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Green Real Estate Trends

Green Real Estate Trends | Real Estate Trends | Scoop.it

"Calculating ROI and communicating the benefits of green building is essential. This only further proves how necessary it is to have agents with green real estate designations who are able to explain the value and benefits of green homes and properties."

Clarence Wong, MSRE's insight:

Real estate brokers with green designations will be better equipped to explain the benefits and ROI of green buildings. With green buildings on the rise, these type of designations could help brokers stand out from their peers.

 

Here are green designations:
EcoBroker Certified® Designations (US); Accredited Green Agent™ and Accredited Green Broker™ designations; Accredited Real Estate Professionals (S.T.A.R.) Certification; and LEED Green Associate etc.

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Creative Co-Working Techniques For Office Owners And Operators

Creative Co-Working Techniques For Office Owners And Operators | Real Estate Trends | Scoop.it
“Owners and developers have begun to include co-working companies as part of the fabric of the building to fill the extra office space, as well unused common space.”
Clarence Wong, MSRE's insight:
In certain markets and urban areas, landlords have been converting unused office space to co-working/incubator space in order to attract entrepreneurial and corporate tenants by providing them with an attractive work environment as well as leasing flexibility, including the option to expand later within the same building. 

However, from valuation standpoint, it is recommended not to allocate too much co-working space in office buildings since this can be perceived as more risky to lenders (co-working spaces with corporate credit tenants are deemed more secure though). A conservative allocation is no more than 5-10%.
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Landlords 'Are Sitting There With Their Mouths Watering' When Big-Box Tenants Leave

Landlords 'Are Sitting There With Their Mouths Watering' When Big-Box Tenants Leave | Real Estate Trends | Scoop.it
“As big-box and department stores like Sears, Macy’s and Kmart close, landlords are divvying up vacated space to please smaller, more modern retailers.”
Clarence Wong, MSRE's insight:
Retail center landlords are chomping at the bit at struggling big-box tenants paying under-market rents to vacate or right-size, so they can demise these spaces & mark-to-market rents to popular discount/off-price, etc. junior box tenants.

For big-box spaces already vacant and now for sale, opportunistic investors can swoop in to purchase them at a low basis (below replacement costs due to rising construction costs), subdivide them, and then lease them out for profit.
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The American Middle Class Is Losing Ground

The American Middle Class Is Losing Ground | Real Estate Trends | Scoop.it

“After more than four decades of serving as the nation's economic majority, the U.S. middle class is now matched in size by those in the economic tiers above and below.”

Clarence Wong, MSRE's insight:
According to the census data, the middle class is no longer the majority. Its share dropped to 50%, while the lower class and upper class rose to 29% and 21% respectively. 

Meanwhile, the aggregate household income held by the middle class plunged to roughly 43% while the upper class rose to approximately 49%. Lower class hovered around 9%. 

With incomes of the middle class & lower class falling behind, it’s no wonder discount/off-price retailers have rose in popularity in recent years among these population segments.
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Why Mandating Ground-Floor Retail in Mixed-Use Developments Fails

Why Mandating Ground-Floor Retail in Mixed-Use Developments Fails | Real Estate Trends | Scoop.it
“While many projects are delivering offices or apartments fully or nearly leased, their ground-floor retail often remains vacant. And it is not exactly the fault of the troubled retail industry.”
Clarence Wong, MSRE's insight:
Municipalities continue to pursue ground-floor retail in mixed-use developments as tax generators. However, ground-floor retail cannot simply be placed in any location since retail sales, column spacing, parking etc need to be carefully considered beforehand; otherwise these spaces could sit vacant.

Floor plans for ground-floor retail in mixed-use projects is more complicated since configuration is dependent on column spacing for upper floor multifamily or office floor plates. Since these ground-floor retail spaces cannot easily be reconfigured, this limits tenanting and re-tenanting options.
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Wal-Mart Already Has a Thriving Online Grocery Business, Just Not in the U.S.

Wal-Mart Already Has a Thriving Online Grocery Business, Just Not in the U.S. | Real Estate Trends | Scoop.it
Watch out, Amazon.
Clarence Wong, MSRE's insight:
With all the focus on Amazon’s acquisition of Whole Foods, Walmart has quietly developed a successful online grocery business in China, capable of bringing fresh produce from its shelves to the homes of consumers within one hour.

