2.28.2006
Trendspotting Broker
Trendspotting Broker
This is really good news for the Commercial sector, not to mention another benchmark we can use to stay ahead of the curve...boring but important.
"NAR LAUNCHES LEADING INDEX FOR COMMERCIAL REAL ESTATE MARKET:WASHINGTON (February 22, 2006) – The National Association of Realtors® launched a new leading indicator for the commercial real estate market today that shows an increase in commercial brokerage activity can be expected over the next six to nine months.David Lereah, NAR’s chief economist, said the new index shows the broad recovery in commercial real estate markets will continue. “In fact, the index increased in nine of the last ten quarters – this trend implies that commercial activity of net absorption and the completion of new buildings will remain solid through the third quarter of this year.”The Commercial Leading Indicator for Brokerage Activity is a new tool to assess market behavior in the major commercial real estate sectors. “The index incorporates 13 variables that reflect future commercial real estate activity,” Lereah said. “Our methodology follows a well-known process of looking at changes in individual indicators and then weighting them appropriately in a process that results in a single indicator of future market activity.”The index is designed to provide early signals of turning points between expansions and slowdowns in commercial real estate. NAR reviewed a wide variety of indicators, examined the relationships of indicators that demonstrated a historical impact on commercial real estate, and modeled a forward looking index based on historic trends. Although individual indicators sometimes move in opposite directions, together they offer a better indication of future market activity. View Commercial Leading Indicator BackgrounderQuarterly data for 13 selected series were reviewed back through the first quarter of 1990. The modeling demonstrated a change in commercial brokerage activity that could be seen two quarters later as measured by net absorption in the industrial and office sectors, and the value of building construction put-in-place on completion of retail, office, warehouse and lodging structures. An index of 100 is defined as the level of commercial real estate market activity during the first quarter of 1990, the first period to be analyzed.During the fourth quarter of 2005, the commercial leading indicator was at an index reading of 117.6, up 0.8 percent from 116.7 in the third quarter; the reading was 1.6 percent above an index of 115.7 in the fourth quarter of 2004.Net absorption in the office and industrial sectors during the third quarter of 2006 is likely to be in the range of 125 million to 140 million square feet. The value of new commercial buildings reaching the market is projected to be $4.5 billion to $6.0 billion higher than the $252.4 billion recorded in the fourth quarter of 2005.The 13 series in the index include industrial production, the REIT (real estate investment trust) price index, NCREIF (National Council of Real Estate Investment Fiduciaries) total return, personal income minus transfer payments, jobs in financial activities, jobs in professional business service, jobs in temporary help, jobs in retail trade, jobs in wholesale trade, initial claims for unemployment insurance, manufacturers’ durable goods shipment, wholesale merchant sales, and retail sales and food service.Separately, attitudinal results from NAR’s Commercial Practitioner Survey in February show most respondents rate current business activity as moderately improving or holding steady; 12 percent said it was deteriorating.On balance, to find the right space or property for a client, 36 percent of practitioners said there is limited ability and another 36 percent said there are fewer choices but that it is not a major problem.When asked about the relationship between local rents and operating costs, 32 percent said costs are rising faster than rent, and 45 percent said both were rising at about the same rate; nearly a quarter said rents were rising faster.Regarding expectations for business conditions over the next year, 74 percent of practitioners are optimistic and 9 percent are pessimistic.In terms of market impact, 51 percent said private local investors are having a significant impact; 49 percent said developers, 25 percent end users, 17 percent private national investors and 11 percent said foreign investors.With market fundamentals improving in most markets, 57 percent said new local tenants, users or start-ups were creating demand for space, 45 percent identified existing tenants or user expansion, and 27 percent said new national or international tenants or users.More than 100,000 NAR members offer some level of commercial service, with 57,000 specializing primarily in the commercial real estate market.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #The next commercial real estate market forecast is scheduled for release on March 15, and the next commercial indicator index will be released May 23.Information about NAR is available at http://www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, charts and surveys also may be found by clicking on Research."
This is really good news for the Commercial sector, not to mention another benchmark we can use to stay ahead of the curve...boring but important.
