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Tag Archives: U.S. commercial properties


Net Operating Income Remains Strong among Commercial Mortgage-Backed Securities

new Jason stats graphic - June 2015Net operating income (NOI) for performing securitized loans were up 2.7% in 2014 from their original underwritten levels, signaling strong but uneven growth in the performance of U.S. commercial properties and Philadelphia commercial properties, according to the latest analysis from a leading commercial mortgage-backed securities (CMBS) bond rating agency.

Overall, Nomura Securities International noted a “healthy dynamic” of performance currently is in place for U.S. commercial real estate and for Philadelphia commercial real estate. This report recently was shared with Philadelphia commercial real estate broker Wolf Commercial Real Estate, a leading Philadelphia commercial real estate brokerage firm that represents a number of Philadelphia commercial real estate listings.

Across securitized assets involving U.S. commercial real estate and Philadelphia commercial real estate, NOI growth at lodging properties outpaced other property types, while multifamily-backed CMBS NOIs underperformed.

“Given the diversity of properties securing CMBS loans, we would expect that changes in NOI should reflect national trends,” Nomura analysts said, including both Philadelphia commercial properties and U.S. commercial properties in their analysis. “While employment levels across the U.S. have improved, building remains subdued (outside of the multifamily and lodging sectors), creating a healthy dynamic for commercial real estate performance.”

In contrast, the multifamily and hotel sectors have benefited from several years of strong growth due to dislocation in the housing market and increased corporate and leisure travel, respectively.

According to CoStar Group Portfolio Strategies, office and retail NOI is currently 1% and 6% below values seen in 2010, respectively. However, CoStar is projecting that both sectors will show improvement over the next few quarters. This is seen as welcome news for Philadelphia commercial real estate listings, according to the Philadelphia commercial real estate brokerage firm of Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker.

Office NOI has likely stabilized and should regain 2010 levels very shortly as new construction remains subdued in most markets and employment growth (especially in white collar sectors) has resulted in positive absorption, allowing owners to begin pushing rents, Nomura noted, citing CoStar data.

While retail vacancy among U.S. commercial properties and Philadelphia commercial properties is low in prime shopping locations, overall retail vacancy remains elevated, which has dampened demand for new construction, according to Nomura.

However, in spite of these headwinds, the sector is starting to see positive absorption as discounters expand into empty big-box stores and neighborhood centers are benefiting from a more positive economic outlook, as well as the growth in the single family housing market, Nomura analysts added. Such expansion is welcome news for U.S. commercial real estate and Philadelphia commercial real estate.

Across the four major property types, lodging properties showed the largest NOI improvement. The lodging sector saw an increase of 12% from underwritten levels, with 71% of loans reporting improvement in NOI. Growth in lodging, a key sector among current Philadelphia commercial real estate listings, is seen as positive by Philadelphia commercial real estate broker Wolf Commercial Real Estate, a leading Philadelphia commercial real estate brokerage firm.

Based on national trends, Nomura said it would expect the multifamily sector as a whole to perform more strongly as well. On average, these properties report a 3% decrease from underwritten NOI, versus a 3% increase across all property types, and almost a quarter report a decline in most recent NOI of more than 10% from underwritten levels.

For more information about Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com), Leor Hemo (leor.hemo@wolfcre.com) or Lee Fein (lee.fein@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, industrial buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings and services, provides unparalleled expertise in matching companies and individuals seeking Philadelphia commercial properties that best meet their needs.

As experts in Philadelphia commercial real estate and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philadelphia commercial real estate for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

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Construction Not Keeping Up with Demand in Light Industrial Market

new Jason stats graphic - June 2015While huge warehouse and distribution mega-boxes get most of the attention from analysts and institutional capital, the unassuming light-industrial market in U.S. commercial properties has quietly emerged as the sleeper in today’s red-hot U.S. industrial market.

At midyear, the overall industrial sector, including industrial space in Philadelphia, led all major commercial property types in growth of investment sales and rental rate appreciation. The light industrial and manufacturing subtype between 100,000 to 300,000 square feet in the U.S. commercial real estate market boasted the highest year-over-year rent growth of any property type at 5.7%, compared to 5.4% for logistics buildings, 4% for office and 3.9% for apartments.

In fact, U.S. light industrial and Philadelphia industrial space are so hot that even older, lower-functioning buildings — many located on infill properties in supply-constrained markets — posted annual rent growth of 6.1%, the strongest rent growth within the entire industrial spectrum, according to a report from The CoStar Group that is being shared by Wolf Commercial Real Estate, a leading Philadelphia commercial real estate brokerage firm.

Another reason for the spiking rents is that the both the U.S. light industrial and the industrial space in Philadelphia sectors have seen little growth in new supply in the current cycle. Most big-name capital sources remain focused on acquiring and developing mega-logistics properties when searching U.S. commercial real estate listings. These properties are capturing the bulk of industrial net absorption, fueled by the so-called “Amazon effect” of e-commerce as retailers reconfigure their supply chains around same-day or next-day shipping.

Investors may finally be ready to take another look at light industrial development in U.S. commercial properties. As rents for these smaller buildings have ticked up, replacement rents now appear to be high enough in many markets to justify new construction.

“Finally, light industrial development is starting to pencil out,” said Rene Circ, CoStar Director of Research, Industrial Property who prepared the report that was shared with Wolf Commercial Real Estate, a top Philadelphia commercial real estate brokerage firm. “The tenants are there, the economy is fine, but the space is not.”

Replacement rents for both national industrial space and industrial space in Philadelphia have been high enough to support construction of larger warehouse and distribution properties in U.S. commercial properties for several quarters, and developers have heeded the call. While maintaining a measured pace of development in most markets, logistics construction last year finally passed the average of 120 million square feet under construction annually during the previous expansion cycle between 2002 through 2007.

That said, light industrial construction involving U.S. commercial real estate listings has remained stubbornly below its previous cycle average of 40 million square feet under construction annually.

“It’s very unusual for industrial to post this kind of rent growth and beat out the office and multifamily sectors,” Circ said in his report on national and Philadelphia industrial space that echoes the beliefs of the local market experts at Wolf Commercial Real Estate, a highly respected Philadelphia commercial real estate brokerage firm.

For more information about Philadelphia industrial space or any Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker that specializes in industrial space in Philadelphia.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, industrial buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings and services, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for industrial space Philadelphia for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

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