To accomplish this challenge, Walmart has created a network of chilled mini-warehouses, used artificial intelligence (AI) to tailor inventories, and crowdsourced delivery people to bring fresh groceries to consumers.

By year end, Walmart will have one-hour delivery available to consumers within 1.9-mile radii of 161 Walmarts in China. There are also plans to add smaller freestanding last-mile “dark stores” outside of these 1.9-mile radii.

Could a similar business model be adopted one day in the U.S.?
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Bill Gates firm buys Arizona land for $80 million to create 'smart city'

Bill Gates firm buys Arizona land for $80 million to create 'smart city' | Real Estate Trends | Scoop.it
A real estate investment firm owned by Bill Gates recently bought land in Arizona for $80 million to be developed into a “smart city.”
Clarence Wong, MSRE's insight:
Bill Gates recently purchased 25,000 acres for $80 million to develop a new smart city called Belmont in Tonopah, 50 miles west of Phoenix. While Columbus, OH, winner of the 2016 Smart City Challenge, would be the first existing U.S. city to be upgraded to a ‘smart city’, Belmont would be the ‘smart city’ built from the ground up in the US.

Belmont plans call for smart infrastructure, autonomous vehicles as well as upgraded manufacturing and distribution networks. The CRE portion will comprise of 80,000 residential units, in addition to 470 acres for public schools and 3,800 acres designated for offices, commercial buildings and retail.
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Will fine print in leases derail Amazon's omnichannel grocery strategy?

Will fine print in leases derail Amazon's omnichannel grocery strategy? | Real Estate Trends | Scoop.it

"Many thought it would be smooth sailing for Amazon to steamroll the competition as it embarked on its omnichannel expansion."

Clarence Wong, MSRE's insight:
With Amazon's acquisition of Whole Foods, it intends to not only break into the grocery business, but also use the Whole Food brand and existing locations to expand its brick-and-mortar footprint, including adding Amazon lockers for click-and-collect.

However, considering Whole Foods now poses a threat to not only traditional grocers, but also to big box retailers like Target and Best Buy, these retailers are pushing back by leveraging existing lease restrictions to roadblock Amazon pick-up lockers.
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By How Much Should You Raise the Rents at Your Apartment Building?

By How Much Should You Raise the Rents at Your Apartment Building? | Real Estate Trends | Scoop.it
Many renters have already been pushed to the limit financially. Another rent hike could force them to move out.
Clarence Wong, MSRE's insight:
With apartment rents at all-time highs, a natural question is how much to raise rent by before tenants move out. Although breakpoints can vary, average household income and building class are factors to consider according to RealPage. 

Class-A apartments have the highest rents comprising of upper-class renters with salaries of $80K+, so residents can afford to relocate for better options and this keeps rent increases in check.                

Class-B apartments offer lower rents and are filled of mostly middle-class renters with salaries of $50K, with an average of 20% of income spent on rent, so more likely they can afford to take on rental increases. 

Class-C apartment residents pay the lowest rent and earn less than $30K annually, spending roughly 30% of income on rent. Since they are financially constrained, it limits ability to relocate and absorb rent increases.
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Toys ‘R’ Us Will Live Because Mattel and Hasbro Can’t Let It Die

Toys ‘R’ Us Will Live Because Mattel and Hasbro Can’t Let It Die | Real Estate Trends | Scoop.it
"Manufacturers prop up last remaining single-category stores, offering pledges of support to counter Amazon and Wal-Mart"
Clarence Wong, MSRE's insight:
Iconic Toys R Us might be saved. Major toy manufacturers like Hasboro and Mattel rely on partnering with Toys R Us to successfully sell their products at full retail; they don't want to resort to selling only at discount retailers like Amazon, which would erode their margins. 