"NAR LAUNCHES LEADING INDEX FOR COMMERCIAL REAL ESTATE MARKET:WASHINGTON (February 22, 2006) – The National Association of Realtors® launched a new leading indicator for the commercial real estate market today that shows an increase in commercial brokerage activity can be expected over the next six to nine months.David Lereah, NAR’s chief economist, said the new index shows the broad recovery in commercial real estate markets will continue. “In fact, the index increased in nine of the last ten quarters – this trend implies that commercial activity of net absorption and the completion of new buildings will remain solid through the third quarter of this year.”The Commercial Leading Indicator for Brokerage Activity is a new tool to assess market behavior in the major commercial real estate sectors. “The index incorporates 13 variables that reflect future commercial real estate activity,” Lereah said. “Our methodology follows a well-known process of looking at changes in individual indicators and then weighting them appropriately in a process that results in a single indicator of future market activity.”The index is designed to provide early signals of turning points between expansions and slowdowns in commercial real estate. NAR reviewed a wide variety of indicators, examined the relationships of indicators that demonstrated a historical impact on commercial real estate, and modeled a forward looking index based on historic trends. Although individual indicators sometimes move in opposite directions, together they offer a better indication of future market activity. View Commercial Leading Indicator BackgrounderQuarterly data for 13 selected series were reviewed back through the first quarter of 1990. The modeling demonstrated a change in commercial brokerage activity that could be seen two quarters later as measured by net absorption in the industrial and office sectors, and the value of building construction put-in-place on completion of retail, office, warehouse and lodging structures. An index of 100 is defined as the level of commercial real estate market activity during the first quarter of 1990, the first period to be analyzed.During the fourth quarter of 2005, the commercial leading indicator was at an index reading of 117.6, up 0.8 percent from 116.7 in the third quarter; the reading was 1.6 percent above an index of 115.7 in the fourth quarter of 2004.Net absorption in the office and industrial sectors during the third quarter of 2006 is likely to be in the range of 125 million to 140 million square feet. The value of new commercial buildings reaching the market is projected to be $4.5 billion to $6.0 billion higher than the $252.4 billion recorded in the fourth quarter of 2005.The 13 series in the index include industrial production, the REIT (real estate investment trust) price index, NCREIF (National Council of Real Estate Investment Fiduciaries) total return, personal income minus transfer payments, jobs in financial activities, jobs in professional business service, jobs in temporary help, jobs in retail trade, jobs in wholesale trade, initial claims for unemployment insurance, manufacturers’ durable goods shipment, wholesale merchant sales, and retail sales and food service.Separately, attitudinal results from NAR’s Commercial Practitioner Survey in February show most respondents rate current business activity as moderately improving or holding steady; 12 percent said it was deteriorating.On balance, to find the right space or property for a client, 36 percent of practitioners said there is limited ability and another 36 percent said there are fewer choices but that it is not a major problem.When asked about the relationship between local rents and operating costs, 32 percent said costs are rising faster than rent, and 45 percent said both were rising at about the same rate; nearly a quarter said rents were rising faster.Regarding expectations for business conditions over the next year, 74 percent of practitioners are optimistic and 9 percent are pessimistic.In terms of market impact, 51 percent said private local investors are having a significant impact; 49 percent said developers, 25 percent end users, 17 percent private national investors and 11 percent said foreign investors.With market fundamentals improving in most markets, 57 percent said new local tenants, users or start-ups were creating demand for space, 45 percent identified existing tenants or user expansion, and 27 percent said new national or international tenants or users.More than 100,000 NAR members offer some level of commercial service, with 57,000 specializing primarily in the commercial real estate market.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #The next commercial real estate market forecast is scheduled for release on March 15, and the next commercial indicator index will be released May 23.Information about NAR is available at http://www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, charts and surveys also may be found by clicking on Research."
2.24.2006
Trendspotting Broker
Trendspotting Broker
Sorry for the last entry...still learning what not to do.
Anyway, I've been more involved with people who are buying and selling businesses. It is interesting how every type of business requires a distinct vntage point from a gross income perspective, and what makes it tick.
Liquor sales: I learned today that the smaller, more portable items such as pints of beer, half pints of liquor, have a 30-32% profit margin, while beer and liquor in larger quantities have about a 20-25% margin... Out of that one must pay rent, utilities, payroll, etc.
The client I gleaned this perspective from was referred to me by an Attorney friend after the client was dismayed with a couple of 'business brokers' who, in his opinion, inflate values too much and were not good facilitators.
I think the price one should be willing to pay must recignize tht intangible 'good will' if it is attributable to the continuing success of a subject business, but the business should be a machine already. Then, enhancing the value based upon your ability to revitalize small pieces of the business and add services or products while renegotiating your position to maintain other product lines(or not) adds directly to the bottom line...or at least forces one to discover new avenues and new trends within their business sector.
