NAI Carolantic Realty on Target with Commercial Real Estate Forecasts

January 19, 2012

At last year’s conference, NAI Carolantic predicted that 2011 would be a painfully slow recovery year, but that we would see bottom.  They were right on target once again.  We finished the year with a drop in vacancy in the multipurpose and office sectors and remained the same in retail.  We also had increases in absorption in all but two submarkets.  That was the message to more than 1,700 business and community leaders who gathered at Raleigh’s RBC Center on January 18th for the 27th Annual Triangle Commercial Real Estate Conference hosted by NAI Carolantic Realty. The Conference is considered the authoritative “state of the market” report on the Triangle’s real estate sector and an accurate bellwether on the health of the region’s overall economy.

Steve Stroud, SIOR, Chairman of NAI Carolantic, welcomed attendees noting NAI Carolantic was celebrating “Forty Years of Forward Thinking.”  He also said he was glad to be there given a tractor accident three months earlier.  He thanked family, his team at NAI Carolantic and friends for their numerous acts of kindness during his recovery.

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

Following Stroud’s comments, NAI Carolantic President Jimmy Barnes, SIOR took center stage to review the past year’s commercial real estate landscape and offered Carolantic’s forecast for 2012.

“Remember, leasing is big business, as it has been reported there is over a trillion dollars nationally in lease obligations for public companies alone.  We are finally making headway, but nowhere near where we were in 2007.  The national capital markets are affecting business here in the Triangle. The primary stories are lots of money available but also billions of dollars of maturing debt.  Local and community banks are trying to work with their customers, but vacancies and declining values are big obstacles. In addition, a lack of institutional grade, Class A product, low interest rates, and an abundant money supply have driven up activity and consequently prices.  The Triangle has benefited from this activity with large transactions in the apartment market ($850 million) as well as the office market.  There is still a lot of political unrest, but we are seeing a national recovery, and our local real estate market is as active as we have seen it over the last 36 months.  Nothing robust, but we are optimistic moving into 2012”, said Barnes. 

NAI Carolantic’s survey and analysis showed that, in a market of almost 240 million square feet of office, multipurpose and shopping center space, nearly 32 million square feet remained vacant at year-end.  “Vacancy decreased slightly in the office and multipurpose sectors, and the shopping center market remained at 6% for the third year in a row.  Absorption improved slightly in 2011 and we expect minimal construction in the first quarter of 2012.  The apartment market continues to be on fire with the vacancy rate the lowest in the past decade,” said Barnes.


When it Comes to Auction, a Seller Has More Than One Option

September 28, 2011

There clearly is no “one size fits all” when it comes to selling distressed properties.  A commercial real estate broker is truly a partner and advisor to a property owner choosing auction as an alternative method of sale.

No two properties are alike and therefore, no one auction solution fits all. Realizing that different properties lend themselves to a specific accelerating marketing approach, NAI Global has designed a program which offers property owners more than one option. Through the program NAI has developed, NAI Carolantic can offer property owners three distinct auction options: Sealed Bid Auctions, Live Auctions and Online Auctions. Sealed Bid Auctions are suitable for individual properties or portfolios over $500,000; Live Auctions deliver quick results for both residential and commercial properties of all values; and Online Auctions are the best choice for properties that have been previously listed and exposed to the market.

In all cases, auctions provide a sense of urgency for buyers to act. Auctions eliminate drawn out negotiations with a process that typically takes no more than 120 days – start to finish.

Jim Adams, Broker, NAI Carolantic Realty

If you are a property owner considering an alternative to traditional marketing, consider the auction solutions provided by NAI. More information about the program can be obtained by contacting me at jadams@naicarolantic.com, or calling 919.832.0594.

Are All Surveys Created Equal?

September 13, 2011

Recently, I assisted in the sale of a building located in Downtown Raleigh.  Since the owner purchased the building in the early 1950s, there have obviously been numerous changes in downtown.  Adjacent properties were sold several times throughout the years, and each time the new buyer needed an updated survey for their closing.  

During this particular transaction, I took the time to sit down with what I consider to be one of the most detailed surveyors in Wake County.  He spent several hours with me digging through piles of paperwork that he had uncovered through his research for the subject property.  Most of the paperwork consisted of recorded neighbor surveys stating a legal description of the property lines and a recorded map.  