For these reasons, the major toy manufacturers have pledged to stand by Toys R Us as suppliers during restructuring. During this transition, some agreements with debt holders would prohibit Toys R Us from closing stores completely, but it still may have opportunity to right-size some locations instead.
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Here are the cities that meet the criteria for Amazon’s second headquarters

Here are the cities that meet the criteria for Amazon’s second headquarters | Real Estate Trends | Scoop.it
Amazon on Thursday announced it was looking for another city to host what it calls its second headquarters. Given the company’s stated criteria, here’s how Amazon could narrow the list — using the data the company so eagerly devours.
Clarence Wong, MSRE's insight:
MarketWatch analyzed Amazon's criteria for its 2nd HQ and came up with Atlanta, Austin, Baltimore, Boston, Bridgeport, Denver, New York, Provo, Raleigh, Tampa and Washington DC as possible locations. 

Below is Amazon's criteria. Click on the article link for more details and methodology. 

(1) "Metropolitan areas with more than one million people" 
(2) "Stable and business-friendly environment" 
(3) "Urban or suburban locations with the potential to attract and retain strong technical talent" 
(4) "Communities that think big and creatively when considering locations and real estate options" (tax breaks)

#AmazonHQ2
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Amazon's Whole Foods era begins Monday -- with cheaper kale

Amazon's Whole Foods era begins Monday -- with cheaper kale | Real Estate Trends | Scoop.it
The e-commerce giant plans to cut prices on many best-seller grocery items, and Prime members can look forward to "special savings and in-store benefits."
Clarence Wong, MSRE's insight:
The grocery shake-up has begun. No longer needing to rely on high margins to operate, soon-to-be Amazon-owned Whole Foods has announced it will cut prices on popular grocery items this coming Monday upon close of the acquisition. 

Furthermore, Amazon Prime members will also enjoy other "special savings and in-store benefits". This "high-end grocer" is evolving, and traditional supermarkets need to adapt in order to keep up or be left behind in the grocery space.
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Amazon Unveils Delivery Lockers For Apartment Buildings

Amazon Unveils Delivery Lockers For Apartment Buildings | Real Estate Trends | Scoop.it
Innovative as ever, Amazon has quietly rolled out a new delivery feature to help apartment landlords in particularly dense markets manage tenant packages.
Clarence Wong, MSRE's insight:
More young professionals and retirees are nowadays opting to rent rather than own homes to save money and also for convenience, including receiving packages when they're not home. To address this need, Amazon has introduced its Hub locker service to simplify parcel delivery and management for apartment operators.
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Amazon Buying Whole Foods Could Transform Grocery Shopping

Amazon Buying Whole Foods Could Transform Grocery Shopping | Real Estate Trends | Scoop.it
By buying Whole Foods, Amazon can take its wild grocery store vision nationwide.
Clarence Wong, MSRE's insight:
Amazon's acquisition of Whole Foods signals the online behemoth's foray into the grocery space, providing it with over 400 premier brick-and-mortar locations. It can use these locations to perfect checkout-free grocery shopping for its customers via either pick-up or delivery through this new last-mile grocery distribution channel, while also offering traditional customers the ability to shop in-store. Once this concept is perfected, Amazon can expand into tertiary areas. If this plan pans out for Amazon, traditional grocers will need to adapt to keep up.
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Amazon Goes Head-To-Head With Pharmacy Retail Chains

Amazon Goes Head-To-Head With Pharmacy Retail Chains | Real Estate Trends | Scoop.it
“Pharmacy retail chains are preparing for hefty competition and the threat of declining foot traffic after discovering Amazon has launched an exclusive line of over-the-counter health products.”
Clarence Wong, MSRE's insight:
Traditional drug stores and big-box stores like Walmart/Target have always offered low cost generic brand medicine, but Amazon is now offering even lower cost alternatives through its Amazon Basic Care over-the-counter health product line. 

By undercutting drug stores and big-box stores in price for generic over-the-counter medicine and also offering the name brands, Amazon is giving its customers even more reason to continue ordering through them for daily-needs products. 

