Col. Nikki Rowe Boulevard) and Business Highway 83. The property is located adjacent to a major irrigation canal owned by Irrigation District #2 that provides water for the City of Edinburg and farm irrigation use. The water plant was constructed in 1927. The City of McAllen acquired the plant from Central Power and Light Co. (now AEP) in 1945. The water plant was decommissioned in 1997 after McAllen’s 3rd plant was commissioned on the west side of McAllen in 2006, eliminating the need for the old plant to be used in the future. The reservoir was drained, where it remains unused to this day. Water from the Rio Grande flows on a daily basis through the canal, which is adjacent to the reservoir. The new fishing pond will be fed from this water source, allowing flow-through of fresh water.
The proposed project will also provide critical habitat for migratory birds and water fowl which will support the World Birding Center project. Through the 1990’s, the population growth was projected to increase rapidly along the lower Texas Gulf Coast with the greatest increase in Hidalgo and Cameron counties (Culliton et al. 1990, U.S. Census Bureau 2002). Additionally, by 1988, close to 95% of the native Tamaulipan thorn scrub habitat had been destroyed due to rapid urbanization and agricultural development. With suitable habitat extensively fragmented, the remaining parcels of coastal forest and grassland ecosystems are critical stopover habitats for many circum- and trans-gulf migratory birds in the spring and autumn (Barrow et al. 2005, Gauthreaux 1999, Vickery et al. 2000, Forsyth and James 1971, Langschied 1994, Tunnell and Judd 2002, Jahrsdoerfer and Leslie 1988).

Hundreds of Jobs Coming to Edinburg, Texas Area

Teleperformance is pleased to announce they have secured substantial new business with an existing client, a primary wireless service retailer, and bringing the 500 new jobs to the Edinburg, Texas area. Teleperformance, the worldwide leading provider of outsourced contact center services managing customer care and technical support programs, has begun accepting applications to fill over 500 immediate customer care representative and various other positions. 
Teleperformance USA

Tuesday, November 2, 2010

Good Weather Ahead for Commercial Real Estate Industry

There are many signs and indicators that 2011 is going to be strong and productive for the overall economy in general and the real estate industry in particular.  The stock prices of some of the larger REITs and brokerage companies such as Vornado, SL Green, JLL and CBRE have all risen considerably in the past few months.  With the expected changes in Congress there will be a psychological lift throughout the business community that will encourage corporate executives to hire and expand.  The recession and low interest rates have resulted in companies having more cash in reserve and higher profits due to reduced payrolls.
The new optimism will begin to encourage companies to produce more, hire more and do more, which means more business for the real estate industry. Those firms which have hired new quality sales people and fine tuned their operations and their marketing departments will be ready to take on the many opportunities that will become available. 
It will soon stop raining and the sun will come out tomorrow!  Those who are ready will benefit from the good weather ahead.
-Gil Robinov
Gil Robinov is an Executive Managing Director at NAI Global New York City. New York is home to more than 185 member governments of the United Nations. Robinov is recognized as the industry leader in this marketplace and has represented over 25% of these organizations.

Senior Housing Poses Opportunities for Investors

In spite of a sluggish national economy and skittish capital markets, the outlook is extremely bright for the senior housing industry.  While other asset sectors continue to suffer from a lack of liquidity, recent data suggest that high demand and a return of capital to the senior housing market will make for a rich deal making environment in the months ahead. 
According to several recent reports issued by NIC, senior housing has weathered the economic downturn better than other asset types and offers a higher rate of return to investors. As of Q4 2009, the senior housing sector generated a cumulative return of 2.7 times its mid 2003 value, compared to the entire CRE sector, which posted a cumulative gain of just 1.5 times its mid-2003 value, according to the National Council of Real Estate Investment Fiduciaries (NCREIF). 
Occupancy rates have stabilized while rents continue to grow, albeit slowly.  Demand for senior housing will continue to rise substantially over the next few years, as the first wave of the 79 million members of the baby boomer generation have already passed the age of 60. The fact that Americans are living longer has created longer-term tenants and an increased need for facilities that accommodate the expanding needs of seniors. While demand flattened during the downturn, it has rebounded quickly and is growing at a faster rate than it was prior to the recession. 
Meanwhile, construction starts for senior housing properties have dwindled over the past 12 months, which means leasing at existing properties will increase as demand from consumers continues to rise. In fact, the NIC reports that new construction for senior housing is down 32% from the same time period last year, while demand is outpacing pre-recession growth rates.  Above average returns and the potential for significant growth are attracting a wide base of potential investors, including TICs, private equity groups, national banks and foreign investors.   
Of course, not every senior housing project can succeed in today’s economy.  Successful senior housing projects require a combination of strong balance sheets and extensive operating experience to be attractive to lenders. Debt capital is readily available for projects that can prove long term value with experienced owner/operators that have a track record of success.   
Savvy brokers are taking advantage of these market opportunities and are reaping the benefits.  For example, NAI Bluestone recently secured $14.3M in debt and equity financing for the development of the Arbors at Buck Run, an 85-unit assisted living and memory care facility located in Feasterville, PA.  The financing was secured on behalf of Capital Health Group, LLC, one of the nation’s premiere senior housing and healthcare private investment companies, and Orens Brothers, an experienced developer and construction management firm with a long track record of successful projects throughout Greater Philadelphia. Despite the fact that the project required re-development capital in today’s challenging construction financing market, NAI Bluestone was able to identify the right debt and equity capital providers who shared its conviction that the sponsorship, project and its market represented a terrific risk/reward opportunity.  Our ability to secure debt and equity re-development capital in today’s market proves that capital is available for strong projects, but it requires strong relationships with lenders, experience and a track record of success. 
Looking ahead at 2011, we are going to see more and more activity in the senior housing sector.  Brokers with strong lending relationships and experienced development partners will be poised to take advantage of this growing market, which will continue to outperform other asset types in the upcoming year. 
-Matthew McManus
Matthew McManus is Chairman of Philadelphia-based NAI Bluestone Real Estate Capital, LLC.