I was shocked to see the countless mistakes he discovered from careless survey work. One neighboring property is legally described to be three feet within the right of way along one of the streets of Raleigh.  However, the attached map showed the building to be within the property boundaries.  

In a totally different situation, I was involved in the sale of some land in the Research Triangle Park. After a detailed survey was completed, the buyer discovered the property actually consisted of an additional acre not advertised and shown on an old survey.  This was an immediate return for the buyer.

I also recently heard about an incorrect survey in Cary that led to a $30,000 settlement by the new property owner.  That had to be painful.

Moss Withers, Broker, NAI Carolantic Realty, mwithers@naicarolantic.com

If you are buying a property and in the midst of your due diligence, I encourage you to give careful consideration to the quality of the work performed by the surveyor. Obviously receiving the right plat is critical to the process.  But also consider a survey as an insurance policy for the future and it might save you many headaches and countless dollars down the road.  I have come to realize that all surveys are not created equal.

 


Game Changer

September 1, 2011

Director of Retail Services, NAI Carolantic Realty sbull@naicarolantic.com

Hats off to Dennis Edwards, President  & CEO of the Greater Raleigh Convention & Visitors Bureau, along with his staff for a very successful 24th Annual GRCVB Annual meeting yesterday at the Raleigh Convention Center.  Several of us from NAI Carolantic Realty joined with hundreds of other business leaders in attending the event and were very impressed with the various awards presented to include the John B. Ross Jr. Leadership Award to USA Baseball; the Thad Eure Jr. Memorial Award to the Carolina Hurricanes Hockey Club; and the Lifetime Achievement Award presented to John C. Brantley, airport director at RDU.  The balance of the program included a panel discussion moderated by Tim Schneider, publisher of Association News & SportsTravel magazines.  Panelists included two meeting planners and two sports event planners focusing on how the destination game is changing and how Greater Raleigh businesses can help to continue to attract groups and visitors to our area.  Also impressive was the GRCVB’s donation of five dollars from every luncheon seat purchased to support the Raleigh/Wake Partnership to End and Prevent Homelessness.  

Everyone must have left this meeting with a sense of pride for Raleigh, and an appreciation for those working hard to ensure Raleigh continues to be a ‘Game Changer’…the theme of the GRCVB’s annual meeting.

 


You learn something new every day!

June 15, 2011

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

Isn’t it great to learn something new every day…especially as it relates to our Region of North Carolina?  I was reading an article recently from the NC Department of Commerce  and wanted to share it with you.  The article indicated that according to a recent study prepared for the Research Triangle Regional Partnership (RTRP) and funded by NC State University’s Institute for Emerging Issues faculty fellow program found that North Carolina is a hub for smart grid companies.  According to the report, titled Smart Grid: Core Firms in the Research Triangle Region, NC states, “The Research Triangle Region and state of North Carolina have a unique opportunity not only to invent, manufacture and sell smart grid technologies to the world, but also to apply them at home.  The merger of Duke Energy and Progress Energy, creating the nation’s largest utility, may offer economies of scale that can facilitate smart grid deployment.”

The article went on to say the proposed smart grids hold the potential for utilities and customers to manage electrical usage more efficiently.  A smart grid would potentially enable the US power system to avoid power outages and blackouts.  Only California has substantially more facilities that develop, manufacture or service smart grid technologies.

The Research Triangle is home to the headquarters of five lead companies, making it second in the nation, and approximately 59 core smart grid firms with 101 locations that develop or manufacture relevant hardware and software, or perform other smart grid-related services.  These companies employ nearly 3,000 people.  Of the eight smart grid technology categories identified by the International Energy Agency, the Triangle’s largest concentration is in information and communications technology integration.

Knowing this fact about our Region can only help us as we talk with clients around the country and the world about all the advantages of living and working in the Triangle.  Let’s never stop learning.


Think Positive

May 25, 2011

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

New figures were recently released by the NC Employment Security Commission which indicated the state added 2,900 nonfarm jobs during April.  In addition, the state’s unemployment rate held steady in April, remaining at 9.7 percent for the second month in a row.  Not tremendous growth, but at least on the positive side especially considering the disastrous job loss we had in 2009.