Until Amazon starts to offer prescription medicine, drug stores have the upper hand on this, but they still need to be on the defensive. So it’s no wonder CVS and Walgreens are teaming up with health care companies Aetna and UnitedHealth respectively to help maintain foot traffic.
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Kohl's to partner with grocers or convenience stores to fill vacant store space

Kohl's to partner with grocers or convenience stores to fill vacant store space | Real Estate Trends | Scoop.it
Kohl's plans to announce news around partnerships on its next earnings call March 1.
Clarence Wong, MSRE's insight:
Kohl’s is seeking grocery or convenience tenants to backfill space in their 300 right-sized locations. Lidl and Aldi have smaller footprints, offering both grocery and convenience items. Amazon already sells smart home products and takes returns within Kohl’s, so they could expand their partnership.

This underscores the importance for big-box retailers to evolve and stay relevant in order to compete against the likes of Target, Walmart and Amazon. For Kohl’s, adding grocery and convenience co-tenants will increase destination traffic while also create desirable tenant synergy.
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Hotels Use Technology and Design to Evolve the Healthy Room

Hotels Use Technology and Design to Evolve the Healthy Room | Real Estate Trends | Scoop.it
Can a hotel room make you healthier? The jury is still out, but judging from some recent experiments, there may be more than a nugget of truth to the idea.
Clarence Wong, MSRE's insight:
Hospitality operators like the Four Seasons and Swissôtel are starting to enhance their hotel rooms with wellness features in partnership with Delos. Wellness amenities include special lighting to counter jet lag, aromatherapy, dawn simulator alarm clocks and special air purification systems.
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FHA to stop insuring mortgages with PACE loans

FHA to stop insuring mortgages with PACE loans | Real Estate Trends | Scoop.it

“In 30 days, the FHA will stop insuring mortgages on homes that also carry PACE liens.”

Clarence Wong, MSRE's insight:
Under Trump’s leadership, the FHA has decided to reverse the Obama administration’s decision to insure FHA mortgages with PACE liens. The argument for this reversal is to decease risk, liability and probability of default for property owners since PACE loans are tied to property tax bills and therefore considered an assessment. The downside is that it will now to harder for homeowners to finance sustainable upgrades like solar panels, etc. for their residences.
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Blackstone and Ivanhoé Cambridge Announce Largest Private Multi-Family Residential Rooftop Solar Project in the U.S. at New York City's Stuyvesant Town-Peter Cooper Village

Blackstone and Ivanhoé Cambridge Announce Largest Private Multi-Family Residential Rooftop Solar Project in the U.S. at New York City's Stuyvesant Town-Peter Cooper Village | Real Estate Trends | Scoop.it
- Triples Manhattan’s capacity to generate solar power 
- Panels offset approximately 63,000 tons of carbon dioxide emissions, comparable to removing 12,000 cars from the road 
Clarence Wong, MSRE's insight:
Blackstone’s and Ivanhoé Cambridge’s StuyTown apartment community is not only the first multifamily community to receive ENERGY star certification in NYC, it will now also feature the largest private multifamily residential rooftop solar project in the US. 

The 3.8 Megawatt (DC) solar energy system will span across 22 acres of rooftops with 9,671 high efficiency solar panels, generating enough energy to power over 1,000 NYC apartments annually. Project will commence in winter and is scheduled to deliver in 2019.
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FedEx pickup/drop-off services now available across 7,500 Walgreens locations

FedEx pickup/drop-off services now available across 7,500 Walgreens locations | Real Estate Trends | Scoop.it
This holiday season, 80% of the U.S. population is within nine minutes of a FedEx hold location, FedEx reported.
Clarence Wong, MSRE's insight:
Amazon competitors need to evolve to stay relevant or be left in the dusk by Amazon’s disruptive path. FedEx has teamed up with Walgreens to install over 7,500 pick-up / drop off locker stations within retail stores in all 50 states in order to compete with Amazon lockers. 

Walgreens on the other hand is beefing up its mail delivery and pharmacy operations support, so it can compete on pharmacy deliveries with Amazon (it recently received wholesale pharmacy licenses in 12 states) and also be able to focus more on providing trusted service to clients at stores.
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Amazon rivals turn to legal fine print to stem Whole Foods strategy

Whole Foods Market met a new foe this summer during talks to lease a top retail space in a San Francisco mall: the Target next door.
Clarence Wong, MSRE's insight:
With Amazon's acquisition of Whole Foods, it hopes to not only break into the grocery business, but also use the Whole Food brand and existing locations to expand its brick-and mortar footprint, including adding Amazon lockers. 