Monday, November 1, 2010

Midterm Elections to Impact Real Estate Recovery

The midterm elections may have a big impact on the real estate recovery.   At the American Bankers Association meeting in Boston a member on the right leaning CATO institute stated that if the Republicans take Congress in November the Republicans will pass a resolution in short order to force both Freddie and Fanny into receivership.  The potential for significant change in the residential and multifamily financing structure of the United States is very possible.  For over 30 years these quasi governmental organizations have been a core feature of the American financing landscape for single family and multifamily homes in the U S.
The current situation of poor balance sheets for both organizations has resulted in the loss of Republican confidence in both organization and if either are forced into receivership the only sure bet will be disruption to the marketplace.
-Rhyne Brown
Rhyne Brown is Executive Vice President of Client Development and leads NAI Global’s Special Asset Solutions group, a professional real estate practice that is focused on meeting the needs of banks and special servicers active in managing distressed assets and REO.

A Market Segmentation is Essential to the Success of a Retailer!

An accurate understanding of the market area where a new retail location will be based is key to the success of the venture. Traditionally retailers would collect a core set of demographic variables as criteria for understanding a particular market or site.  The key variables are: income, age, population, traffic counts and depending on the market area ethnicity.  Retailers set minimum thresholds for each variable in order to filter through potential opportunities. In fact, a number of retailers and developers still use this approach today to validate markets.
To better understand a more complete picture of a market area, i.e., who lives in a particular city or trade area, a market segmentation system brings a more robust understanding by combining a suite of variables together to categorize people into distinct groups.  People would generally be categorized under 10 main groupings, with Most Affluent being the first group and Least Affluent the 10th group.  Within each group there would be sub-groups which could see the U.S. population broken down into some 70+ distinct classifications.  The power of the market segmentation  system is that it measures, quantifies and assigns people to a geographic point of reference on a map that describes not only how many people can be found in a group but more importantly the buying patterns or behaviors of people.  “Melting” a series of demographic variables together to create a classification allows retailers to more precisely measure a market’s size, and target specific potential customers.
The use and evolution of a market segmentation system is widely endorsed and used extensively across North America, most parts of Western Europe, and portions of Asia-Pacific (Australia, Japan).  In emerging markets of South America and Asia, countries have created a segmentation classification based on an Alpha system.  An “A” category reflects a high degree of affluence while an “E” category reflects a poor segment.  Retailers in North America have had to adapt to understanding their potential client base in emerging markets as the ability to segment a population in comparison to the U.S. or the U.K. is at the present time not comparable.
Use of a segmentation system is not limited to bricks and mortar retailers.  Consumer Goods companies rely heavily on understanding customer buying behaviors, and how much money people have to spend on goods and services.  With the advent of on-line shopping, internet based retailers use the same tools to sell their books, clothes and travel packages.
Segmenting a market based on a suite of variables is much more powerful than the traditional filtering or benchmark approach to analyzing a markets worth.
-George Anderson
Based in Toronto, Ontario, George Anderson is Vice President of Market Analytics for NAI Global, and works closely with retailers and financial institutions using geodemographic analyses to identify and evaluate markets for expansion around the globe.