Along with this news, the North Carolina Department of Commerce released information that it has been working on 149 new projects with 74 actual projects announced.  Over 7,000 jobs have been created with a capital investment of $1.09 billion between January and May, 2011.

We can also celebrate some local good news with the Lenovo announcement on May 20th that it had signed a contract with Affiliated Computer Services, Inc, a Xerox Company, as part of an initiative to expand its Global Services business. The agreement will create approximately 300 new jobs in the Research Triangle region.

Oh, and I congratulate our hometown boy, Scotty McCreery who is a shining light for the Town of Garner and the State of North Carolina.  Way to go Scotty!

Just a few of the reasons why we have a lot to be thankful for living in North Carolina, and specifically the Triangle region.  Please let us know if we can be of assistance to you and your firm.


Triangle Industrial Market Update

March 18, 2011

At the Annual CCIM Forecast luncheon this past Wednesday, I gave an update on the Triangle industrial market to approximately 300 attendees.  My presentation included a historical look back to 1996 showing vacancy trends over the years with the most recent increase starting in 2006 with 12.5% vacancy to today with 20.8% vacancy.  Sublease space makes up a large portion of the vacancy with over 800,000 square feet on the market at the end of 2010.  It is then no surprise that there has been no absorption and in fact negative absorption since 2008. 

Ed Brown, SIOR, CCIM, NAI Carolantic Realty

The three largest submarkets for leasing activity are the Research Triangle Park, East Wake and North Raleigh/US 1 corridors. Given the high vacancy numbers, one would expect construction to be down and in fact, there was little to no speculative building.  Construction was limited to a few build to suits. Rental rates have been flat since 2000 with most Class A buildings hovering around $4.00-$4.50 per square foot depending on location and ceiling height.  Many companies have taken advantage of current market conditions and traded up to lower their cost to a newer and/or more efficient building.  Industrial building sales were generally in the $41 to $46 per square foot range, and land sales were anywhere from $29,000 per acre in outlying areas, to $100,000 to $200,000 per acre for prime locations.

Today, we see the most industrial market activity in the following sectors: printing, medical, food, electronics and furniture.  I expect our negative absorption will continue through 2011 with several tenants downsizing or moving out of buildings in Keystone Park, Imperial Center, Tri-Center South and Tri-Center North.  Construction costs continue to escalate especially with increasing fuel prices.  Steel has increased 16% this year and concrete is due to increase to $5 per yard in April.

For the future, I expect industrial vacancy levels to be up again this year, and absorption to remain negative.  Rates will be stable and there will be no speculative construction.  Land values will be down, and construction costs will rise.  But, job growth…the engine that drives our economy, should improve which can only help the overall commercial real estate market.

Please let me know if you have any questions or if I can be of service with your real estate needs.


2011 Will Be The Year

February 8, 2011

Jimmy Barnes, SIOR, President of NAI Carolantic Realty

2011 will be the year we begin the recovery for a successful 10 year run. If we can get 5 strong years out of a 10 year real estate cycle, we will have been successful. Historical numbers show we did just that in the 80s, 90s and from 2000 to 2010 and we expect the same trend as we head to 2020. So plan on 5 strong years and work, plan and prepare to make the other 5 ok and not awful. 

We continue to have serious challenges with $1.4 trillion in National commercial debt coming due between 2010 and 2014.  Commercial owners are returning keys to banks (you may have heard the term “jingle mail”), and employment rates that are not expected to improve much this year.  Past downturns have been based on over building, but this downturn is clearly Global, based on over leveraging and record setting job loss. 

But there’s not a better place to be in the country. Our market, as it has in the past, will recover more quickly than other markets, and our State and region give us reason to have confidence in the recovery.  This year expect: 
• Vacancy rates to start trending down
• Could be a supply problem is some submarkets
• Rental rates to hit bottom
• Absorption to remain flat
• No speculative construction anytime soon
• Investment sales up another 40 percent, and
• Land prices to now reflect true values.


Emerging Perspectives/Part III

January 31, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following  ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is the Part III and the final portion of his remarks.