The speed bumps in business simply force you to discover newer and better products. But never forget the marketing, especially the BUZZ.
Always learning, I think. Chris
Chris
Sorry for the last entry...still learning what not to do.
Anyway, I've been more involved with people who are buying and selling businesses. It is interesting how every type of business requires a distinct vntage point from a gross income perspective, and what makes it tick.
Liquor sales: I learned today that the smaller, more portable items such as pints of beer, half pints of liquor, have a 30-32% profit margin, while beer and liquor in larger quantities have about a 20-25% margin... Out of that one must pay rent, utilities, payroll, etc.
The client I gleaned this perspective from was referred to me by an Attorney friend after the client was dismayed with a couple of 'business brokers' who, in his opinion, inflate values too much and were not good facilitators.
I think the price one should be willing to pay must recignize tht intangible 'good will' if it is attributable to the continuing success of a subject business, but the business should be a machine already. Then, enhancing the value based upon your ability to revitalize small pieces of the business and add services or products while renegotiating your position to maintain other product lines(or not) adds directly to the bottom line...or at least forces one to discover new avenues and new trends within their business sector.
The speed bumps in business simply force you to discover newer and better products. But never forget the marketing, especially the BUZZ.
Always learning, I think. Chris
Chris
2.22.2006
I've been gathering data about Tenant In Common(TIC)ownership...and this was just posted today about regulatory concerns with Real Estate Brokers handling these types of deals. I think it is just a matter of time before it is figured out for Broker involvement, because it is like the Time Share was back in the 1970's, which was finaly regulated and brought mainstream big time in the 80's...Here's the info:
"Tenant in Common Transactions Under Scrutiny: How You Can Advise Regulators There is an implied concern that some of these investments that are sold as a pure real estate transaction may in fact be a sale of a security and therefore subject to state and federal securities law. Securities law may prevent Realtors from being fairly compensated for services rendered in a TIC transaction. A TIC is a form of real property ownership where a purchaser owns an undivided fractional interest in real property. Because of the confusing aspects of TIC transactions, NAR has issued two publications – the TIC Hot Topic Report, and the TIC Brochure - providing guidance to NAR members on the risks and rewards of the TIC marketplace. The publications provide an overview of the market, an analysis of the factors that separate securitized TICs from real estate TICs, the conflicted regulation of securitized TICs between state real estate laws and state and federal securities laws, and the risks to the investor and the real estate professional. NAR is in on-going discussions with the Securities and Exchange Commission to clearly define a process by which real estate professionals may participate, and be compensated, in the brokerage of securitized TIC interests. "
We shall see...just another trend to keep track of.
"Tenant in Common Transactions Under Scrutiny: How You Can Advise Regulators There is an implied concern that some of these investments that are sold as a pure real estate transaction may in fact be a sale of a security and therefore subject to state and federal securities law. Securities law may prevent Realtors from being fairly compensated for services rendered in a TIC transaction. A TIC is a form of real property ownership where a purchaser owns an undivided fractional interest in real property. Because of the confusing aspects of TIC transactions, NAR has issued two publications – the TIC Hot Topic Report, and the TIC Brochure - providing guidance to NAR members on the risks and rewards of the TIC marketplace. The publications provide an overview of the market, an analysis of the factors that separate securitized TICs from real estate TICs, the conflicted regulation of securitized TICs between state real estate laws and state and federal securities laws, and the risks to the investor and the real estate professional. NAR is in on-going discussions with the Securities and Exchange Commission to clearly define a process by which real estate professionals may participate, and be compensated, in the brokerage of securitized TIC interests. "
We shall see...just another trend to keep track of.
2.18.2006
Greetings
I've just begun the newest part of my business interest...a blog about spotting trends in the real estate industry. I think it is one of the best parts of being in general brokerage...I am required to be aware of personal goals and desires shared by clients in order to be results-driven. Preferences, service requirements, communication styles, new technology and more.
Spotting trends and tapping into the buzz about a new focus is important...these are little morsels of info that generate new attitudes and expectations for consumers. Besides, it's cool to stay in touch with new stuff.
Spotting trends and tapping into the buzz about a new focus is important...these are little morsels of info that generate new attitudes and expectations for consumers. Besides, it's cool to stay in touch with new stuff.
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