However, considering Whole Foods now poses a threat to not only traditional grocers, but also to big box retailers like Target and Best Buy. These retailers are pushing back by leveraging lease restrictions to roadblock Amazon pick-up lockers.
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Magic Johnson as a CRE Investor - Keynote at ICSC in Los Angeles

Magic Johnson as a CRE Investor - Keynote at ICSC in Los Angeles | Real Estate Trends | Scoop.it
Lesse
Clarence Wong, MSRE's insight:
Great to hear Magic Johnson speak about "doing good while making money" at this past L.A. ICSC. Magic's first CRE investment was a successful, unprecedented 50/50 JV with Starbucks to open 100+ stores in urban underserved areas.   

He then convinced California Public Employees' Retirement System (CalPERS) to provide him an initial $50MM (which led to $100MM) to invest in the revitalization & repositioning of shopping centers in underserved minority communities.  

When asked about future CRE opportunities, Magic said he'd like to continue investing in the redevelopment of urban communities, e.g. the 300 acres near the new L.A Rams/Chargers stadium in Inglewood.
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JLL Wins Assignment to Find Electric Vehicle Charging Sites in $2 Billion Volkswagen Investment

JLL Wins Assignment to Find Electric Vehicle Charging Sites in $2 Billion Volkswagen Investment | Real Estate Trends | Scoop.it

"For years, CRE brokers have predicted that electric vehicle (EV) charging stations will become standard amenities at office bldgs, shopping centers, hotels, service stations & even restaurants."

Clarence Wong, MSRE's insight:
Volkswagen subsidiary Electrify America will invest over $2B to find and develop EV charging sites in a variety of CRE properties ranging from office bldgs, shopping centers, hotels, service stations & restaurants. 

Telsa's national EV supercharging network is already well-publicized, so it's great to see other companies step forward to grow and diversify EV charging station infrastructure and give Telsa some competition.

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More U.S. households are renting than at any point in 50 years

More U.S. households are renting than at any point in 50 years | Real Estate Trends | Scoop.it
The number of U.S. households renting their home increased significantly between 2006 and 2016, as did the share.
Clarence Wong, MSRE's insight:
The % of household heads who rent homes reached an inflection point at the start of the last recession & has steadily increased since then for an unprecedented 10 years straight, coinciding with the tremendous run-up in apartment values. This household head renter segment has now reached the highest point since at least 1965 within the past 50 years. 

Various factors have converged to cause this sustained increase in head of household renters & apartment rental demand: stricter single-family mortgage lending guidelines; lack of significant wage growth to keep up with inflation & rising home values; more retirees choosing to rent; & Millennials opting to rent longer & start families later.
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Three Factors That Influence Apartment Turnover

Three Factors That Influence Apartment Turnover | Real Estate Trends | Scoop.it
Apartment turnover is inevitable. Unless rents are absurdly cheap, people are going to come and go. It’s the nature of the multifamily industry.
Clarence Wong, MSRE's insight:
Apartments have shorter lease terms, typically one year, which allow landlords to burn off loss-to-lease more quickly on turnover units compared to mark-to-market adjustments for other commercial property types like office, retail & industrial. 

Multifamily turnover can be influenced by three (3) factors: job growth, median age & supply. Higher job growth allows renters flexibility to move within a market; younger renters can easily pick up & go; & higher supply allows renters more living choices.
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How Close Is Too Close? E-Commerce Pushing Last-Mile Hubs Closer To Population Centers

How Close Is Too Close? E-Commerce Pushing Last-Mile Hubs Closer To Population Centers | Real Estate Trends | Scoop.it
Malls, shopping centers could be eyed for infill distribution centers, experts say.
Clarence Wong, MSRE's insight:
Functionally obsolete dying malls and department stores, victims of changing consumer preferences for fast-fashion, discount retail and online spending, are often situated in well-located areas and population centers. As such, these properties present opportunity for developers to repurpose them to last-mile distribution centers for retailers and e-commerce providers.
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