“There are many who will try to convince us that ‘taking our country back’ means taking it backwards.  And nothing is further from the truth.  Yes, we want a return to our founding principles, to personal responsibility, statesmanship, and fair taxation. But, believe me, the solutions to the mess we are in now, require that we look to the future.  Specifically, to take a hard look at our schools and universities and work for fundamental changes in the ways we are teaching our children – especially when it comes to teaching the history of this great country.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

Unfortunately, many of us will not be around to solve the problems we’ve created.  I believe that at this point the best legacy we can leave behind . . . something we can accomplish . . . is to get our education system back on the right track. 

For example, at the high school and elementary level, you have the efforts of Bob Luddy, founder and president of CaptiveAire Systems.  Bob has a passion for education, and he’s put his enthusiasm, time and money into creating Franklin Academy, Saint Thomas More Academy, and, in 2007, Bob opened Thales Academy in Raleigh, the first in a network of private community schools offering a high-quality grammar school education at low-cost tuition.  Franklin Academy and St. Thomas More are both nationally ranked near the top of all secondary schools.

We have charter schools like Raleigh Charter High School.  It was founded by a Board of Directors made up of business professionals, experienced educators, and college professors.  It is a community school, with a diverse student population and parents dedicated to seeing that their children succeed in a disciplined atmosphere that promotes real learning.

There are many new perspectives emerging on the education scene.  Students and parents have new opportunities, and we need to provide them with even more. We, as business and community leaders, have a responsibility to get involved.  We need to work with our public school system to help them make changes to better prepare our children to compete and succeed in the next century.

If we are going to get our country back, the best place to start is getting our schools back.  And by that I mean getting control away from those who object to the Pledge of Allegiance, and those who don’t believe it’s important that our children learn about the real heroes of American history.  We need the next generations, to appreciate the sacrifices that have made possible all of the freedoms we too often take for granted.  

I’ll close with this quote:  “All tyranny needs to gain a foothold is for people of good conscience to remain silent.”  Thomas Jefferson

We have been silent long enough.”


Emerging Perspectives/Part II

January 25, 2011

Steve Stroud, Chairman of NAI Carolantic Realty, gave the following ‘perspective’ at the 26th Annual Triangle Commercial Real Estate Conference held on January 12th at the RBC Center in Raleigh, NC.  This is Part II of his remarks.

Steve Stroud, SIOR, Chairman of NAI Carolantic Realty

“My parents, and their generation, never complained to the government, and never asked for anything but an opportunity.  They rolled up their sleeves and went to work, and they made the most of any opportunity that was afforded them.  They belonged to a community, and that community looked out for one another. There was nothing exceptional about their circumstances, or their resolve to raise a family with a deep sense of personal responsibility and a respect for this country and what it stands for.  They were a typical North Carolina farm family of the 1940’s and Fifties. Their values were hard work, and thrift, and belief in God and family. Their values had not changed one bit from those of our Founding Fathers.

This was not so long ago.  A single generation, in fact.  So where did we go wrong?  And more importantly, what can we do to get our country back again?

First, bring back statesmanship . . . . in Washington DC, in our state capitals, and in our city and county governments as well.  We need to stop electing politicians who know how to campaign but know nothing about governing.  We need to quit the earmarks and eliminate the gerrymandering that creates congressional districts that look like somebody spilled a bottle of ink on the map. Both parties have been guilty of the same thing. 

Second, get rid of bloated government.  Lately it seems that the only jobs being created have been government jobs. On the day that the Federal government employs fifty percent of the population, plus one person, then our democracy will cease to exist. 

Third, bring integrity back to our electoral process.  The right of every legal, registered citizen to vote must be protected.  And we must recognize that if people who have not earned the franchise are allowed to vote, that hurts the legitimacy of the whole democratic process.  Bring back the process where voters need to show their voter registration card, or some other form of official ID.  Right now it’s too easy to cheat.  In fact, the instructions on how to do so are published on the Internet.

Finally, we’ve got to fix the relentless taxation that seems to be aimed at punishing those who make the most of their opportunities and achieve something in our society. 

In some twisted fashion the achievers have become the enemy, to be seen simply as a source of tax money that is then re-distributed.  And when the bill comes due for this incredible level of deficit spending, who do you think is going to be asked to pay it? 

(Part III, the final portion of Steve’s remarks will be posted next week.)


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