Market Data

Market Trends(29)

Investment Conditions Ratings – 1Q07
1=Lowest; 10=Highest

Apartment

7.1

Hotel

7.0

Retail

6.9

Industrial

6.8

Office

6.5

Source: RERC/CCIM Investment Trends Quarterly

Improving Indoor Air
Poor indoor air quality can affect not only inhabitants’ well-being but also the reputation and financial status of commercial properties. New, renovated, and older buildings all can suffer from poor IAQ. Property owners and managers should take the following steps to establish an effective IAQ management program:

  • understand the fundamental influences that affect IAQ;
  • select an IAQ manager and perform an IAQ baseline audit;
  • educate employees, tenants, and contractors about their influence on IAQ; and maintain complete IAQ records.

Clean Air and OSHA Compliance Reference Guide, published by Building Owners and Managers Institute International, has more information on IAQ. To learn more about the book, visit .

Kentucky Towers


Developers will break ground on Sept. 27, 2007, on Louisville, Ky.’s $465 million Museum Plaza tower. The mixed-use project will include more than 200 condos, 270,400 sf of office space, a 250-room Westin Hotel, 20,000 sf of retail, more than 75,000 sf of art gallery and studio space, and an 800-space parking garage.

Industrial Market Seesaw
Biggest changes in year-over-year vacancy rates

Market Vacancy rate (%)


3/31/07

3/31/06

Little Rock, Ark.

17.7

9.4

Columbia, S.C.

4.2

0.5

Charleston, S.C.

3.8

6.5

Portland, Ore.

7.8

10.4

Pleasanton/Walnut Creek, Calif.

10.7

8.6

National average

8.15

8.5

Source: Colliers International

Worth Quoting
“America … is no longer a world leader when it comes to infrastructure.… Other countries marshal vanguard strategies and provide the contemporary lessons for developing best practices in public/private finance, intermodal transport, congestion pricing, and high-speed rail.… Too often [in the U.S.] projects focus on restoration rather than rethinking the model and finding possible efficiencies. … There is a tendency to invest in the infrastructure we have instead of the infrastructure we will need.”

-- Infrastructure 2007: A Global Perspective, published by the Urban Land Institute and Ernst & Young

Office Market Under Construction
Top 5 new construction markets

Market

Sf under construction 1Q07

Suburban Phoenix

7,829,106

Suburban Washington, D.C.

7,362,220

Suburban Dallas-Fort Worth

5,982,798

Washington, D.C., CBD

5,787,591

Manhattan, New York

4,600,000

Source: Colliers International

The Numbers Game
Demographic changes will have a much greater effect on commercial real estate development and investment in the coming years, thanks in part to the size of the retiring baby boom generation and the coming-of-age offspring echo boomers. Together the two generation make up half of the U.S. population and such size increasingly will dictate real estate decisions in all property sectors, according to a Commercial Property News article. For example:

As baby boomers retire, labor growth may shrink from the current 2 percent annual pace to 1 percent, cutting office absorption by half from 80 million sf to 40 million sf annually.

Retail centers trying to cover all bases are incorporating lifestyle center components with multiple big boxes. Westfield Topanga in California will be the first center anchored by both Target and Neiman-Marcus.

Echo boomers want to live, work, and play in the CBD, but many are priced out of downtown luxury apartments and condos. Look for them to choose class B and C multifamily product.

Aging boomers translate into growing healthcare and seniors housing portfolios. REITs and other large investors already are pumping up their healthcare, medical, and nursing-home investments.


Sterling University at the Junction near Sam Houston State University in Huntsville, Texas, is one of four Texas student housing complexes recently acquired by SCI Investments to be sold in tenant-in-common transactions. SCI has acquired more than 1.9 million sf of student housing in four states. For more on campus related developments, read the July/August issue of Commercial Investment Real Estate.
Photo credit: SCI Investments

Grow Your Own Intelligence
Do you want to look smart or be smart? It’s a tricky question in our performance-based culture, but your answer may determine your chances at success, says Stanford University psychology professor Carol Dweck, author of Mindset: The New Psychology of Success. People obsessed with looking smart tend to have performance goals: They view their intelligence as a fixed ability and pursue activities and situations that allow them to demonstrate how smart they are. People who want to be smart have learning goals and see their intelligence as an ability that can be developed; they are less concerned with looking smart and more concerned with learning -- from experience, mistakes, and challenges.

Dweck’s contention is that perception is everything when it comes to intelligence: “If you want to demonstrate something over and over, it feels like something static that lives inside of you -- whereas if you want to increase your ability, it feels dynamic and malleable,” Dweck explained in an interview with Stanford magazine. Her studies have shown that praising children for intelligence rather than effort decreases their motivation, a thought that should inform the way managers evaluate their workers. Dweck’s most recent research has shown that people can learn to adopt the learning goal approach and improve performance -- they not only look smart, they are smart.

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